Wall Street Prep

Breaking into Sales and Trading

Everything you need to know about how to get into the sales and trading industry

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I’ve had a lot of people ask me how to break into sales and trading. I’ve mentored both current students and mid-office professionals looking to move onto a job on the trading floor. I’ve interviewed countless candidates and seen the pitfalls. Nothing is more satisfying than seeing my mentee land the coveted sales & trading gig in a major investment bank after getting the job of their dreams. Here are my key strategies for breaking into sales and trading.

Step 1: Understand What You Actually Do in Sales & Trading

Sorry, that stock-picking skill set may be great for equity research or buys side careers, but not sales and trading.It never seems to shock me how many people who want to go into sales and trading don’t know what it is: “I want to be a trader because I can pick stocks. Look at these 3 penny stocks I bought that are now worth 10 times their value.”

In sales & trading roles, you act as a market maker. Sales and trading is the marketplace of an investment bank that buys and sells stocks, bonds, and derivatives. Salespeople work with asset managers, hedge funds, insurance companies, and other buy-side investors to pitch ideas and to buy or sell securities or derivatives.

How do I Break into Sales and Trading?

 There are three primary paths to get a sales and trading job:

  1. Convert an undergraduate internship to a full-time offer
  2. Enter as a quant after completing a Master's or Ph.D. degree
  3. Internally transfer from the mid office to the front office

Securing an Undergraduate Internship 

Here is an ideal timeline that a “typical candidate follows.” Don’t freak out if you are feeling like you are off-track. I completely missed the track here and ended up at J.P. Morgan right out of college and stayed there for 10 years.

College Selection

  • Focus on a target school that has a track record of placing students into sales and trading roles. You’ll have a strong alumni network to draw on and a large number of banks that recruit on campus.
  • Not recommended: selecting colleges primarily based on male:female student ratios. (I would have improved my chances if I followed this advice, but still managed to start at J.P. Morgan despite how my priorities were wired in at sixteen.)

Your Freshman Year

Consider business fraternities or other networking opportunities where you can mix with upperclassmen who are interested in finance.

  • Think about your resume and focus on how to build it out.
  • Analyze course selection: GPA is more important than academic rigor
    • Getting an A in regular Calculus is more important than a B+ in Advanced Calculus
    • Balance out your course load between hard sciences and liberal arts courses 
  • Choose extracurriculars that show your interest in finance (i.e. finance clubs). 
  • Consider business fraternities or other networking opportunities where you can mix with upperclassmen who are interested in finance. These will be your alumni contacts during recruiting season.
  • Immerse yourself in the financial markets. Follow business news and headlines that move markets.
  • Secure a summer internship. Ideally, an office role related to finance that shows your interest in a career in sales and trading.

Your Sophomore Year

  • Learn the jargon of the trading floor. Know what the different asset classes and roles are. Attend bank information sessions and learn about timelines and opportunities.
  • Position yourself for a sophomore internship. Banks are increasingly offering sophomore internships, but any financial services related internship would be helpful. I was a lifeguard in my sophomore summer, and that wasn’t particularly helpful.
  • Research and plan out the banks you want to target for your junior internship. This is the one that really counts, as the majority of sales and trading full time hires will come from this intern class.

Your Junior Year

  • Carefully note the application deadlines and dates for company presentations for your target banks. Refresh the careers page during the fall of your junior year as applications open up.
  • Reflect on your summer internship and craft and hone your pitch for your junior internship.
  • Take a weekend trip to New York and visit the banks that interest you for informational meetings with alumni or other connections. Plan a trip with multiple classmates to maximize the number of meetings you can have as a group.
  • The recruiting process begins early, with summer internship applications open as early as October.
  • Most interviews occur in January and February, with offers wrapped up by spring break.

What Can You Expect From S&T, Securities, or Markets Internship Recruiting?

Recruiting has changed in recent years. I used to recruit at Cornell because my younger sister studied there. I would leave mid-afternoon with about twenty or so colleagues, fly in on a small 37 seat turboprop jet, have an early evening meet and greet where I hand out a hundred or so business cards, and then meet my sister for dinner afterward. We’d fly back the next morning on a 6 am flight and arrive back onto the trading desk halfway into the trading day. Traders don’t like being away from their desk and it just wasn’t a great use of time.

What you’ll see now is more online (HireVue) interviews and online games and simulations. The online interview is conducted the same way as live interviews and is split into three main categories: technical, brainteasers, and fit.

