Paths to a Trading Career

Trading offers opportunities which few other jobs and careers can match. For those able to achieve success they can attain financial independence at a relatively early stage in their life, with the possibility to earn very large or even huge amounts of money and set oneself up for a very comfortable lifestyle. – As a job/career, it is an extremely interesting and exciting choice; no two days are ever the same, and the challenge of competing and winning against the markets and other traders is both highly rewarding and extremely stimulating. Unlike many other careers, trading does not follow a linear path based on intellectual and academic ability or privilege. Trading is a skill which can be learned and developed; in many respects trading is closer to an art than a science. 

As owner of the Linked-in group 'Trader, Trading and Risk Psychology' and a 'Trader Performance and Development Coach' I receive countless Linked-in messages from people asking how they can get into trading. – I use to reply personally to a few of these, with a summary of the various options open to them. However, the number of Linked In messages I now receive asking this question together with time limitations from my work responsibilities, make this no longer possible. I have therefore now decided to put together the following piece which is my thoughts on this issue, and then throw this question open to Linked-in group members who can then pool their knowledge and experience and perhaps come up with various thoughts on this matter to help young, and perhaps even the not so young, to get started in trading.

The main issues are:

1) Finding paid employment as a trader: - It is increasingly difficult to get work as a graduate trader inside an investment bank in the wake of the Global Financial Crisis and with the subsequent constraints on bank capital, increased regulation and within a contracting market place. The days of getting a job on the floor of an open-outcry exchange are largely gone, however there are an increasing number of private proprietary trading firms which have and continue to move into this space (More about that below).

2) Trading location: - In order to learn trading I feel it is important to be around a trading environment with like-minded people from whom you learn from and with. The noise and buzz of a good trading environment provides useful information in itself, and stimulates the senses in a way that just staring at screens cannot achieve. A good location will offer many resources in terms of access to markets, monitors, pc’s, trading management systems and availability of news and research. - Though many people can and do trade from home, I would recommend being in an office with other traders if possible: Trading from home is a very lonely existence, and that in itself can be demotivating and can undermine one’s ability to learn and develop.

3) Obtaining adequate trading capital: - This has always been the dilemma of the self-starter. Until one has proved themselves, using one’s own capital is pretty much the main avenue open to most people. For many self-starters, and particularly for those without access to capital, this is usually extremely difficult. – Even for those with access to capital, producing an income in the early stages, and until the capital has increased sufficiently, is extremely challenging.

4) Training and development: - Good training is essential, there are various avenues to this such as classroom based learning plus practice on a simulator or with a small trading account, plus on the job training and practice along with a good mentor and teacher. There are of course many people who teach themselves, reading from books and publications, though I believe some human guidance is essential.

5) Understanding the nature of the job and the risks involved: - Many people come into trading seeing it as a job they can merely learn and apply, or as an extension of some casual trading, hobby or interest they have. However trading is so much more than that, it is all consuming and encompassing and in every sense akin to starting ones own business: This includes the danger and very real risk of losing a major part of or even all of ones capital, also a very sharp learning curve, and the high possibility one will suffer serious setbacks as one learns and develops. Furthermore, in the same way a new business owner rarely earns a decent income in the early years, the new trader will probably not earn a living until they can stand firmly on their own two feet, which may take some time. Finally, like the failure rate for new businesses, the failure rate for traders is unfortunately very high.

So what other options are open to get into trading?

The opportunity to work in a bank trading room as a way into trading is as mentioned growing increasingly limited as banks retrench from trading following the difficult market environment of the past few years.  There is still some hiring occurring, however it is mostly from higher education establishments through graduate intake programmes, and the numbers being hired are I believe considerably down on a few years ago. - Hedge funds tend not to employ inexperienced traders, however one or two of the larger funds, do have graduate training programmes, but once again I believe these are mostly open to graduates from the select establishments. 

