by Jerry Chi Comments (112)

48 Hours in the Life of a Sales & Trading Intern

48 Hours in the Life of a Sales & Trading Intern

The following takes place between 6 AM and 6 AM, at a large investment bank in Tokyo.

Events occur in real time.

6:00 AM: The alarm goes off. I really want to snooze but via sheer willpower I jump out of bed – need to impress my boss and co-workers.

6:30 AM: For my breakfast, I buy bottled tea and onigiri (rice balls) at a convenience store. I listen to the Nikkei Shimbun (analogous to the Wall Street Journal) podcast while walking to work.

6:50 AM: I am one of the first people at the office. I breathe a sigh a relief after confirming that my boss isn’t here yet – sometimes he comes in early too.

I had promised myself that I would prove to my boss what a hardworking intern I am. I hastily start the menial task of copying and passing out materials (e.g. research reports, recap of other world markets, latest rates data, etc.) to each trader’s desk. I wonder how many of the traders actually read what I pass out.

8:00 AM: The trading desk is almost full now. I am skimming articles on financial websites and Bloomberg, preparing myself to sound well-informed on the markets when talking to people for the rest of the day (Note: Many trading interns do not get access to Bloomberg since it is very expensive… to the tune of $1500 USD per month). I try to predict how the news will affect the markets for the day.

8:15 AM: All the equity traders have arrived at their desks – fixed income trading is on another floor. Everyone gathers for our morning meeting. Some of the salespeople that work with the traders float over to listen in.

Traders that specialize in each sector or type of trading – vanilla equity, options, portfolio trading, agency trading, etc. – give quick overviews of what happened the day before and their predictions for the upcoming trading session.

What happened overnight in the US/European markets is also naturally a point of discussion, since markets tend to follow each other.

Sometimes I struggle to understand all the jargon or the specific concepts underlying their comments, but overall I can grasp what they’re saying. Everyone speaks in English at the meeting, but many revert to Japanese afterward.

9:00 AM: The Japanese stock markets open. Today I am spending the first couple hours sitting next to an equity options trader, having gotten his permission the day before. I make sure to stay especially quiet right before and after the market close, since those are the busiest times for traders.

Out of his 6 monitors, he has Excel open on 2 screens, Bloomberg open (usually charts) on another 2 screens, Reuters open on 1 screen, and another screen for Microsoft Outlook. The numbers in Excel update every second. I see the trader wrinkle his eyebrows and I wonder why.

10:00 AM: I wait for a moment when the trader seems less busy, and I ask him about what happened. Apparently his gamma had not been hedged as well as he had thought – shortly after the market opened his gamma rose to a higher level than he had anticipated, which meant more risk than he wanted.

I nod in appreciation; I know that some other traders would not have bothered to answer my question.

11:30 AM: Today is a volatile day in the market, and many traders don’t feel comfortable leaving their desks for lunch. I am sent to McDonald’s to buy burgers for most of the equity traders. I’m OK with doing a bit of grunt work; after all, I am an intern, and I’m way better off than the interns in Liar’s Poker.

12:30 PM: By now my eyes and neck are a bit sore from looking at the equity trader’s 6 screens while sitting at the edge of his desk. The market is slowing down a bit now anyway, so I return to my own desk and read some articles and midday market recaps.

I work on the stock picking analysis project that my boss assigned to me, but I know I won’t be able to get any serious work done until the late afternoon.

1:30 PM: I figure I’ve annoyed the equity option trader enough for the day, so I try to find someone else on the desk that’s approachable enough to let me sit by them. I end up sitting next to an equity trader who focuses on retail stocks. Unfortunately, he is one of the more introverted types, and it’s hard to get him to say much. I see him make two trades for the rest of the day.

3:00 PM: Japanese stock markets close. Of course, there’s still after-hours trading, and much work to be done. I see the equity options trader I sat with get up and go to the coffee room. I “coincidentally” happen to go to the coffee room for a break.

There, I thank him again for letting me sit with him, and I do the best job I can of commenting on what happened in the market that day, while asking his opinion on a few points.

