Slashdot Mirror
Moving from Tech to Trading?
DJ Paradox asks: "I've been working in IT for around 11 years now and more recently in IT Security within the Finance/Investment Bank arena. I'm looking into the prospects of a change to an entirely different field, working on the trading floor. I've read a few books on trading but most of them seem to be geared toward the Do-It-Yourself-Day-Trader instead of a professional career. I don't have a finance degree but have a permanent position with a good sized global bank and a manager who is willing to help. So I ask Slashdot if anyone has recommendations for courses, books, websites that I should cover to get a head start in this transition. Have any of you made a similar jump? Should I try to move towards a more trader-aligned tech group first and build relationships? Should I try to go for Equities or Futures & Options trading? What markets would be the best to start/learn with?"
Save up more money first. You need to have enough in your account to where you can devote a maximum of 20% into one stock and still make a decent amount of money off of 10% or 20% increases. At the $1000 level, commission fees will likely gobble up any gains.
If you want to "dabble" in day trading, you need at least $15K. Day trading requires you to take out many low risk trades if you want to be successful. And I don't like the word "dabble," as anyone who doesn't go into it hardcore tends to lose money.
Brokers that charge flat fees for trading, and don't charge any maintenance fees, are good. Scottrade and TD Ameritrade are examples.
Do not downmod posts "overrated" simply because you disagree with them.
Floor trading is a pretty extreme job. Most floor traders work their way up from entry level runner positions. One way to avoid that is to buy or lease a seat, the AMEX is pretty cheap these days. Of course, you'll need clients for that.
I like your idea of moving the tech group for a trading group, that would get you in contact with some of the action, and you could get a better idea if it's what you want.
It's exciting, but stressful.
You're going to have a hell of a time day trading with $1000 - and you haven't done much research, as live broker fees are way higher than fees you'll see at etrade or tdameritrade (which are typically around 10 bucks a trade depending on where you go)
How many /. teenagers are looking at the screen trying to figure out what it is you're asking.
Wait, what was the question?
The opposite of progress is congress
I can help you out there. I was in the same situation 2 months ago. I'd been working for two years, and had about $5-10k that I wanted to play around in the stock market with, but all of the big online firms, ETrade, Schwab, Fidelity, etc. had fee structures that were much more expensive than I was comfortable with/could afford.
I finally ended up going with Scottrade, at www.scottrade.com. They're a discount online broker who charge a flat $7 commission per each sell or buy, regardless of how big or small the order.
They're a discount broker, so they don't have all the whizbang services and features of the other guys, but I didn't need any of that. I was comfortable doing my own research and everything. All I need was a cheap way to buy and sell stocks in relatively small quantities online. And Scottrade fit that perfectly.
Check them out and see if it's appropriate for what you want to do.
Disclaimer: I am not employed by Scottrade, the only relationship I have with them is the one described above where I am a happy customer.
-"Those who fought today will die tommorow."-
You don't state your level of trading experience (ie have you ever day traded), so I am going to assume you are a complete newbie. Unfortunately, you are going to be way out of your element and will get slaughtered if your only experience comes from books ... and that's if they even let you on a trading floor/pit.
My advice would be to put those grand aspirations on hold and get yourself a trading account from a discount broker (Etrade/TDAmeritrade/Scottrade). Fund the minimum which is usually around 2 grand and start trading. You'll probably wind up losing but the knowledge gained will be worth more than any course or book.
Elite Trader, for example.
The Investor's Guide to Active Asset Allocation
some people from my group made the jump to trading. they started developing trader apps, then moved to desk support, and learned enough about the dealio doing support that they moved to trading.
that would be a long-ass road to travel from IT security though. can you code?
long story short, find a job where you get to learn about finance, and if possible, get to know traders and what they do.
You can't "dabble" in day trading. It's a full-time job. You would do much better to buy shares of SPY via Scottrade, and hold them forever.
Don't piss off The Angry Economist
It doesn't sound like you have talked to anybody that would actually be your boss if you made the move to the trading floor. Having worked in the same environment, if you had asked them you would know exactly what you need to do to move into that area.
