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Message: <blockquote data-quote="Author" data-source="post: 92182" data-attributes="member: 12902">There's a ton of thinking that goes on all day long. Between pricing products and hedging dynamically, we spend all day discussing our positions, deciding which ones we think will perform well and which won't. It's not trivial to just "get greeks" - these greeks very often represent enormous, multi-million dollar risks, some of which we like and some of which we don't. It's our job to sort out the good from the bad and work out how to make sure our position is made up of all the ones we think are good. We talk about how to improve our positioning in order to reflect our views of the market. In order to come up with views in the first place, we of course glean insight from seeing directly the various flows and where they come from, but we also spend a great deal of time pouring through data, charts, correlations, backtestings, etc. We have a ton of tools that we've made over time that can grab relevant data for us, and we have tools that can come up with a model price for us, but when it comes time to make a decision about a market view and how best to express it, and when it comes time to turn a model price into a dealable rate in a large size, those are very much human decisions. As traders, we're expected to be experts in translating what machines do for us into real life. Our models are all limited (read: wrong) in some way, and so while they're great in getting us the majority of the way to a price, if we just dealt off the model and hedged out the exact greeks of the model every day, we'd lose money. Further, once we deal these products, it's up to the traders to decide how to go about hedging them. There's not just one way to hedge. Sure, there's probably a standard way to hedge each first generation exotic, but the trader knows fine alternatives and can decide which is most appropriate in current market conditions. The trader knows he can get option X done more cheaply than option Y because he knows how similar things are trading in the market, the vast majority of which is not computerized - and even it it were it would be exceedingly difficult to give a computer the judgement it takes to make that decision. If you make the wrong call you can move the market against you and lose money on your hedge. All of the above - and surely I'm leaving more examples out in this brief post - make the job an impossible one for a computer to do profitably.I apologize that I did not make it clear that we do a lot of thinking on the desk, and I do hope this reply rectifies that mistake. What I was hoping that you would take away from the post was that we work very hard and very quickly. A lot of people out there like to think that traders are these guys that get paid a lot of money to sit at a desk and eat steak while telling sexist jokes all day. Half of the people who believe this despise the industry, and the other half want to be in the industry. I wanted to make it clear that it is not what we do, especially for people who think that the hard work will be over once they get an offer on the trading floor out of school. At times it's true that we don't get to think as much as we like to because we can be exceedingly busy and stressed out, but every single day we sit down at the desk we are expected to share our thoughts about the market and our book's positioning.</blockquote>

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