He comments that I am pretty knowledgeable for an intern, and it seems like I have made a good impression on him. I think to myself, “Yes…. one step closer to getting a full-time offer…”

4:00 PM: I go out for coffee with a guy from the middle office, an appointment made previously. He’s one of the junior guys, so he’s not too much older than me.

As an intern, not everyone is willing to go out to coffee with you – and sometimes you can learn a lot from people other than the managers and star traders.

I milk him for information: Which traders are more approachable? Exactly how do you interact with the traders? What happens when a trade doesn’t settle correctly? We also bond by talking about which girls in the office are cute.

5:00 PM: My manager takes me to a small conference room for my 10-minute weekly meeting. How much have I learned so far? Which type of trading was I most interested in? Did I have any questions? He reiterates that the competition is tough and that I’ll have to keep working really hard to impress everyone if I want a full-time offer.

5:30 PM: I start working on my stock picking analysis project once again. By downloading data (both fundamental data and technical analysis data) from Bloomberg into Excel on thousands of stocks, I try to figure out a handful of stocks that would be good long trades, and some that are good short trades. This is only one of several projects I am working on.

7:00 PM: Many of the traders have left their desks by now. I wander around the trading floor trying to find someone who’s not in a hurry to go home, and I try to start a conversation to learn something about their trading that day.

Sometimes traders are more relaxed at this time of the day and it’s easier to talk to them.

7:30 PM: I get an email with a link to 50-page economic report from the research team. I interrupt my work to skim the report.

8:00 PM: Almost all of the traders have left the office. Why is my manager still here?

8:30 PM: My manager finally goes home. Whew. I try to wait at least 15 minutes after he leaves so it doesn’t look like I am leaving right after he does.

While there’s less face time in trading compared to investment banking, you still don’t want to leave before your boss – especially as an intern.

9:00 PM: Meet up with a friend and some of her friends for dinner. Most of them are done eating by the time I arrive, but at least I get to say hi.

11:00 PM: Arrive at home. I plan to go to sleep within 30 minutes but after checking email, I end up staying up past midnight. I cringe when I think about how hard it’ll be to wake up the next day.

Then I think about my investment banking intern friends – who are still at the office – and I feel a bit better.

Day 2

5:40 AM: Wake up. I had set my alarm earlier because the day before I had trouble finishing the grunt work on time. I pummel my own head in an attempt to feel awake.

6:30 AM: I arrive at the office… and there is only one other person there. Hmmm, am I working too hard? I tell myself it’ll all be better once I am a full-time employee – which is usually true, at least in trading – and then I begin copying research materials that need to be passed out later.

7:00 AM: The copier is jammed, and I didn’t notice for 15 minutes. Crap. I start to multitask, using 3 copiers instead of 2.

8:00 AM: Today, before the general traders’ meeting, I go to the agency traders’ smaller meeting, which is only in Japanese. The agency traders are responsible for executing the large orders placed by large buy-side institutions, like mutual funds.

They talk mostly about news and overseas market movements, but they also talk about the previous day’s order flow, and about how a research report produced by our firm today might cause a lot of orders for a specific stock. The meeting lasts about 10 minutes.

9:00 AM: The Japanese stock markets open. Today I am spending the first couple hours sitting with the agency trading team. Agency trading is really different from proprietary trading because all the decisions about what and how much to trade are decided by the client – the only decision made by the trader is how to divide the order into smaller trades and when to execute them.

The trader I am sitting with has been doing this for years, and is able to constantly submit trades while barely looking at the screen and talking to me at the same time.

I pray that his discussion with me doesn’t cause him to make any mistakes. Fortunately, he doesn’t have fat finger syndrome. The trader has 4 screens – 1 for order submission and order details, 2 for Bloomberg (charts), and 1 for email / browsing. I am able to ask a dozen or so questions, which is more than usual.

11:00AM: The Japanese market closes for the lunch break (1.5 hours). I go out to lunch with the agency traders, who have less work than the other traders since they don’t have to do as much analysis.

Half of our conversation is about trading, and the other half is about Japanese celebrities. My knowledge of celebrities helps me bond with them… which might increase my chances of getting a full-time offer? I later realize that bonding with traders and being liked are quite important for getting an offer.

