For the past nine months, I was lucky enough to have my desk right next to a small hedge fund based in the City of London, including spectacular views!
Here are some reflections on the experiences I had here.
Working relationship with professional discretionary trader
I had an active working relationships with one of the fund’s discretionary traders and we met, daily for the first three months, and twice a week for the remaining time. During these meets we discussed his trading, my trading, and trading generally. He has been working in the industry for more than a decade, so he had a breadth and depth of knowledge, which often amazed me. I kept detailed notes of all our conversations. This helped us to keep track of our discussions, avoided going over the same topics, and allowed us to set some objectives. This is somewhat akin to a “trader buddy” relationship that I have mentioned from time to time on this blog. The articles FX Trading Buddies and Why network with other traders? discuss some of the benefits stemming from having regular interaction with other traders.
I am very thankful for the huge amount of hours that we have spent together and enjoyed it thoroughly!
Conversations with systematic traders
In addition I also had the occasional meeting and/or impromptu discussions with some of the fund’s systematic and low-latency traders – I prepared carefully for these meetings to ensure that I had a good list of questions to ask and to learn as much as I can. These conversations helped me broaden my knowledge of alternate trading approaches as well as testing processes and strategy development.
Again, I am very thankful for all their time and all the knowledge that they have shared with me.
Impact on my perspective of trading
Over the 9 months I continued my own trading and also continued working on my trading. The traders pointed me in the direction of very useful resources for me to check out. It did help me to question my approaches and perspectives on trading.
It was also interesting to see how the approaches and attitudes of a professional trader working at a hedge fund are often quite different from an independent retail trader.
Retail traders & hedge fund traders: pros & cons
Interestingly hedge fund traders also have a tough time making consistent profits regardless of their type of trading strategy. They constantly have to work very hard, adapt to the markets, refine their strategies and create new ways to trade the market. They are not able to stand still.
Additionally, the traders face the pressure to perform. Unlike retail traders who are trading with their own capital and without a boss, traders employed at a hedge fund are reliant on consistent track records to maintain their employment. Their longevity comes down to their profit & loss and to the patience of their boss. That said, the traders receive a salary month in month out whilst they remain at the fund. They also can’t take time off if their trading is not going well, or if the current market conditions don’t suit their trading style – instead they will be expected to come up with something else. Additionally, the hours are often long.
An advantage to a fund-based trader is their access to resources, low transaction costs, skilled software engineers and programmers, and large amounts of trading capital.
Something that surprised me is that traders at the fund need to be more proactive and self-initiating than I had expected. There is no spoon-feeding and traders need be very self-motivated and resourceful. And working at a fund does not guarantee having other traders to interact with on a constant basis – depending on traders’ trading styles, there is a limit to the overlap of topics/challenges to be discussed amongst traders.
Hence, all in all, some real insights. All of this experience came about thanks to a friend who is closely involved with the fund and very generously provided me with a desk all this time!
That’s all that came to mind prior to me de-assembling my monitors and PC to transport them to my prior trading office digs on the edges of the City.
Happy trading all & have a nice weekend.