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What do trading desk managers look for in new hires? Industry veteran and futures trader Larry Levin chats with eFinancialCareers about the skills needed to succeed in today's increasingly electronic trading environment.
With experience as a trading desk manager for Lind-Waldock, and some two decades trading either electronically or from the floor of the Chicago Mercantile Exchange, Larry Levin trades the E-mini S&P and the E-mini Russell. He also heads a Chicago trading-education company called the Secrets of Traders. He makes clear today's recruits are a more educated and technically savvy group.
Tell us something about your career trajectory. How did you rise through the ranks?
Originally, when I got out of high school in the late 1980s, I went to college for marketing. I went to Columbia College for about two weeks, and decided it was better to go to Cubs games than college. My parents ordered me to get a job or get some other place to live. Friends of mine were working at the Chicago Mercantile Exchange, and they got me a job as a runner. I was making $3.35 an hour, literally running trading orders back and forth from the trading pit. Obviously things have become more computerized since then (laughs).
How was that first day there? I guess the trading floor can be intimidating?
My first day was a horrible experience. I was told to take an order to a certain pit, and I didn't know where to go. The bell rang and I ended up costing the broker $10,000. I was working for Lind-Waldock, one of the biggest firms then. I stuck it out, and thought it was exciting. I ended up getting promoted to a phone clerk, and so I put orders in using hand signals at a desk that did quite a bit of volume in the S&P 500 pit. In a few more months some people there were fired, and I literally stepped into a role in charge of the S&P operation in a relatively short period of time.
What are the most important things trading desk managers look for in new hires?
They're looking for someone with common sense, quickness - or an ability to think through and do things efficiently and correctly - and someone with a statistical mind, who's always thinking about the numbers, whether it's how many customers we need to get in today to make a profit, or watching a customer's position and recognizing whether it's against them or for them. You also have to be good with computers. You need to know about charts, and know good technical analysis.
Trading is like any other business, and so you need to start at the bottom, and there is no easy road. You'd probably start as a clerk, where you're not trading your own money or the company's money, not making any decisions, but simply putting in orders for customers or proprietary trading orders.
Where are the opportunities coming from today?
A lot of the proprietary trading companies are the places to be. There's one company here in Chicago that's only hiring MBAs, and they like training them themselves - even people with no trading background. There are a lot of arbitrage opportunities out there, and there are companies taking advantage of that. A lot of traders who've done well on the floor, and who have the computer skills, will get together the computer people they need and try the entrepreneurial thing.
I can't imagine someone today getting promoted like you did. Weren't people in the late 1980s much more entrepreneurial, not necessarily a heavily degreed crowd, with the MBAs and math PhDs you see today in trading?
That's absolutely true. I was in the right place at the right time, and it was a much different time back then. Today, the people that have a finance background in school, with an appropriate internship or relevant first job, will certainly have a better chance to acquire a job. Most of the trading jobs now, that are hiring, are 99 percent off the trading floor. They're in offices, trading electronically. I wouldn't be surprised if the trading floors went away in three years.
So, why has the nature of the person being hired changed?
It's simply because the trading has changed. It's almost all computer-driven today, and it's so much cheaper - as far as transaction costs and employee costs, whether you're running a business in the futures industry or with any financial instrument.
Trading experience goes a long way, and while I didn't go to college, most are looking for that today, as it's a more competitive world out there. When I first started, there weren't computers on the floor. I knew the important prices, but today charts are driving it. When you're a floor trader, you have the action, the noise, and the big institutional firms doing things, and you follow that. When you trade electronically, you don't have any of that, and all you have are the technical aspects - your math skills and your statistical skills.
Can you tell us a bit about your current trading efforts, and how the changing times are changing how you trade?
Well, I do maintain a seat on the floor, but I'm trading electronically. I do TV spots from the floor still for CNBC and Bloomberg, usually on a daily basis. But I don't trade on the floor anymore. I don't really feel there is a future there, even though I can still make money on the floor. If you want to be a trader, you need to change with the times. The future is electronic trading - so that's what I do.