You would probably need to start by going to training for and passing the exams for the Series 11 and Series 63 exams. Furthermore, you would need to be sponsored by your employer to take these exams. You knew that, right?
Oh, and plan on starting at the very bottom and taking a massive paycut for the privilege.
I second that motion - at $1000, commissions alone present an insurmountable challenge to successful trading (and there are enough challenges there already).
Put together a plan to save up more money, and in the meantime, read up and devise what strategy you'd like to trade with. You can perform analysis, manage a fictional portfolio and test results in the meantime before placing real money on the line. Above all, don't treat this as "dabbling" unless you're comfortable with losing the whole wad, like someone going into a casino treats their bankroll as "entertainment" money.
Stop by my site where I write about ERP systems & more
Moving from trading to tech, I could see. But from tech to trading? Do we look like FinancialDot to you? Who the hell approves this stuff?
Hundreds of relevant stories in the queue, and this is the best they could approve? Give me a break.
You suggested that you were considering an intermediate move into a more trading-oriented tech group. I think that is a good idea. You can learn a lot from reading, and from more-or-less formal education. I got an MBA in finance and am a CFA. But having day-to-day contact with what's actually done will really help your learning -- and there are some things about the nitty-gritty of trading that you won't learn from books. Also, having more direct exposure will help you make sure this is what you want to do, and will let you see different niches in the market "ecosystem".
Being a successful institutional trader involves a number of skills and personal characteristics. The more you can learn about it going in, the better I think your chances will be. As far as which market: focus on the area that you're most interested in. There is one caution: really understanding the process of valuing options and other derivative securities takes a non-trivial level of math understanding. (I was lucky there -- my undergrad degree is in physics.)
I have put a great deal of effort into consideration of your question, and I hope the following answers will be of use to you.
I don't have a finance degree
No problem, it's not like it's *your* money you're spending. In fact, I personally use the "Bank of Joe" for all my financial transactions. It's run by this guy down the street, who has no formal training, or even a real vault, but he seems eager enough. His service fees are *killer* though.
have a permanent position with a good sized global bank
Learning by osmosis, always the best way. It definitely helped several of my friends to succeed at university.
So I ask Slashdot
As a career move, this ranks somewhere around "seppuku... with a butter knife".
if anyone has recommendations for courses, books, websites
I recommend taking some courses in formal logic. I understand the curriculum is both interesting and enlightening.
Should I try to move towards a more trader-aligned tech group first and build relationships?
Sure, but she might get mad when you take advantage of that plural relationship.
Should I try to go for Equities or Futures & Options trading?
This is a tough call, but I'd have to say "yes".
What markets would be the best to start/learn with?
Your options are, of course, varied; however, I recommend a local farmer's market. Their produce is far superior to those of bigger chains, and who better to learn from than the people who grow the crops?
For your training, take that $1000 and set fire to it. Then after you save up another $1000 and set fire to that. Keep on doing this until you can burn the money without getting emotionally wound up about losing the money. Once you get to that point you can then trade objectively and not make stupid rash decisions which will lose you even more money.
I bet there's some of you out there who think I'm joking.
Australian running a company that does C# / C++ / Java / SQL / Python / Mathematica
I would advise you to try to start out as a 'quant' or a developer of 'algorithmic' trading solutions. Quants use programs and math to kick ass on the trading floor. Some quant houses don't care at all about wall st experience because they view things in a statistical/algorithmic way. They always always need good IT people. Think DE Shaw, Barclays, etc. Read Willmott forums and such places for info and job leads. Almost all of these jobs will be in New York/Connecticut and London. Another keyword is 'financial engineering;' there are masters programs that can certify you in this and your background is probably appropriate. Check out 'Financial engineering news.'
Algorithmic trading is another route. Big brokerages all have algorithmic trading platforms, which automatically split up an order into tiny pieces to sell throughout the day, on different exchanges. You could get into working on these systems, which are in a continual arms race, and see where that leads.
