• C++ Programming for Financial Engineering
    Highly recommended by thousands of MFE students. Covers essential C++ topics with applications to financial engineering. Learn more Join!
    Python for Finance with Intro to Data Science
    Gain practical understanding of Python to read, understand, and write professional Python code for your first day on the job. Learn more Join!
    An Intuition-Based Options Primer for FE
    Ideal for entry level positions interviews and graduate studies, specializing in options trading arbitrage and options valuation models. Learn more Join!

Market Risk vs. Trading

vikramsj

Joined
6/11/09
Messages
19
Points
11
I have heard from some people in industry, that jobs in Market Risk are a good place to start if you are unsure whether or not you wish to eventually become a trader. Just curious how true this really is. How closely related are the responsibilities of a market risk analyst to that of a desk strategist/trader. Does it really make for an easy transition? From what I have seen most recent quant graduates that choose a route in Risk management, usually end up staying with it.
 
Going into trading is hard, no matter which area you are coming from. Not sure who you heard it from but he made it sounds like market risk is the brewing ground for future budding traders. If there are better offer available, I doubt people will choose to go into market risk so they have a better jump to the vacant trading seat.

The recent hiring reality has been "you get what is available to you" and there are more risk management positions out there than anything else.

Also, generalizing the job title is not encouraged in this field. "Market Risk Analyst" at one bank doesn't necessarily do the same job, or have the same skill set at another bank. Same thing applies to "Quant", "Quant Analyst". It's not like "dentist" where "drill, fill" routine is universal.
 
Trading vs Risk vs Everything Else

Andy, one doesn't "jump into [a] vacant trading seat". That's just not the way it works. People have to be trained, then they sit on the desk for a while - often doing support work. And while risk management does differ from firm to firm, the basic job types - reporting, analytics, IT, desk coverage are VERY similar.

It's unlikely that people reading this forum will be able to go straight to trading. They're better off doing model review, quant development, or risk management first to prove their mettle and their dedication. They may also find that these are more rewarding careers than trading. Lesser funds are filled with third-rate traders who could be more successful (and happier) finding careers more suited to their talents and personalities.


Andy said:
Going into trading is hard, no matter which area you are coming from. Not sure who you heard it from but he made it sounds like market risk is the brewing ground for future budding traders. If there are better offer available, I doubt people will choose to go into market risk so they have a better jump to the vacant trading seat.

The recent hiring reality has been "you get what is available to you" and there are more risk management positions out there than anything else.

Also, generalizing the job title is not encouraged in this field. "Market Risk Analyst" at one bank doesn't necessarily do the same job, or have the same skill set at another bank. Same thing applies to "Quant", "Quant Analyst". It's not like "dentist" where "drill, fill" routine is universal.
Click to expand...
 
So this "trader" from this hedge fund in Toronto came by today to my university(canada) to give a talk on the financial industry.

This is what he said, and I thought it was wrong and seems like my doubts have been answered here.

"You come in as traders.then promoted..to become risk managers...then MD...then so on..." was his reply when asked how you progress in the trading division. I thought he was way out to lunch on those comments, but the students were business faculty undergraduate mostly with no knowledge.

It might have been the strong language barrier too and maybe he was trying to say something else, as he had one of the strongest chinese accents I have seen in a long time. His hedge fund is out of Hong Kong, but they recently opened a small office in Toronto.
 
no, that's probably the common career path (trading -> Risk Management) if you want to get into management. Most of the traders I know despise management though.
 
Ken Abbott said:
Andy, one doesn't "jump into [a] vacant trading seat". That's just not the way it works. People have to be trained, then they sit on the desk for a while - often doing support work.
Click to expand...
Ken,
Point understood. I was one of those "sit on the desk for a while - often doing support work" so I know trading job is to be earned, not to be filled.
I was pointing out the misconception of people who hope to go from market risk to trading. And as you said, "it's unlikely that people reading this forum will be able to go straight to trading". People have to earn their due and graduates from most programs don't get a trading job handling millions right out of school. It's often a support job on a trading desk.
 
Ken Abbott said:
It's unlikely that people reading this forum will be able to go straight to trading. They're better off doing model review, quant development, or risk management first to prove their mettle and their dedication. They may also find that these are more rewarding careers than trading. Lesser funds are filled with third-rate traders who could be more successful (and happier) finding careers more suited to their talents and personalities.
Click to expand...

Isn't model review independent of trading groups? Would there be much interaction between the groups so as to prove you have the skills and get transferred to a trading desk?

I ask this because I was interviewed by Morgan Stanley for an internship this summer in their Model Review Group in New York. I will be starting my Masters this summer in Chicago and could not progress further because I cannot move to New York. They sent me interview email after I was all finalized basically as it had been 3 months since I had applied. My interviewer gave me her information and told me to contact her to possibly work there next summer.
 
Thanks all for the feedback. The person that I heard this from was a guest lecturer at my school and was in charge of the Risk Management team at his firm. The impression he was conveying was that a role is Market Risk could help familiarize you with the markets, before deciding on what area to specialize in. In that sense I suppose it was misconstrued that the transition into trading is easier than from other areas. But as previously stated, there are more and more jobs in Risk Management popping up and hiring recent quant graduates. I was just trying to get a feel for how much the job profiles overlap, and if transitions from one to the other are possible without being typecast.
 
Trading is a very broad/general term. Do you mean Portfolio Manager? Prop Trader? Trader I, II or III (execution monkey)?

Risk Management is also a general term - do you mean RM for a firm? Portfolio? Fund?
 
winstontj said:
Trading is a very broad/general term. Do you mean Portfolio Manager? Prop Trader? Trader I, II or III (execution monkey)?

Risk Management is also a general term - do you mean RM for a firm? Portfolio? Fund?
Click to expand...

Was talking about doing RM for a firm/or fund into working on some kind of desk (commodities,derivatives, etc.)
 
"Normal" path would be start at a good school, get 3.2GPA+, get internship at big-4 accounting or top name I-Bank for Jr. & Sr. year of college, get job at top I-Bank out of college, work 2yrs and transition up the ladder to an internal fund/analyst/risk.
 
Back
Top