This is a guest post on trading from Tusk Trader (check out the newly launched site: www.TuskFund.com), an experienced Bay Street trader who will be writing here until Tusk’s own blog is set up. Tusk had a front row seat to the twists, turns, and almost collapse of our capital market systems a few years ago and provides a unique perspective you won’t find anywhere else. For most people, financial literacy is the elephant in the room. Let Tusk Trader help change that. If you are on twitter, make sure to follow Tusk at @TuskTrader
My Bay Street friends and colleagues know that May is one of my favorite times to commute to work. I take the subway and the ride never fails to entertain me every morning. May is when the new recruits and summer students head downtown each day, pretending to be grownups for the summer. Most are technically adults but far from being actual grownups. The older commuting veterans like myself can pick many of these newbie’s out a mile away. It is not the newbie’s attempts to put something together from their own wardrobe that entertains me on my morning train ride. I don’t draw my entertainment from youth with few clothing options. It is the clear input from their parents that provides my smiles every morning as many of these freshmen are wearing their parent’s wardrobe from about 2 decades ago. There are suit jackets on the young males that leave enough room to be buttoned up over their gym bags if attempted. I can almost hear the dad telling his son, “The double breasted, gold button blazer is coming back in. I saw one in a store just last week”.
At least once a week in May, I spy a young woman clearly wearing a skirt suit older than she is. The suit was most likely purchased while her mother was a single woman, acquired well before the maternity leave that was caused by this young women now sitting on the subway. I can just picture the mother convincing her daughter how great the jacket is and that it is a classic. I imagine the mother telling her daughter the story of when she was on her first date with the young lady’s father when she saw the suit in the movie Secret of My Success and just knew she had to have it.
Many students and new graduates have limited resources to acquire an ideal work wardrobe (completely acceptable and understood by most firms). Most firms (across many industries) are also keenly aware of how difficult it is for a many students to purchase or obtain a suitable interview outfit. Firms focus on overall presentation when commenting on an interviewee’s appearance and suit selection. Being clean, pressed, and professional is sufficient to make the grade at this level.
At the same time these young, fresh-faced commuters are adding to my mood in the morning, they are also the envy of their contemporaries. They are employed. Not every student or recent graduate is so lucky. I am approached often by young people wanting to get into the capital markets environment and primarily the trading industry. I warn them that if they are not top of their class (I wasn’t), it is not the easiest nut to crack. Trading floors have not been on hiring binges in a long time and summer students specific to trading floors are not overly common. A floor of 30 traders can have as few as 2 junior traders, depending on the structure. The hardest way to get hired on to a floor is to wait for a posting. That almost never happens. When there is a posting, it is rarely genuine. Many firms have to post to the public even if they are planning for an internal hire or if some form of nepotism is about to take place. Still toss a CV in that direction if you see a posting, but it is not something to pin your hopes too.
I usually get asked two specific questions. The first is, “What do I take at university to become a trader?” There is no specific answer that will guarantee you that desired trading job when you are finished, but there are pathways you could choose that many have chosen before with success. The most common education a trader has is a business degree from a good school. Getting a business degree with a focus on finance or a finance related academic stream is the most common approach. A lot of older traders have a degree in economics. It is a well-worn pathway and a good choice, but not the most common in recent years. An area of study that is really gaining strength for new hires is computer science. With algorithms now the mainstay of many trading activities, having a programming background could go a long way to getting you that elusive interview. It would probably not be the best choice if your ideal job is a sales trading role, but are you that picky? Just kidding. It’s your life and you have the right to be picky. The computer science route is one of the most in demand areas for the capital markets, but if you don’t like computer science, don’t take that path. It is the most ‘directional’ of your options and you will actually use a lot of your education in your job. Sorry to burst your bubble, but not always the case with a lot of jobs.
Lastly, math is a great choice for a university focus, yet often overlooked. Math can lead you into financial analysis, trading, accounting, or risk management quite well. Math is a fantastic option if you like math, do well in math, and are not sure about a business degree.
To become an actual licensed trader, there are specific courses you will have to take. To be a trader, you will need to take the CSC through the Canadian Securities Institute. There is also the Trader Training Course. If you are coming right out of school, the advantage to doing these courses once hired is that there is a good chance your new firm will pay for some or even all of these programs. If you have been doing other jobs in the capital markets industry while waiting for your big break in trading, sign up for the CSC on your own and get that under your belt.