Hello all, I hope this thread is not too repetitive as I have seen many posted on similar topics. I was hoping to get a fresh perspective tailored to my situation which is not entirely unique. I am currently a Junior in college and I have come to a point where I need to seriously weigh my options as far as career paths. As a student, I have admittedly distinctly average credentials and attend a pretty good midwestern university. Most of my life I have aspired to be a trader and grew up idolizing my father who traded Eurodollars as a local at the Merc. As I have grown older I have seen the trading landscape change from open outcry to the computer screen. This change has essentially eliminated my opportunity of being "given a job" clerking in the pits in the hopes of becoming a successful floor trader. Like all graduates, I would like to embark upon a career with great income potential and relative security. I am more than willing to sacrifice both in order to establish myself as a career trader. I am very aware that my chances at being hired at an upper-tier trading firm are very slim. This does not mean I will not try, but that I have realistic expectations. I am very solidified in my aspirations of becoming a successful trader and I am willing to make any and all sacrifices necessary to make this happen. I'll work late hours, toil with meaningless work to get an in, etc. I am humble in my status and well-aware that I have an infinite amount to learn about the markets and how to become a profitable speculator. What would you recommend I consider as a course of action after graduation? I thank you sincerely for any input offered. Sorry for the long post!
Well, I may not have advice per se, but I'll share my insights/opinions. For being young, you are somewhat astute in this regard. To learn the markets, you have to live the markets. When trading was done in the pits, it was indeed possible to get paid a pittance as a clerk. While the work and pay wasnt great, you got something valuable from it: the benefit of watching the markets trade day in and day out. The unfortunate reality of screen based trading is that there are no longer any jobs left which allow you to both get paid and immerse yourself in the markets. No one is going to pay you to sit in front of a quote screen all day. It is sad, but although trading to the screen was supposed to make "the markets available to everyone", it has in my opinion made the barrier to entry significantly more difficult. Those "get your foot in the door" jobs just dont exist anymore. Um. I dont mean to bust your bubble here, but if you think trading is that path, you're insane. Go to medical, law, or dental school if you want good income and long term job security. Trading is the antithesis of "relative security". You sound like you have a good work ethic. Keep that, and it will serve you well. Keep your humility too. The minute you think you know everything, the market will step in to give you a costly lesson. You can try the prop trading route, but it is a bit of a crap shoot. First off, there is high degree of randomness as to who gets in the door. Every prop firm has a battery of entrance exams designed to find the candidates who possess the secret traits management feels makes the perfect trader. EVERYONE and their brother wants to make big money trading, so the firms work on the principle of getting as many people taking the exams as possble. All the prop firms have hordes of wanna be traders banging at their doors. A very very low percentage actually make the grade. At multiple prop firms in town, I progressed to the 3rd of 4th round of the interview process, only to get disqualified at the end with no explanation given to what I was lacking. Thats just the harsh reality of the business. Also, be aware, being a trader isnt what it was like when your dad is in the pits. A starting trader at a prop firm is likely to just be a "bot monkey". The firm pays a programmer/quant to come in and write algos to scalp the market. Your job as a "trader" is to be salaried (My guess is at 35-60K, but I never actually received an offer), to watch 'bot and make sure its behaving correctly. Its not trading for a split of profits or anything like that. The pits were a way for the "average joe" to make it in trading. I wish it wasnt the case (because I'm an average joe !) but they are going the way of the dinosaur. It you REALLY want to make it to the major leagues, that means going institutional. You will be going against the absolute best job candidates from all over the world. Get yourself into the absolute best graduate program you can, work your ass off to get the best grades you can and make haste to the big wall street firms. Thats all I've got. Best of luck in your endeavors. -T
It is much easier to go the institutional route first (if you can get a job). If that doesn't work out, or if you don't like it, you have the experience, you took your shot and you can move into the props and arcades. The props will always be there and they are not nearly as difficult to get into as the big firms. The big firms provide the chance to work and learn while making enough money to survive. The entire time you are there - you need to be learning, learning, learning... developing your own trading system/style in your spare time. Then once you have 1000s of hours of screen time, seeing the firm's orders, seeing how the market trades, seeing what goes on... you will have the experience and knowledge to hopefully try your hand at trading. Ideally you'll get your shot at that big firm. If you don't get your shot at that firm - you can go off on your own and trade prop. The entire time at the big firm you should be saving money to work with when you go off on your own. That money will eliminate some of the stress and necessity to be profitable when you go prop - gives you a little time to learn the ropes while you survive. If you go the prop route first... if it doesn't work out, you will have to go get an MBA from a top school to break into the hedge funds or Wall Street firms. Institutional - guaranteed salary - work your ASS OFF!! You are will likely be doing bullshit tasks for whoever hires you - you do what they want, when they want, and how they want it done. You play that corporate role, work your way up - and when you get your shot - you better put up or shut up. If you don't put up those numbers - you're out... Prop - no guarantees - maybe a minimum wage salary so you can eat - but not much more. You have freedom, and you can make your own schedule - but you have to be self motivated to learn ON YOUR OWN. You will be grinding it out every day. If you don't have a financially secure situation - living with your parents, friends, or have some money saved up to live off of, the need to make money will make it difficult for you to survive the learning curve. You may be forced to get another job to survive - and do the trading on the side until you learn more.
You have an advantage here that I think some overlooked. Your father traded down in the pit right? Although he was probably fed all day with good orders from his broker buddies he had down there he still knows how the market works and how it reacts during the day. It doesn't change once its on a computer screen except instead of increasing roar in the pit its an increasing volume bar on the screen and the price action is reflected in the charts. Use your dad to your advantage and suck every bit of info out of him that you can (he also probably has some great job contacts also). Dont let everyone convince you that the markets are changing completely. Granted it is a different landscape now than what it used to be but the overall trading hasn't changed. There are still buyers and sellers trying to figure out where fair value is for a particular contract. Some use gut instinct and others use statistical models, each can be successful and each can fail. Thats what is so fun about this industry, literally anyone can make it as long as they want it really bad! There is no minimum requirements to be successful here! You have the phd grads from harvard and you have the guys who barely finished high school and each of them can be successful! Whatever you choose im sure it will be the right choice and sorry for rambling on forever! Good Luck
These are great words... And no disrespect intended to all the quants out there - but don't be discouraged by the masses of people telling you have to be a quant... that quants are the future of trading... you need a PhD in math and systems development. A LOT of quants don't know jack sh!t about trading. These quants will optimize the fk out of themselves... anybody who thinks that quants are the future of trading and the markets - well they're fkn quants! The key is though - for you to find your strengths - your niche - and develop that. That has to do with your personality, your personal strengths, your goals... etc. Above all though - start trading - a small account... day trading, swing trading, position trading, scalping, arbitrage, forex, futures, equities, bonds... whatever - just start. There is NO substitute for EXPERIENCE... EXPERIENCE TRADING. No PhD or Masters or CFA, or CMT will teach you how to trade. Just TRADE.