The bottom line is to use your IT background. Like most fields, trading is getting more computational/mathematical, not less, so you need to leverage your abilities. Start with solid books like Bodie, Kane and Marcus: Investments and Hull: Options, futures, and derivatives to get some foundational knowledge. Ignore the retail-oriented 'technical' trading/day trading stuff. Read the WSJ and Institutional Investor and things like that.
Good luck.
I don't mean this in a mean way, but really, Slashdot, News for Nerds. You work in an investment bank. I'd think your resources for investing information there would be much better than here.
Changing fields is fine. I'm doing it myself, but take some time and research the field. There are books that are career oriented for all sorts of fields and I'm sure there are for finance and investing as well. Read about the different types of jobs and see what appeals to you.
I spent a few years before making the decision to go into medicine, albeit, there's a long-term investment in education in going that route that you don't really have with many other fields. So you may not need to take as much time to think about it, but do take some time and think about it. Research it, learn about it, figure out if it's what you really want to do.
I have a friend who worked in bonds for a while and he hated it. I have an uncle who did the same thing and loved it (and was incidentally very good at it and has made a mint). If it really appeals to you, go for it. But do the research. Make sure it's what you want before you divert yourself from an existing career.
It has been proven (see The Great Mutual Fund Trap) that day trading is a way to lose. People always jump in too late and jump out too early and have their profits eaten up by fees (which they pay whether they win or lose). The guys in that book reported on an analysis done of Etrade and Ameritrade records. The numbers were very clear.
The only way to win is:
Here's a little info from the book:
They tracked over 1000 mutual funds for 10 years. Of the 1000, 1 (count them... ONE, uno, single) fund gained every year over the DOW. Mutual funds are run by fund managers who know a lot more than you, and have huge resources. Turns out that it is completely random as to wether a fund can beat the DOW.
Every now and them, one fund manager wins big for their fund. And they become hot property. But its random. They will eventually fade.
A side note: there is also a survivorship bias - any mutual fund that does poorly for very long is usually folded into another - that is, it disappears. So the ones that survive are the best, and they aren't better than the DOW on average.
Index funds are the way - they have very small fees, insulate you from any sector tanking, they track the dow, and require 0 effort on your behalf.
The book was a huge eye opener for me, and for the last few years has proven itself.
Trading in options, futures, and other derivative instruments should be reserved strictly for Ph.D's with their own Beowulf cluster, or people who aren't losing enough money by day-trading. You can get in more trouble, quicker, than you can imagine.
Don't dis a finance degree. I did grad work in physics and work at a supercomputing center, and I have a large amount of respect for how hard finance can be. I've taken a few finance classes, and it ain't basketweaving. It's *hard*, in the same way physics is hard. If you think you are going to waltz into that field and compete with degreed people, you are either smarter than I am, or delusional.
Stick with stocks and bonds, but spend a year or two practicing. You don't need to trade stocks every minute/hour/day to make good money. Just look at Warren Buffet. Buy a copy of Ben Graham's "Intelligent Investor" and "Securities Analysis", Marcia Stigum's "The Money Market", Annette Thau's "The Bond Book", Robert Hagstrom's "The Warren Buffet Way", and Jim Collins "Good to Great. Read them, several times, and then test your knowledge with your own money before you blow someone else's.
Also worth a check-out is Interactive Brokers. They're who I use and the cheapest around afaik.
One strategy I've found does fairly well for me in options is selling call and put spreads. You need a bit of knowledge in statistics but there's a wealth of information out there on how to do it. I've never been big on long option positions though. They seldom have worked for me.
$5 dollar trades here: Ameritrade izone
I think Scottrade has commissions of $7, which E*Trade aproaches if you make enough trades (their commissions start at $15 and go down as you make more trades to $7). But as someone else said, if you've got only $1000 or so to play with, I'd suggest buying and holding some stocks for long-term investments and not really day-trading. Day-trading requires buying/selling stocks on slight upticks, for which the stock commissions (remember, you get them buying AND selling) really eat into for you to make a profit. Ie, a stock increase of a few cents would be useless to you (unless you're playing with penny-stocks which is highly inadvisable), but would be great for someone who bought a few thousand shares.