Technical Questions

Do you know option theory? These will test some basic finance knowledge. The interviewer wants to know you care about the markets enough to learn some of the basics.

  • Do you know bond math?  
  • Can you talk about the markets? 
  • Do you have some idea where the S&P500 is trading? 

In My Experience ...
I flunked one interview because I didn’t know what duration was. I should have spent more time studying bond math, and maybe taken more finance courses instead of my Beaches & Shorelines course where my homework over spring break was to bring back some sand. I hit the books after that interview, learned what duration was, saw it in action on the trading floor, and can now teach it to you.

Brainteasers

These are designed to test how you think. The interviewer tries to catch you off guard and asks you to solve an abstract question while testing your arithmetic skills. Why is this important in the age of computers? If you can’t figure out your fractions and eighths, you might struggle to mark-up a bond in the right direction.

Fit-related questions

These questions tell the interviewer if you have done your research and how you'll handle a fast-paced, high-stress environment. You’ll be surprised how poorly some really smart people can do on the fit questions.

Converting an Undergraduate Internship Into an Offer 

Most (often > 90%) newly hired S&T analysts come from the intern class.

The odds are certainly in your favor once you get your internship. At most banks, a large majority (sometimes 90%+) of new hire analysts come from the intern class. Most junior intern slots generally have a seat for a full time hire the next year. With an internship in hand, it’s your job to lose.

You should think of the internship as a 3 to 4-week interview process. Around the halfway point, your desk will need to decide on a yes or no such that return offers are prepared for all the yeses on the last day of your internship. 

Your first impression is important. I had one intern lecture me that I didn’t know what FX stood for. This intern claimed that FX stood for fixed income and not foreign exchange. Part attitude, part lack of knowledge; that intern didn’t get a full-time offer. 

Arrive at the internship with a good attitude and be ready to work. You won’t be licensed to trade, so you can’t take orders and do much. You’ll mostly shadow and ask questions.

Banks used to ask interns to pick up coffee and food, now that is frowned upon. Still, offer to go pick up coffee with someone and use it as an opportunity to network and build a good impression for yourself. You’ll likely get a project partly to showcase that you’ve learned something related to your assigned asset class and partly keep you busy. 

The best way to position yourself for your internship is to learn as much as you can about the product and the markets beforehand. Treat the internship as a weeks-long live interview where you want to appear smart and knowledgeable.

If you're hoping to break into Sales and Trading, getting comfortable with Bloomberg will give you a leg up.

If your school has a Bloomberg terminal, use it and get comfortable with it. Bloomberg provides trial subscriptions to interns. If you’ve listed “Bloomberg Certified” on your resume, you best know how to pull up basic functions such as TOP, WEI, or DES.

You can actually become Bloomberg Certified by watching videos on your own computer without actually ever using a Bloomberg terminal. Be forewarned — while this certification can be used to demonstrate your proficiency, it can open the door to extra scrutiny, so be sure you know your stuff if you plan to use it.

What happens if your group doesn’t have a spot? Should you focus your attention 100% to networking? If you as an intern are constantly gone and meeting other people, it doesn’t leave a good impression with your existing group. I would be open and transparent. Your group will support you as long as you don’t look like you have one foot out of the door. 

In My Experience ...
One year, I had two interns for one spot. One intern was a great fit for a fairly quantitative role, while the other one was not a great fit, but went to the same school as my MD. The intern that wasn’t a great fit had a great attitude and tried hard every day and that won me over. I had a chat with one of my friends on the Cornell recruiting team. He was venting about his intern, and that intern wasn’t getting a return offer. I made an introduction, introducing my intern that needed a spot to my friend. That intern was a great fit for his desk, got a return offer, and is still working on that desk.

Plan B: What Happens if You Don't Get an Offer? 

Sometimes you don’t hear back. You’re watching your application in pending status. You may get some closure with a short rejection letter. Thanks but no thanks.  It’s after spring break in your junior year and you don’t have a sales and trading internship, what should you do?

Focus on crafting your pitch around what you did over the summer in lieu of a sales and trading internship and how you can differentiate yourself from the other candidates. 

First, take the best option you have for your summer. You’ll need to explain what you did and why. I taught SAT classes at Kaplan and used it as an opportunity to develop my public speaking and presentation skills. It also helped me improve my skills at solving brainteasers and logic games.

