Since investment markets and products change quickly, there are very few formal training programs for traders. Almost all the training is learned on-the-job. Salaries start below $100,000 but compensation is supplemented by annual bonuses, which can rise to stratospheric levels. Top traders at investment banks can be among the best paid members of the firm.
Despite that, many successful traders at major investment banks often leave to join smaller firms or perhaps start their own hedge funds, where they can profit even more from their ability to execute profitable trades. This trend may increase in the future, as the fallout from the financial crisis has put a damper on bonuses paid at major investment banking firms such as Goldman Sachs and Morgan Stanley.
What kind of qualifications do you need to land a job as a trader at an investment bank? A quick glance at the investment banking trading jobs listed at JobSearchDigest.com provides some insight.
An entry-level position as a “desk strategist” at a major investment bank requires a master’s degree in computational or mathematical finance, and at least five years of related experience. This person would collaborate with the bank’s traders on risk analysis, risk reporting, and value-added trading strategies.
A commodities trader at a New York-based investment bank would need a master’s degree and five or more years of experience. He or she would join a global trading team and would help build a speculative portfolio of trades based on extensive knowledge of the oil markets, as one example.
A systematic foreign exchange trader might create trading strategies for algorithmic, high frequency trading and marketing making of foreign exchange, for both G10 and emerging market currencies. This type of position also requires a post graduate degree in mathematics, and experience the forex industry.
Finally, a senior options trader in the oil and energy sector might run the firm’s options business, working with junior traders. This professional would need a solid track record of generating profits from both flow and proprietary trading, along with in-depth knowledge of options trading.
Traders are the gunslingers of the investment banking world. It’s a fast-paced, high stress, winner-take-all occupation. But the sky is the limit for what you can earn if you have the temperament and mental agility to compete in this high stakes arena.