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With experience as a trading desk manager for Lind-Waldock, and some two decades trading either electronically or from the floor of the Chicago Mercantile Exchange, Larry Levin trades the E-mini S&P and the E-mini Russell. He also heads a Chicago trading-education company called the Secrets of Traders. He makes clear today's recruits are a more educated and technically savvy group.
Tell us something about your career trajectory. How did you rise through the ranks?
Originally, when I got out of high school in the late 1980s, I went to college for marketing. I went to Columbia College for about two weeks, and decided it was better to go to Cubs games than college. My parents ordered me to get a job or get some other place to live. Friends of mine were working at the Chicago Mercantile Exchange, and they got me a job as a runner. I was making $3.35 an hour, literally running trading orders back and forth from the trading pit. Obviously things have become more computerized since then (laughs).
How was that first day there? I guess the trading floor can be intimidating?
My first day was a horrible experience. I was told to take an order to a certain pit, and I didn't know where to go. The bell rang and I ended up costing the broker $10,000. I was working for Lind-Waldock, one of the biggest firms then. I stuck it out, and thought it was exciting. I ended up getting promoted to a phone clerk, and so I put orders in using hand signals at a desk that did quite a bit of volume in the S&P 500 pit. In a few more months some people there were fired, and I literally stepped into a role in charge of the S&P operation in a relatively short period of time.
What are the most important things trading desk managers look for in new hires?
They're looking for someone with common sense, quickness - or an ability to think through and do things efficiently and correctly - and someone with a statistical mind, who's always thinking about the numbers, whether it's how many customers we need to get in today to make a profit, or watching a customer's position and recognizing whether it's against them or for them. You also have to be good with computers. You need to know about charts, and know good technical analysis.
Trading is like any other business, and so you need to start at the bottom, and there is no easy road. You'd probably start as a clerk, where you're not trading your own money or the company's money, not making any decisions, but simply putting in orders for customers or proprietary trading orders.
Where are the opportunities coming from today?
A lot of the proprietary trading companies are the places to be. There's one company here in Chicago that's only hiring MBAs, and they like training them themselves - even people with no trading background. There are a lot of arbitrage opportunities out there, and there are companies taking advantage of that. A lot of traders who've done well on the floor, and who have the computer skills, will get together the computer people they need and try the entrepreneurial thing.
I can't imagine someone today getting promoted like you did. Weren't people in the late 1980s much more entrepreneurial, not necessarily a heavily degreed crowd, with the MBAs and math PhDs you see today in trading?
That's absolutely true. I was in the right place at the right time, and it was a much different time back then. Today, the people that have a finance background in school, with an appropriate internship or relevant first job, will certainly have a better chance to acquire a job. Most of the trading jobs now, that are hiring, are 99 percent off the trading floor. They're in offices, trading electronically. I wouldn't be surprised if the trading floors went away in three years.
So, why has the nature of the person being hired changed?
It's simply because the trading has changed. It's almost all computer-driven today, and it's so much cheaper - as far as transaction costs and employee costs, whether you're running a business in the futures industry or with any financial instrument.
Trading experience goes a long way, and while I didn't go to college, most are looking for that today, as it's a more competitive world out there. When I first started, there weren't computers on the floor. I knew the important prices, but today charts are driving it. When you're a floor trader, you have the action, the noise, and the big institutional firms doing things, and you follow that. When you trade electronically, you don't have any of that, and all you have are the technical aspects - your math skills and your statistical skills.
Can you tell us a bit about your current trading efforts, and how the changing times are changing how you trade?
Well, I do maintain a seat on the floor, but I'm trading electronically. I do TV spots from the floor still for CNBC and Bloomberg, usually on a daily basis. But I don't trade on the floor anymore. I don't really feel there is a future there, even though I can still make money on the floor. If you want to be a trader, you need to change with the times. The future is electronic trading - so that's what I do.
Link