In the absence of obtaining an internship or graduate place at an established trading institution the next best option and the option open to virtually anyone, is to try and get into training programme at one of the many and growing number of proprietary trading firms.  This is becoming increasingly popular as a means of providing opportunities to potential traders. There are usually two types of approaches here:

• Non ‘Fee-paying’ programmes at proprietary firms: These either take graduates and pay a small salary, or they may take in a number of recruits on a short sharp ‘boot-camp’ type approach, which they quickly whittle down to a very small group who they train and then place within their company, though often without a salary or a very small token salary but with the opportunity to earn a trading income.  This option is only open to relatively small numbers and only a few traders get selected, however often the training is limited and traders have to learn the method particular to that firm.

• ‘Fee-paying’ programmes and courses at proprietary firms: The firms provide a fee based training course and programmes and then ‘cherry-pick’ those that show the most potential for hire. Upon being hired they then earn a small salary or/and the opportunity to earn a trading income : Some people may have an issue with paying to learn and then only ‘possibly’ getting hired, however this seems to be very much 'the way' in this day and age of ‘training courses’ and unpaid ‘internships’. - This approach usually involves firms charging a fee to participate in their training courses and programmes. In return they provide education, teaching, mentoring and facilities to trade on simulation software, or may even provide you with a small trading account in which to trade real money. Some firms run diploma courses and these may be attached to a recognised or accredited education establishment.  As would be expected the education and training is far more in-depth, broader based and of a higher quality, and for those who do not wish to or cannot continue in trading or would like to move into a related area within finance or the financial market industry, it could be a useful addition to their curriculum vitae or résumé.

Some considerations to pursuing these options.

This involves a level of commitment and sacrifice by the trader that in many respects is their first trade: For example:-

• The ‘fee-based’ training programmes and courses, though not cheap are probably on a par with training courses in most professions and industries. – In most cases, the trading education at the ‘fee-based’ training courses is far superior or more in-depth than the non-fee-based approach and should provide a far more solid grounding.  
• Many of the training programmes can lead to opportunities to be hired by the proprietary firm providing the training; however the actual number hired may be quite small. Nonetheless the training can be a springboard to a career in trading elsewhere or in one of the many associated businesses or careers.
• Earning potential is of course very high in trading, but in the early days, weeks and even first couple of years learning the job, income may be low compared to alternative career choices. This can become troubling when one sees friends earning considerably more in another role, or if one has big financial commitments or dependents to support. – The need to make a decent amount of money quickly, is unrealistic and can be the death-knell of many a promising trading career.
• Intellectual ability does not necessarily equate to trading success. This is one of the biggest stumbling blocks for many people who expect, having achieved straight A’s and first class degrees throughout their education, to be able to achieve success in trading. One has to go in with an open mind, and be willing to learn from scratch if they want the big rewards.
• Persistence: If you really want to trade, and the first attempts do not work out, or your experiences at a proprietary firm or on a particular course are not positive, do not be too downhearted. Many a successful trader experienced similar starts to their careers, it is in many respects part of the learning curve. I know of one trader that had three attempts and many years trying before finally getting going.

Other options available:

• One can start and learn at home on one’s own or in a small proprietary trading office or arcade where you hire space and equipment. 
• If you know someone in trading, perhaps a family friend or friend of a friend, try and spend some-time with them, watching and learning, and seek their opinions on a career in trading. They may be able to give you or know someone who can give you a head start.
• Major trading hubs, such as London, New York, Chicago, Dubai,  Hong Kong, Singapore, Frankfurt, etc,  tend to offer far more possibilities than provincial and towns and cities. 
• There are some trader training companies and businesses which provide online or classroom training and/or support systems. However do be aware that there are also many dubious but well-presented and marketed companies out there posing as professional training organisations, promising you the world and getting you to part with your money for very little return.  – Do your homework and investigate all options thoroughly.

'Learn' and 'Future' images courtesy of FreeDigitalPhotos.net.