There are plenty of schools that offer financial engineering certs, find one and go through it.
What the hell were you thinking?
[o]_O
I trade for a living, though technically speaking I don't day trade.
I agree that you need more money. You can't trade stocks with $1000, even as a hobby. The costs will eat you alive.
I disagree with all the people recommending web-based brokers like Scottrade. If you are serious about trading there's really just one way to go, a direct access broker like Interactive Brokers. They are light years ahead of the web brokers in technology and trading costs are much lower, $1 commissions on up to 200 shares. You can also trade just about any financial instrument in the Western world from one account. You will learn much more about trading using a real direct access platform.
You can also go for your CFA or something similiar depending on how much academic training you want, and if you feel like it would help in getting a job.
Buying and holding an S&P fund as some have mentioned here may be good advice for those unwilling or uncapable of more actively managing their portfolios, but you'll be leaving a ton of money on the table that way. It is possible with a lot of hard work to do much better than that.
A book can't teach you how to trade, but I would read Reminescences of a Stock Operator, Confessions of a Speculator, Practical Speculation, and Common Stocks & Uncommon Profits to get started. William O'Neil's CANSLIM method isn't a bad one to read up on either (IBD). You may want to read up on statistical analysis also. David Dreman's books are a good place to go on value investing. You can also read up on technical analysis, but tread carefully in those waters. There is a lot of nonsense out there.
If I were to give you one piece of trading advice, it would be to CUT YOUR LOSSES, and make preservation of your capital your number one priority. You can't trade if you are out of capital.
Don't paper trade. It is absolutely worthless for learning how to trade. Trading involves a ton of emotion (we're all human), and paper trading is easy because there are no consequences.
Be prepared to lose. A great trader would be one who wins 60% of the time. The key to success is gaining more on the infrequent winners than on the more frequent losers. If you're a perfectionist, and don't like to lose, look for another field.
Look for a niche and exploit it; don't try to go up against the big boys where you have NO edge.
Use the internet. There is a lot of free info out there that is valuable. Just be sure to separate the wheat from the chaff.
Good luck, and remember trading is a ZERO SUM game. Every dollar you make is coming out of someone else's pocket. Don't ever forget that. Your opponents won't!
Don't get discouraged, and be willing to fail, and try again.
Please understand that trading is not for the faint of heart. The pressure is high, numbers are big and the stress level can down right kill you. However, if you want to be a good at trading, most of the traders I knew in NY and HK told me that certain amount of killer instinct is required to be good at it. Please see this interesting article: http://www.nber.org/digest/mar02/w8508.html
The purpose of writing is to inflate weak ideas, obscure poor reasoning, and inhibit clarity....Calvin
With high leverage available on FX (even 100:1) you could loose everything or double your money in a matter of minutes. This is nerve wrecker, but it is a lot of fun.
I agree with the parent, but rather than lose 2 grand, just sign up for a FREE account and practice trading with that. I think there are others, but the only one I found with a quick google was Forex
Read John C. Hull's "Options, Futures and Other Derivatives" which is the absolute minimum BASIC knowledge you should have for trading the market. The day trading books might make more sense after reading that. You work at a bank, and I would be very surprised if someone, somewhere didn't have a few books like this lying around that you could loan.
Also, you can read some mathematical finance texts, and maybe take a few courses (I believe Stanford and Carnegie Mellon have good programs, if you consider education an option at this point, if you can get in, and if are interested in becoming a quant).
Good luck, and I hope you don't get whipsawed too badly in the beginning.
Better yet, outsource the burning!
Just sent the $1000 to me and I'll burn it for you.
It'll only cost $100 and also doubles as an introduction to the concept of middlemen.
(tax not included)
Slashdot social media options: AIM, ICQ, Yahoo, Jabber and Mobile Text. Why no MySpace?