12:30 PM: Since the agency traders don’t seem to be annoyed by me, I keep sitting with them until the markets finally close at 3 PM. I start to get bored and tired near the end, but I keep myself busy thinking of new questions for them.

3:30 PM: I had previously made an appointment for coffee with one of the sales traders, but he cancels on me for the second time. Maybe I just should give up on talking to this guy.

4:00 PM: The Head of Prop Trading is having a meeting with some other traders and some middle office guys and suddenly calls me and another intern into the meeting. He wants me and the other intern to help with trading commission calculations, and I have to collect some of the information necessary to do so myself.

I am surprised that a bulge bracket investment bank doesn’t precisely track its trading commissions – but later, I realize that even the biggest financial institutions are full of problems you wouldn’t expect.

I think about how I already have a big trading analysis project AND an equity research project AND grunt work AND other random stuff I have to do, but at the same time I can’t bring myself to say no. This guy is an MD, so I’ve got to impress him. Fortunately the other intern pipes up and finds excuses for why we can’t help.

4:30 PM: Afternoon snack. I go downstairs and make sure nobody I know is in the room, and then I eat a sandwich while massaging my eyes and neck. I don’t want to come off as stressed or physically strained to anyone.

5:00 PM: I spend an hour trying to figure out some Excel VBA for automating organization of data in the trading analysis spreadsheet I’m making. After some trial and error, I get it to work.

The other intern sucks at Excel and is having trouble doing his analysis, so he comes to annoy me with questions. I wonder why an MBA knows less than me about Excel.

7:30 PM: I eat some ramen. Mmmmm. No matter how unhealthy or cheap it is, I still love ramen.

8:00 PM: I feel really tired, so instead of working on my project I just read tons of financial articles. Nobody is paying attention to what I’m doing, anyway.

8:30 PM: Half of the trading desk is still here, mostly junior people. What are they still doing? I go over and talk to them – they are planning and analyzing trades for the next day.

I conclude that if these people weren’t workaholics, they probably wouldn’t be here. Then again, if you’re making or losing millions of dollars every day, sometimes overnight, maybe you’d never be comfortable being away from work anyway.

9:00 PM: I go home and cook noodles with canned fish, seaweed and soy sauce and eat them while watching Japanese music videos. Actually, it’s a pretty good way to cool down. I read a chapter of Future, Options, and Other Derivatives by John Hull.

11:00 PM: I crawl into bed. Wow, I’m going to get almost 7 hours of sleep!

Day 3

6:00 AM: Wake up. Back at it…

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About the Author

Jerry Chi graduated from Stanford, worked in equity research and trading in Japan, and then started and sold his own prop trading firm in China. He earned his MBA from Wharton, and then worked at Google and Supercell in Japan.

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by Jerry Chi Comments (33)

Credit Derivatives Trading in Tokyo: Interview

Credit Derivatives Trading in Tokyo: InterviewContinuing our series of interviews with bankers / financiers in different parts of the world, today we’re speaking with a friend of mine from Stanford who worked in credit derivatives trading in Japan and then founded his own trading firm… after only 1 year of work.

A lot of readers are interested in going to Asia, and an equal number are interested in starting their own investment firms one day – so I figured this would be a good read.

1. Tell us about yourself.

I’m Taiwanese American, born in the states and raised in Silicon Valley. During my studies at Stanford, I had the opportunity to study abroad and intern in Japan.

It was so cool that I decided Tokyo was the place I wanted to be after graduation. While in Tokyo, I gained experience on the equities trading desk of a major U.S. investment bank and the fixed income trading desk of a major European investment bank.

Now I run my own trading firm out of Beijing, but I trade U.S. and Japanese equities.

The Recruiting Process

2. What was the recruiting process like for trading?

I applied for full-time jobs by going to the Boston Career Forum, which is the largest Japanese-English bilingual career fair in the world.

Many Japanese and non-Japanese find their jobs at top investment banks in Tokyo this way. Before attending the career forum, make sure to submit your resume in advance and fill out any online forms/questionnaires of firms you are interested in.

The interview process at the career fair can be grueling – possibly more than 15 interviews jam-packed in one day.

