After College Job: Trading

[chisness]

Trading seems cool because it's like poker -- you can basically build your own strategy and have unlimited potential.

At my school's job fair today there were a good number of smallish trading firms that had programs based something like this:

1) few weeks of intro/training
2) 6 months of mock trading and researching trading methods, as well as suggesting trading methods to real traders
3) start trading

These programs worry me a little because they just seem so unstructured. Am I going to just be using previously created strategies by a firm without learning much unless I can come up with something (how hard is this?)? Will I be learning much since I can't be taking much risk with the firm's money being such an amateur?

Is it best to get into trading later when you have your own capital to work with instead of just trading a firm's money? Would it be more effective to start off in Banking? Where do the top traders come from? Programs like these? Programs at big banks?

[Barrin6]

bump,good question

[Go_Blue88]

I currently am trading for a company in the Chicago Board of Trade (I just graduated from Michigan last semester). I went through (am going through) a similar process to the one described.

It's essential that you begin with a solid foundation--your company will teach you their version of that. There are tons of different strategies--you'll develop your own through time and experience. It's sort of like poker--you get a solid foundation before you begin to experiment with stuff and broaden your hand ranges.

The job is really fun. I basically come in and play a game every day. It's also much harder than you seem to think. 90% of people fail.

edit-- feel free to ask specific questions. that might help me be more helpful to you.

edit 2-- oh you did ask some questions. well as to one of them, you need a lot of money if you want to trade on your own. there's lots of different costs in addition to the potential money you'll lose trading. besides, why would you want to go out on your own right away? your company will give you a really solid education.

[recondite7]

is the name of the company M&N trading goblue?

[boardertj]

goblue, How many hours a week do you/ an average first year trader work?

[metamath]

good question.

i'll be trading next year at credit suisse and i have no idea what to expect.

[chisness]

With a hedge fund future goal, how does trading compare to banking?

Follow-up: An important trait for hedge funds and in general is to understand how to value a company and understand which companies are valuable.

Does trading allow for this? It would seem that banking would be better since you get to do really in depth research and projects on companies, products, and industries. A comparison between trading and banking with regards to which better prepares for hedge funds would be cool to see.

[PRE]

chisness, are you aware of the differences between those fields you mentioned? Specifically, what type of hedge fund strategy do you want to get into?

Most hedge funds use trading as their principal strategy, although there are still a good amount of those based on fundamental analysis. Banking will teach you nothing except how to model on Excel (which I'm not judging, I'm just letting you know what you'll be learning). A typical saying used among IB'ers is that a monkey could do what they do, it just requires close to every waking hour of your life. Most Ivy league business grads go into banking ONLY due to the exit oppourtunities (i.e. hedge funds, venture capital, etc.). It's not that they feel they'll be learning anything particularly groundbreaking.

The first thing you need to do is figure out what you specifically want to do, since it sounds like you're in your last year of school. From what I gathered, the only reason you want to get into hedge funds is for the money (since you don't know the specific type of work this could entail). Choosing a specific career path based on money is a terrible idea, as you will probably be miserable and not good at what you do.

To give you some background on myself: I was a senior at an average private university last year with good grades but no idea what I wanted to do. After researching different fields within finance, I decided I wanted to get into equity research (fundamental analysis). I ended up getting into a very good institutional investment management firm (buy side is much harder to get into out of college then the sell side, even though it pays less in most cases), even though a hedge fund was my goal (hedge funds are even harder to get into). With a little bit of luck and the help of poker, I managed to get offered an analyst position at a hedge fund two weeks ago, where I am now.

Long story short, if you want to get into the fundamental analysis side of research, look into buy-side firms or hedge funds that utilize that strategy. If you want to get into trading, I suggest looking into SIG, a trading firm based in Philadelphia; I don't think there is any better place to start (in fact, a guy that used to help run SIG started his own hedge fund right next to it; like SIG, he will ask you poker-related probability questions; he's very intense, though, and I wouldn't suggest looking into his fund unless you are extremely good with math). With some experience, you'll be able to get the attention of hedge funds using quant/trading strategies. In regards to investment banking: if you have a long-term goal of a joining a hedge fund (whatever strategy), ONLY enter IB if it is a bulge bracket firm. This might be tough since you're not in Ivy league, but still possible with a top 20 school. If you need me to answer anything else, let me know.