Trading of almost any sort, including stocks, but far more appropriately options, futures, and derivatives, is Gambling, but is legal all over the US and is a sanctioned sport.
Yes, there are legitamate reasons for all three instruments and they can be, and are, used by a small number of institutions for the intended purpose, which is to limit risk and provide certain guarantees of performance. Mostly, howeverm they are used for gambling. It's no different than betting the ponies. You research the background, estimate the conditions, allow for some randomness, and then GUESS what will happen to the price and place your bet accordingly. Oh, sure, it's better than buying a lottery ticket, but really no different than any other paramutual game. The house still takes their margin/cut (known as brokerage fees), and makes money whether you win or lose.
If I were king, I'd outlaw all options, derivatives, and futures (Imo, they're the reason oil is $70+/bbl - the cost of extraction hasn't substantially changed, and E/M's bottom line proves it). If you want to place bets, do it in Vegas like everybody else.
Is it just my observation, or are there way too many stupid people in the world?
Like these guys who built an online stock trading supercomputer
Become an investor, not a trader. Before you buy, research the hell out of interesting stocks. After you buy, hold onto them and continue to study their performance and financial condition. Sell when the cracks (if ever) appear. You'll avoid the hustle and bust of a trader's life (more likely, death) and make more money with less work. It's also boring, which is why it's unpopular.
That said, I'll recommend the following books:
The Intelligent Investory, Ben Graham.
The Essays of Warren Buffett, Cunningham.
Contrarian Investment Strategies, Dreman.
Those books teach what others ignore, that identifying good stocks means identifying good companies. People do make money otherwise by gaming the market, selling on sentiment etc. But then again, you never hear of wealthy traders... investors like Buffett get all the attention, because value investing is what works. Get rich slowly or not at all.
So you go to a tech website and ask how to get into working on the floor? With that kind of logic, I can see why you SHOULD leave the tech field.
I'll make it crystal clear for you. If you're a race car driver, asking a fellow race car driver how to become a beekeeper isn't very smart. Ask a beekeeper!
And coming from an IT background like you, what attracted me was technical analysis. Find someone who trades successfully the way you want to trade and use them as a coach/mentor. I use the trainers from http://www.wealthintelligenceacademy.com/ and the broker http://www.tradestation.com/ (great software package for analysis and automation, with a healthy user forum). WIA has a pit-trading course, but I'm sticking with options until I build my account (currently only trading with a $5000 acct).
Option trading will eat you alive without a mentor. Any trading system worth your time will have a strong focus on money management and position sizing so that even though you lose often (everyone does when actively trading) you don't lose much, and when the trade goes your way, you know how to lock in profit.
For fundamentals analysis with a focus on finding good growth companies, the book "Rule #1" by Phil Town is a keeper.
For general investing, everything by Robert Kiyosaki is worth reading.
I looked at Scotttrade when I opened up my Roth IRA about... oh 5 years ago now. They were quickly scratched off my list when I asked if they allowed you to reinvest dividends for free. At that time, you had to pay the same commission ($7) to reinvest dividends for each stock, each time a div was paid out. Not sure if that's changed since then.
The last book Siegel wrote (Future of/for Investors) was a great read. Interesting points about how when a stock gets added to one of the major indexes, the stock automatically becomes inflated in price, since all the institutions have to buy the stock, therefore driving down returns of the whole index.
You have 'a manager who is willing to help' and you are here asking Slashdot how to become a trader?
Well, here's my advice: Start an open source project to write a day-trading application that can be run in 'live' mode or 'fantasy-trading' mode for practice. Also let it run on live data or stored historical data for re-plays and what-ifs. Oh, make sure it runs on Linux. Probably should write it in Python or Ruby. Let's hear from the community on that important question.
But then again, this is Slashdot, and we are mostly computer programmers not traders so take this advice for what it's worth.
- For the complete works of Shakespeare: cat
I see no reason why my fellow ./'ers are all so negative towards this issue. All he asked for was help, and not for everyone to shoot his dream down.