Most top-tier firms will interview you at least a half dozen times before giving you an offer, which might be given out on the spot or a few weeks later.

For finance professionals already working in Tokyo, much of the hiring goes through acquaintances, former colleagues, and headhunters.

Trading interviews are naturally different from investment banking interviews – for students, there will be some basic fit questions and math / brain teaser questions to test quantitative aptitude. For experienced professionals, the questions will focus on previous trading experience and your understanding of financial markets.

3. Was the process any different because you were applying to Japan?

For US or European investment banks in Tokyo, the process is pretty much the same as everywhere else, except you sometimes go through different channels – such as the Boston Career Forum – rather than sticking to on-campus recruiting or networking.

At Japanese securities firms, recruiting happens much earlier (over a year before the job starts). I’m not sure offhand how much the actual process differs because I didn’t really apply to any Japanese companies.

In terms of getting offers, commitment to living in Japan and ability to speak Japanese come into play, but language ability is not as crucial to trading as it is to other finance jobs like investment banking or private equity.

4. How much networking did you do when getting your job? How essential was that?

My internship at the equity trading desk was due to networking with an alumnus.

I found the fixed income job via the career forum I went to, so no networking was required there.

I got in without a huge networking effort for 2 reasons:

  1. I went to a “target” school and had a finance background.
  2. The market was much better when I was recruiting.

These days networking would be pretty much required to get in, unless you get lucky or have some crazy connection(s).

The Job Itself

5. What did you think the job would be like before you started?  How did that change once you got there?

I expected the fixed income trading job to be exciting and extremely quantitative, but I later realized there was a lot of repetition and that most of the real quantitative work was being done by the quants, not the traders.

The traders simply use the tools developed by the quants.

Trading volume and the outstanding notional amount of non-government fixed income securities in Japan is pretty small. Trading volume of Japanese equities is high but tick-sizes are controlled so that stocks seem to move much more slowly than U.S. equities.

Traders used to fast-paced U.S. markets might be somewhat turned off by this. That said, each market has its quirks and some people enjoy trading the Japanese capital markets.

Also, I expected to spend most of my time trading – but a lot of my time was actually spent resolving IT issues and organizing data.

6. Is there any activity in credit derivatives (where you worked) these days? Or is it completely dead?

Yes, there is. The activity of credit default swaps actually increased after the credit crisis started, since previously Japanese companies didn’t default much and the market didn’t move much.

The Itraxx Japan CDS index, for example, moved about 3 basis points in the half year before July 2007, and then exploded by over 200 bps in a few months.

On the other hand, try selling a synthetic CDO stuffed full of subprime mortgages to a conservative regional Japanese bank… yeah, good luck. It was already really hard before the credit crisis, and now it’s even harder.

Some investors are still willing to take risk given that corporate credit has pretty juicy yields now – but overall, the already small group of credit trading professionals in Tokyo has gotten even smaller since the credit crisis.

7. What other options were you considering? Were you glad you chose what you did in terms of geography/industry?

I only considered jobs in Japan since I liked the country so much.

I was also thinking about consulting or equity research – but those are also more difficult to get into and require native speaker level proficiency.

In retrospect I might have chosen a derivatives structuring job over credit trading, since I am analytical and disliked the repetition involved with flow trading.

Culture / Pay / Models & Bottles

8. Do bankers still lust after models and bottles in Japan? Or is it just sake bottles?

Haha. Oh man. Some guys come to Japan just for this.

If you want to indulge in in Tokyo, it’s pretty easy to do so – until your boss wants you to work overtime.

I won’t get into all the details here since this is PG-rated, but just use your imagination.

One common practice is “goukon,” or blind date parties, where 5 guys and 5 girls might go out for drinks together. I organized one myself before. Even non-finance people in Japan work long hours and it’s hard to meet people otherwise, so these have always been popular.

The selection of bars, pubs, and nightlife in Tokyo is also awesome (not just sake bottles; it’s very international). It’s not like Hong Kong where there is basically only one area (Lam Kwai Fung) to go drinking.

That said, you should come to Japan because you really like the country, not for the models / bottles aspect.

