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Traders' secrets

Published on Friday, 03 May 2013
Success on a bank trading floor often depends on having great mental stamina and the instinct to investigate the newest technology.
Photo: The New York Times
James Boyle
Matthew Saul

Citi and Fidelity experts open up on trading careers

Life on the trading floor of a top investment bank is famously fast-paced and frenetic, but James Boyle has clearly learned to take it all in his stride. In fact, the Asia-Pacific head of equity trading for Citi appears to positively thrive on the pressure that comes with running a 45-strong department team that handles areas such as equity options, programmed trading and electronic market-making across 15 countries.

“I am essentially responsible for seven different teams trading in specific products or markets,” says Boyle, who grew up in Canada, took an MBA at New York’s Columbia Business School, and has steadily worked his way up over the last 17 years. “Each team has a desk head who reports to me on any unusual trades and we also have intra-day discussions on anything which may move the markets or affect clients. We are a very client-focused business, so what interests them is what interests us.”

The key, he says, is to understand and balance the relative importance of macro and micro issues. On the one hand, for instance, it is important to have a view on the likely next move by the US Federal Reserve and the Bank of Japan on monetary easing, or to assess ongoing implications of the recent Cyprus crisis which could hit markets outside Europe. On the other hand, it is vital to know what is happening in the Hong Kong property market or with the latest IT product launch, and how that could affect investment tactics and portfolio holdings.

“On any particular day there is a lot to focus on, with many different calls to make,” he says.

Boyle typically starts his day very early, checking e-mails and market updates before heading out for a 5.30am run. The drive to the office is a chance to catch up on news reports and plan the day and, from 7am, things move into high gear. A priority is to check on risk positions by seeing what each team has on the books. Then it is a matter of deciding where risks should be reduced or maintained and where the best opportunities are for the bank and individual clients to profit in the day ahead.

A regular morning meeting with colleagues from the sales and research departments highlights daily and weekly themes for each country in the region. And as the bank takes a global stance on strategic investment issues, conference calls with offices in London, New York, Johannesburg and Sao Paulo can stretch on well after the standard work day finishes around 7pm.

“To do this job well, you have to instil a sense of confidence in your employees and make sure they understand in which direction we are heading on a daily basis,” Boyle says. “You also need perspective which, in my case, comes from trading through a number of different crises and learning that, during the good times, you must prepare for the tough times that will inevitably come along.”

He began trading options when still in high school and then, like many of his future colleagues, took a first degree in physics and maths. Later, as an “apprentice” sitting beside an experienced senior trader, he learned the technicalities of the job and gradually built up his own “book”.

“The need for quick decision-making and careful risk management played to my strengths,” Boyle says. “But being a good trader doesn’t necessarily translate into being a good manager; that is where you need extra training.”

Citi usually hires interns and rotates them among trading desks to give experience and assess their potential. The best candidates are then invited to join the in-house management associate scheme, which includes formal training in subjects such as options theory and accounting.

“This job is not for the timid,” Boyle says. “But an important part of our recruitment strategy is to bring in young talent who are smart, aggressive and driven to succeed.”

Such traits no doubt helped Matthew Saul break into the industry and subsequently rise to his current position as head trader, Asia-Pacific, for Fidelity Worldwide Investment. He now manages an 11-person team covering equity markets across the region from Australia to Japan and India. The team’s focus is on longer-term holdings, and clients include retail and institutional funds which represent investors from around the world.

“I actually got into the industry via the back door by becoming a photocopy boy at a brokerage house in Melbourne while studying finance at university,” says Saul, who has been interested in the sector since his early teens. “The contacts I made coming in early every morning before the market opened led to a chance to help out on the client trading desk, and things progressed from there.”

At a time when screen-based trading was starting to make markets more global, he found the business offered a dynamic work environment and a promising career path. Sixteen years on, he is still excited by the mental challenge of studying stocks and economies, forecasting developments over three- to six-month periods, and understanding which factors will influence price movements and outcomes.

“In trading, it obviously helps to be very mathematically minded and, equally, to have a passionate interest in markets and what they mean, because it is not all just numbers,” Saul says. “When hiring, we don’t look for volatile ‘hotshot’ traders. We look for methodical people able to cope under great, sustained mental pressure, who have the mental stamina to be as diligent in getting the best result on their 100,000th trade as they were on their first.”

He notes, too, that anyone who thinks all traders are from the same mould is mistaken. In fact, a typical team these days includes individuals with a diverse range of backgrounds, personalities and outside interests, all keen to make their make their mark.

“An optimistic outlook on life probably helps because, for any trader, one thing is certain – countless times during your career, the markets will make you look stupid or drive you mad,” Saul says. “The instinct to investigate the newest technology, or better understand how the existing system works, will also earn great appreciation.”
 


Saul’s sage career advice:

FOLLOW THE MARKETS YOURSELF
“If you have money, do some investing or just try a paper portfolio to see if you enjoy it.”
MAKE CONNECTIONS
“It helps you get a foot in the door, which makes a big difference when hiring compared to a CV in my inbox.”
THINK HARD BEFORE COMMITTING
“Trading requires long-term dedication and is not something that can just be tried for a few years.”
GET UP AT 5AM
“Try this every morning for a month and see how you feel, because as a trader you’ll probably have to do that for most of the rest of your career. It also requires physical stamina. Try taking up yoga – it’s great for de-stressing after a bad day in the markets – or boxing if you’re the more aggressive type.”
CONSIDER YOUR KEY STRENGTHS
“The people who succeed long term in trading generally have strong personalities. Think about who you are and what unique abilities you can bring to the trading world.”


 

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