As for the things you can do, well that kind of depends on where you are. In the UK you will need to do a number of exams set by the securities and investments institute http://www.sii.org.uk/ Im not entirely sure what your requirements would be in the US. I used to work as a technology risk analyst for an investment bank and our entire team had to the introduction to securities and investments exam.
To get a job on a trading desk, you generally have to go through a whole heap of hoops, but in most cases, it helps if you are a desk support person *note* not trading support (which relates to the support of the hardware/software used by traders)
These jobs require a fair amount of training to be conversant with the setup, i.e. multiple screens,special phones etc. So banks generally train their staff at training centers dotted around the country/world just so they can see those that will cut the mustard
One thing i will say is that you should give day trading / spread betting a go. It will really test your nerve and help you decide if you really want to go ahead with this
Good luck.!
Tis, brakes that allow cars go fast!
just following up on this, a good site for fantasy portfolio investing is investopedia.com. You trade real stocks but are given a portfolio with $100,000 funny money starting cash. In the main competition, you cannot devote more than 1/5 of your portfolio to one stock, forcing you to diversify and in many cases limiting upside, but limiting downside too.
Do research on market conditions, realize what causes large groups of stocks to go up/down and what causes sectors and individual stocks to go up/down. If you can trend trade, you can make a lot of money.
It's funny comparing the gains between my real and fantasy portfolio. The fantasy one always wins, because decisions are less emotion based. Regardless of how hard I try, emotion always creeps in a little bit with a real portfolio. It's something that really has to be wringed out over time and can be the most damaging to your capital.
Do not downmod posts "overrated" simply because you disagree with them.
I believe that if you trade from your IRA account, you keep defer the taxes until you redeem your income from the IRA at retirement.
One of my clients is the Clearing Corp. for "Hard Red Winter" (HRW) Wheat. The Clearing Corp. is the party responsible for matching your trades with buyers and sellers.. At the end of the trading day all trades must be even. All buyers must have sellers..
This is my observation of what goes on in this commonly traded commodity market In the HRW market, there are a limited amount of "pit" traders, and they all know each other..
They will take the edge from every trade and leave the house accounts on the bad side of any unfavorable transaction.
Even if you have a market (mills that need HRW, or farmers that can sell HRW), they may decide not to trade with you.
It combines the worst aspects of High School and exclusive clubs. If you are ready for this kind of environment then go ahead and buy a seat on our exchange!
Oh.. A pit trader once told me a joke..
Want to end up with a Million Dollars trading options?
Start with Two Million...
Counterexample
10,000 invested with SPX in 1969 would net you about 300K today. 10,000 in Phillip Morris would net you 2 million. And that's if you used the dividends (4% yield today) to buy crack.
Dear God, did you just use the word dealio in a sentence??
I looked at them about 2 years ago, and I _think_ that they now let you do commissionless dividend reinvestment, but I can't recall exactly. I think my problem with them was that they were still mostly meatspace-based. Mailing things seems so unnecessary.
But the parent is correct that it will not teach you the most difficult thing - controlling your emotions. Closing out a losing position is much harder than it sounds. It hits your stops and says SELL but every instinct screams at you to hold out.. it going to bounce... and minute now... arg it went down even more, now it's really oversold... I can't sell into this, it's a bull trap... blatent market manipulation. And that's how you blow up a trading account. It doesn't help that things *do* bounce sometimes and that there are real bull traps out there, etc.
-- your Web browser is Ronald Reagan
Hi :
Here is what you should read
1. Options, Futures and Other Derivatives, by John C. Hull. (Excellent book, I have read it. Very technical.)
2. Macroeconomics by Andrew Abel & Ben Bernanke (I have this book, but haven't got time to read it. Ben Bernanke is some big shot now of Federal Reserve in USA).
3. Principles of Corporate Finance by Richard Brealey & Stewart Myers (have read some chapters of the book, but not the complete book. was recommended to me by a management student)
4. Wall Street Journal or equivalent for your country ( Stay current with the market).
I would like to give links from Amazon to the books, but you can search yourself.