9. What was the culture of your firm like? Was it more because of the firm itself or because you were in Japan?

Foreign investment banks in Tokyo have a mix of the parent bank’s culture and Japanese culture. That means:

  1. Longer working hours than Western counterparts, but maybe not as long as Japanese securities firms.
  2. It’s a meritocracy, and young people can get paid a lot – unlike in Japanese firms, where you typically get paid a fraction of US salaries.
  3. Women are valued and respected more than at Japanese companies, but maybe not as much as they are in the West.
  4. Diversity is more important than at Japanese firms.

In my view, most people would be crazy to work for a Japanese securities firm over a foreign investment bank.

10. What were the hours / pay like in Tokyo?

My starting salary out of college was about 7 million yen base plus a 2.5 million yen bonus, so about $100K USD total. If you start out at a Japanese securities firm your salary could be as low as 1/4 of this (yet another reason why lots of Japanese youth still live with their parents – try getting by in Tokyo on $25K per year!).

Hours were around 13 hours a day plus an occasional Saturday. I know traders in Tokyo who work from 10 hours a day to 17 hours a day, but most are in the 11-14 hours per day range.

Just like at any other trading firm, your salary can quickly escalate into millions of USD depending on your performance – but that rarely happens and given the financial crisis, most firms probably won’t let you take that sort of risk anymore.

11. These days many readers are concerned about how they’ll pay for their apartments in Manhattan given lower pay – what was that like in Tokyo, where real estate is even more expensive than New York?

Keep in mind, everything in Japan – even the most expensive apartment you can find – is much smaller than what you’d find in the US or other parts of the world.

I paid about $1,000 USD per month for a 25 square meter (270 sq ft) place but the location was excellent.

If you are willing to take a short 30 minute commute then your rent can be a lot cheaper. The public transportation system in Tokyo is second-to-none, and Japanese products can help save space in the apartment (like really small but effective vacuum cleaners). Some companies also use an accounting trick to pay for an employee’s housing before taxes, then subtract it from the employee’s pre-tax income.

Next Moves / Starting a Trading Firm

12. You didn’t stick around too long before starting your own firm – why did you leave the industry when you did?

I left my fixed income trading job in Japan because I wanted to start my own company, and because I felt my job was overly repetitive.

I’d like to say that I foresaw the credit crisis and all, but it was just good timing that I got out before things turned really bad.

13. Many readers are thinking of starting their own investment firms one day – what was it like going through that experience after having worked in trading for only a year or so?

Staring my own trading firm was a pretty tough experience, but I learned a lot. My advice: do not do it for the money.

You need to think carefully first about your desired work-life balance and your passion, and only then should you think about the money.

Although my firm is doing OK, I think I started it a bit too early on in life – I would have benefited from a bit more experience at a big company.

Starting the firm in China, of all places, was also “interesting” to say the least. Founding a company in any location is really tough, but all sorts of factors made it even more difficult and grueling here.

14. Where do you want to be 10 years from now?

I hope I can be back in Tokyo, and I’m open to career options outside of finance. I haven’t done too much long-term planning because things change too quickly – if you had found me 2 years ago, I never would have expected to be running my own trading firm today!

15. Many readers are thinking about going to Asia to find opportunities in finance/business these days – any advice or recommendations on that?

I think it is an excellent time to be coming to Asia, especially Hong Kong, Singapore, Beijing, and Shanghai.

If you choose Tokyo, your career prospects might not be as bright but the lifestyle is great. Beijing and Shanghai have lifestyle issues (like pollution, etc.) and the financial system is not as advanced, but they are improving and growing rapidly.

Singapore and Hong Kong are the most advanced financially, they have excellent corporate-friendly legal systems, they are more diverse, and everyone speaks English.

16. Any words of advice for anyone interested in going into trading today?

Be confident but don’t be overly confident. Don’t think that you are always smarter than the market. Do your own due diligence when entering into a trade. Make sure you can handle the pressure of losing money before you take the job.

Trade because you really like doing it – not just for the money.

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About the Author

Jerry Chi graduated from Stanford, worked in equity research and trading in Japan, and then started and sold his own prop trading firm in China. He earned his MBA from Wharton, and then worked at Google and Supercell in Japan.

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