Recovering from Trading Career Failure

About 6-8 years ago...I lost 7mm dollars on a single trade. (while trading on a dealer desk..my official risk limit was 5mm...but i was up more than 7mm before the loss...so this put me back to about flat on the year...my avg daily PnL vol was 100-200k at the time). Was laid off shortly after that...officially for downsizing, but we all knew it was because of that loss.

Just to give some color, I was an RV rates trader and IT programmer (mostly VBA) for a couple years and had some early success on both fronts. But this time I was just long the market...the market was choppy the day before, and so I bought the dip overnight with large size (i had made more than 5mm in the previous 2 months, so I thought I'd take some risk...I realize now that I was junior in my career and didn't really know what I was doing)...and proceeded to watch the market selloff like a banshee until I got stopped out around 11am the next day for about a 7mm loss.

Was soul-crushing...my skin was pale white...heart palpitations...deer in headlights syndrome...but in hindsight also taught me the value of risk management...and the concept of a market coiling...which is followed by a large directional release. This was the painful prompt I needed to start my education in technical analysis.

I've spent the following years learning everything there was to learn about trading, price/volume action and technical analysis...learned that most of it is garbage and useless...but I've found some gems that I think can be the backbone of my trading strategy going forward. I still follow the RV stuff...and while there is less opportunity...its still there to be had from time to time (i have client account at my old BB firm, so i get access to all the market monitors and research tools).

Now that you know the short version of my story...how do I get back into the business? (i've been away for a few years). I feel I would crush it as a newbie on a desk...but those spots seem to not be for guys like me (40...yes, age-ism seems to be real).

It's strange....but I feel that as a guy with experience, I'm now ready to START my career on a BB desk...and its CRAZY to let young kids do what I did all those years ago.

Are there any others who have gone thru a similar experience?

Comments (18)

Jan 29, 2018

Come on, this has to be ironnchef. You've been MIA and this sounds awfully familiar, lol. How you doing, bud?

    • 1
Jan 29, 2018

I see job openings for Junior Rates Trader all the time. Where are you located?

Jan 29, 2018

Senior guys at my firm take on outright views all the time, no RV play or anything else, just pure, directional. So technical is indeed still used, just everyone has their own way. Honestly, my biggest helper that I've gained over the years more any indicators is screen time because just by looking at the market, I know when a price is too cheap or rich from an exaggerated movement. I mean, this won't be the same for rates, as I have to extend my time frame, but equity, yes.

    • 1
Jan 29, 2018

Send me your resume to my PM, I'll pass it over to our Chicago guys, that is where most of our fixed income business is.

    • 1
Jan 29, 2018

Am I the only one in the thread that can only see @mswoonc 's comment appearing?

I would really like to who is responding to him and what they are saying although I'm pretty sure it's OP...

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Jan 29, 2018

At your age you won't go bulge bracket and for good reason. You wouldn't want the headache and they would want someone younger with more upside. Better to hire 10 college kids and see if any turn out to be stars.

You would end up with a prop firm. For tax reasons and potential total comp makes sense.

But also being gone for 6 years is a major problem. Nothing is the same from then. So making 7 million then with a bank balance sheet is meaningless.

I don't think a firm would fire a guy over one loss. They would want to correct the problem if otherwise profitable.

Array
Jan 29, 2018

Not true... Lower tier banks prefer to hire seasoned guys. Especially at my firm, majority of the traders here are at least director level to MD ~35+ years old. I mean I came across a few rates trader positions at JPM and GS and I saw some associate level trader jobs but we don't have the capital and infrastructure to train up a junior people and taking the chance whether or not they'll be good. But if we hire a seasoned trader, we don't have to worry about that stuff. We have traders who came from here from a Chicago prop firm from running a desk in DB.... I just say keep applying and don't lose doubt. Shoot me your email, I will send you a list of firms you can apply to.

    • 1
Jan 29, 2018

Why would a trader want to work in a lower tier bank? I would think anyone good at that point has either moved to hedge or prop.

Unless the balance sheet really offers some kind of edge. Regulations would be awful.

And you can't own your own business or IP.

The only reason I can see is regularity arbitrage to scale up on someone else's money.

Array
Jan 29, 2018

You think people on the street cares who they work for? I work for BMOCM and we have people from GS, DB, CITI... no one cares about the name of the firm, as long you're compensated very well. My firm has pretty good risk limit, I mean, no, we're not GS but it's enough.

    • 1
Jan 30, 2018

I meant less about tier of bank but bank in general at that age.

What benefits do you get versus being on your own or starting a fund and having ownership?

Array
Jan 30, 2018
traderlife:

What benefits do you get versus being on your own or starting a fund and having ownership?

depending on your trading style, there are certain advantages to trading at a bank on a dealer desk, vs at a fund.

If flow information is a component of your decision making process, then the BB dealer seat has value (Jamie Dimon was correct about this when he compared the JPM dealer desks vs the GS desks...JPM sees the most flow, and so their PnL is more stable -in general-).

Banks tend to have other resources that most funds do not (large IT departments staffed with quants to build any software/models that you might think up). If you understand how to be a market maker, then you can decide when to scratch vs when to hold for a few extra ticks.

My old boss, who has been a desk head as a few different BB banks over the years, has stayed in the dealer community for years. He could have gone to a hedge fund a long time ago (and i used to wonder why he didn't...if you make 30mm at a dealer you get paid 1mm...but at a fund that 30mm would pay you 6mm)...but clearly he thinks that his skillset (and his 30mm PnL) are largely dependent on the value of the BB dealership.

just google it...you're welcome

Jan 29, 2018

I mean it's a bit personal to say this online, but this guy name Jim Gallagher on our floor... rumors say he got 10mm bonus... I don't doubt it... His P/L was up there...

    • 1
Feb 2, 2018

I think that the hardest part of handling a loss like this, be it because of you or your firm (I had a firm-wide issue that obliterated me), is your ability to adequately trade afterwards.

After going through this it took me over 1 year to get my trading even remotely close to the previous performance. I was constantly taking bigger hits than I should. But experiences like this and the grind back up have tremendous value if you persist. Currently trading with about 1/5 position size (approx.) and 1/3 portfolio exposure (avg.) and my performance %-wise has improved vastly.

Technically nowhere near your level, but it seems like you have done your homework after you blew up. And I see no reason why firms in the industry would not be interested.

Good luck! :)

    • 1
Feb 3, 2018

Now take this story and imagine it wasn't the bank's money, but your OWN money.
You have a taste of how I feel, albeit it was 6 figures, not 7.

Feb 4, 2018

anybody gone thru this and made it to the other side? what was the experience and how did you make the transition?

just google it...you're welcome

Best Response
Feb 4, 2018

Best of luck man. If you want to hear of something really unfair, I know of a guy who lost a yard one year and retired a billionaire shortly thereafter.

    • 2
Feb 4, 2018
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