The key thing is that you have to be well-read and aware of what is going on in your country, and in your country's markets. Political systems and nature do affect the markets, hence the book on Macroeconomics.
--Vikas
First of all, there are a lot of different kinds of traders out there. You got market makers, buy-side, sell-side, day-traders, order entry clerks. All of these people would basically fall under the umbrella of a "trader", yet all of their jobs are very different. You say that you're interested in floor trading, so I don't know why there are so many posts about day trading - they're very different. Anyway, I was a market maker(floor trader) at the CBOE for 8 years. If you really want to do this, since you have no idea how to trade, my suggestion would be to find a specialist group to get on board with. Goldman Sachs bought Speer Leads and now has a large specialist group. There's also Susquehanna, Wolverine, Merrill, Interactive Brokers, G-Bar and many more. Basically, what I'm saying is that you need to find a specialist group that will help teach you how to trade and make markets. You can contact the exchanges to find out the largest specialist groups there. Maybe you already work for a firm that makes markets and you could transfer in house.
Most traders don't have great educations. Really smart guys with PhD's end up as quants and generally don't make good traders. I think they tend to over think things - sometimes you just have to wing it. But this is the thing, independent floor traders, the ones with the most autonomy are dying out, they just don't have enough capital to compete. What's left are these enormous specialist groups that are hiring "monkeys" to sit in the pit and watch a screen that tells them what to buy and sell. They don't think for themselves. The groups have computers that sit and crunch the numbers and aggregate all the different positions into a portfolio that they can model the risk of. That's where the guys with PhD come in. So you'll have one guy from the group selling sp500 futures and then all the rest of the traders in group might be buying individual sp500 stocks as an arb.
So it just depends what you really want to be doing. I left a little after the market topped because you could see that hard times were around the corner. Lots of things have changed since then but the generally trends of more computerization and consolidation persist. As far as equities versus options and futures, I think options are much more interesting. I think equity trading will be 100% computerized very soon. Option trading is harder to computerize just because so many people like to do spreads and it's hard to create a decent interface for that. But it will eventually happen.
In the end I don't know what to tell you. In many ways, market making on a floor is dying to be replaced by computerized trading and sophisticated computer systems that automatically aggregate and manage the risk. But you should already know that since you work in IT.
Yes, but the parent also said that paper trading is worthless, and that's blatantly incorrect. Just as with schooling, the hardest lessons can't be learned there, but it can give you the basics and prevent some serious disasters.
I never argued with the emotional side of it. I totally understand that.
"If you make people think they're thinking, they'll love you; But if you really make them think, they'll hate you." - DM
I moved from software dev to options trading. I must say those fields you consider have nothing in common. For successful day trading, my guess is being a lucky monkey will do, so just go ahead and try to survive the longest possible. You should just know that some are better equipped and informed than you are. it's not just about monitoring a specific company, it's about integrating all the information and make strategic thinking about the relations of credit risk costs, interests rates level, forecasted profits, and capital market structures changes. Aka it's not information you can get by staring at your news desktop. So you have to look at where you can get a hedge, by your skills or preference, and try to leverage on those. You will always start low in this domain, getting a bette feel of what's important, but have the ability to move quick. So if you are a good statistician, the best fit is a large bank for some quantitative strategies. If you are more of a probabilist, you can do options and/or structuring. If you are more of a good organizer, go where your skills will help, for instance an exotic options desk. Most importantly, talk with many people. Everyone has a different vision of what finance is.
I'm a student in Math and Physics whose spent several years working as a Software Engineer. I thought about becoming a quant and have spent some time researching how to get a job in the field. With this said, I present to you the results of my investigation. I don't claim to be an expert. However, my opinion is free, so take it as you will.
You've got a foot in the door...
The fact that you work for a bank is good. It may help you get a leg up on getting into a graduate program. Any experience you can get on a trading floor or working as a quant will be golden on your application. The key to the best Finance programs is that they want a high employment rate among their graduates. Pedigree is good. Experience is better. If you're an IT grunt at a place like Goldman Sachs, you practically halfway there.