Next, you need to broaden your search and focus on a full-time offer. Smaller banks and regional banks are often overlooked. Also, consider the trading groups of private banks or asset management departments.

Focus on crafting your pitch around what you did over the summer in lieu of a sales and trading internship and how you can differentiate yourself from the other candidates. 

Another option to consider if you missed out on your junior internship is whether you can arrange an off-cycle internship. Smaller firms are more flexible here than larger firms. Taking a semester off from school to do an internship could potentially delay your graduation date, which in this case is a good thing, as it opens up opportunities to participate in the summer internship recruiting cycle the following year.

Don’t just limit your search to the US. Recruiting cycles in Europe and Asia are different. I got a springtime internship at a bank in London.

Other Avenues to a Sales and Trading Career

Quantitative Masters/Ph.D. Route

While the undergrad internship route is the most common method of breaking into sales and trading, the quantitative master's degree is an option for roles that require significant math and analytical skills. This route isn't an entry point for cash equities or bond sales but specialized positions like fixed income research and exotics trading roles.

Quantitative research and strat roles also come through these programs. Good candidates for this path are mathematicians, computer scientists, statisticians and engineers who work in the financial services industry.

The difference in roles is essential to highlight. If you wanted to get into sales and trading but missed the opportunity to get in during undergraduate recruiting, some might look to a quantitative master's degree as a second chance. However, you must genuinely love math, programming, and have significant quantitative skills to consider this route.

Internal Transfer: Mid Office to Front Office

What happens when a promising young trader takes an exit opportunity at a hedge fund or a different bank?

The day they provide notice that they are leaving, the trader is escorted out of the building and is no longer allowed to trade for that firm. They will still get paid for what is known as a gardening leave, the time where they are not allowed to work for another firm because of knowledge of their former firm's positions and client information.

But now there is an open spot on a trading desk that must be filled quickly. But how? Undergraduate hires require a long lead time to acquire; an external hire will take time as well, not only in the selection process but also to take into account their own gardening leave. The most common solution is to transfer someone from the mid office to the front office. The mid office person knows the people, product, and systems already and can quickly be trained to fill the trading role.

How to Move From Mid Office to Front Office?

These opportunities are rare, and sometimes it comes down to being in the right place at the right time. Any open spot will be competitive; there will be many eager mid-office people looking for any open front-office spot for a pay bump and a career boost. In my example with my mentee, two spots were open for internal transfers out of a 22 person new hire class.

To differentiate yourself, not only do you need to be likable, you need to show that you are competent. The responsibilities of a mid office role are focused on processes and controls.

I’d imagine most of the bank’s mid office and operations team were looking for that spot. It doesn’t need to be in the same asset class, my mentee worked in the rates mid-office and moved to equities front office.

To differentiate yourself, not only do you need to be likable, you need to show that you are competent. The responsibilities of a mid office role are focused on processes and controls.

The kind of training you'll receive in an operations position centers on knowing how to use the systems and how to run the processes. Most mid office professionals don't get the formal training in economics, option theory, or bond math that the new hire sales and traders get during their on-boarding and orientation, so hiring managers for an internal transfer will look for candidates who have independently learned these skills, as they will want to fill the role with someone ready and able to start right away.

The Future of Sales and Trading in an Automated World

These days, the composition of a Wall Street trading floor includes more coders, quants, and structurers. Additionally, some salespeople are part of solutions teams or marketing teams designing more complex products than they have in the past. 

Technology and automation have changed the day-to-day workflow for sales and traders over the last 15 years. Repetitive tasks have now been automated. Simple products such as cash equities and FX spot have largely moved onto electronic platforms. The average salesperson or trader needs to understand how complex derivatives are priced and traded and needs to have a higher quantitative skillset.

Integrating technology and automation has increased the speed and reduced the cost of trading certain products, with these products now serving as building blocks for more complex derivatives that are made more easily tradable.

Looking at the composition of a Wall Street trading floor, you'll find more coders, quants, and structurers. Additionally, some salespeople are part of solutions teams or marketing teams designing more complex products than they have in the past. 

Instructor-led S&T Boot Camps

We've created the Wall Street Prep Sales & Trading Boot Camp from the same materials we teach new hire salespeople and traders at major Wall Street banks. This is a three-day course designed to teach the economic skills, option theory, and bond math that you are expected to know before starting an internship or before moving from the mid-office to the front-office.

Click Here to Learn More about the Wall Street Prep Sales & Trading Boot Camps.

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