Tuesday, April 30, 2013

The Case for Traders

I am writing this post to clarify my previous post.  A few of my friends e-mailed me about it because they mistakenly assumed that the post encapsulated my beliefs on the value that traders add to b-schools.  Hardly.  I was merely stating what I think are the potential minefalls that traders face in the MBA application process.  As a matter of fact, I personally believe that traders can bring a lot to the table.

1. As risk-takers, traders are truly the gladiators in the global financial markets.  I think it's one thing to be a neutral observer of the markets and totally another thing to be a trader who has "skin" in the game.  During my time as a trader and research analyst, I survived the worst financial crisis since the Great Depression.  The experience taught me the importance of risk management, the inextricable relationship between various asset classes, and the need for constant re-evaluation of one's viewpoints.  I think this perspective is quite a unique one.

2. Traders are entrepreneurial but also work in teams.  In my previous post, I wrote about how traders can come across as aloof and not very team-oriented.  Although this may be the case for some traders, it certainly was not the case with me or most traders I personally know.  On one hand, we do spend a lot of time working alone, making trades, researching ideas, and reflecting on market patterns and trends.  But a good idea alone means nothing without proper execution, and that often requires working with others to achieve a common goal.  On my desk, I had to work daily with developers, programmers, and quants to improve risk tools, implement algorithms, streamline the operational processes behind our trading, etc.  Given that I came from a non-technical background, I had to quickly learn the technical language of my co-workers and eventually managed a small team. 

3. Traders are skeptical of orthodoxy.  I think this trait is too often underrated.  My first boss always told me, "Do not get emotionally attached to your positions.  As soon as the facts change, drop it ASAP!"  As a young trader, I would develop a viewpoint and stubbornly insist that I was right.  If the markets moved against me I would tell myself that things will turn around.  The markets humble everyone; it does not discriminate and could care less how wealthy or powerful you are.  Consequently, in order to survive, we must constantly adapt, drown out the noise, and learn to accept when we're wrong. 

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