Math, math, and more math...
If you're going the quant route, you need some math. You need to be conversant in Probability, Mathematical Statistics, Stochastic Calculus, and Information Theory.* There's a reason they hire Physics PhDs (the Ivy League kind) to do work as a quant. Realizing that the pool of disgruntled, yet brilliant physicists is fairly small another entry track among the professional Master's programs in Mathematical Finance has emerged.
Economics and Finance is good too...
If you're going to work on Wall St. you might actually want to know a little something about the market itself. Frankly, I can't imagine how someone could become a trader without some knowledge of economics. Most of the graduate programs seems to be unconcerned with your knowledge of this going into their programs. It seems that math is the ultimate litmus test for acceptance (whether this is good or bad is another question). I guess they figure they can "teach" you the rest.
Pedigree is king...
U. of Chicago, NYU, Columbia, Stanford, CMU, among others have decent Mathematical Finance/Financial Engineering/Computational Finance degree programs. Many of these programs can be completed part-time. Also, Stanford has a certificate program in Finance that you can complete via distance learning. From what I can tell, the certificate program is essentially a couple of core courses from the graduate program.
Network, network, network
SIAM has a Financial Mathematics fair every year. Look it up on the web. Put on a nice suit, polish up your resume, and go to it. Frankly, just taking the step of showing up with some intelligent questions, you bound to get some good insight into the profession.
Any responses/corrections are quite welcome. Like I said, I'm just an amateur myself -- so YMMV.
*Information theory is probably not a hard requirement. Information theory has always fascinated me and I've always been interested in Statistical Physics, Complex Systems, and AIT anyway. On a unrelated note, I've always wondered why Physicists are looked as great quants, when it seems the work smacks of being a good applied statistician.
What do you mean my sig is repetitive? What do you mean my sig is repetitive? What do you mean....
I am an engineer and I also have been researching this and playing the markets using simulations for about six months. I recommend you study the markets day to day and try to figure out WHY they are moving and which market you actually want to specialise in, usually you have to try each one to see whats a best fit for your personality and intuitive understanding. Saying that, I am interested in Forex and the best site for that seems to be Oanda purely because they don't bet against you and their spreads are extremely low for the majors, you can get instant fills and instant exits and there is no human involved in each transaction as its completely computerised. After you have figured out the rhythms of the market you choose...that takes about six months in itself... there are really only three pieces of advice you need to know to become consistently profitable. 1. Cut your losses - ALWAYS set a stop loss (this was one of my major downfalls for the first few months but all it takes is one big wipeout to understand why you need to do this, your instinct will be to hang on to losses in case they turn around- this is FATAL if not immediately then eventually.) 2. Let your winners run and set a trailing stop. (your instinct will be to cash in while you can and it takes discipline to resist the urge to take immediate profits) 3. Buy on the rumour sell before the news. (Example: The markets price things in early so by the time an event like the news of an interest rate rise comes along, its usually priced in already so that you might be thinking with three days before say the BOE might rise interest rates, people would be buying the GBP and selling the USD in anticipation of the rise. Wrong, they bought it on the first hint that interest rates might rise 10 days ago and as the event approaches they will begin to sell off the pound and buy the dollar. and the markets will get very range bound on the actual day of the announcement. anyway the point of this is get to know your market and how it reacts to news.) That said these 3 things may sound simple but the dicipline required to actually do them all the time is something that takes time to develop. Whoever said trading without money was not worthwhile is completely wrong. If you can't become profitable in a practice system, you will never make the transition to a live system because you don't have a profitable system in the first place. You also need to figure out your technique, whether you are going to follow trends or be a range trader for example. Whatever you do, make sure you understand the market you are interested in before committing cash otherwise you will get eaten alive, oh and be prepared for a LOT of frustration and anger in the first four months as the market can see to defy logical analysis. A website you might want to visit is investopedia. Hope this helps.
Depends if you are looking to trade stocks.