Ask a Trader: Key Skills of Successful Traders

As part of Citadel Securities’ trader development program, The 110, we provide an opportunity to ask questions to some of Citadel Securities’ own experienced traders from our private Office Hours Facebook group.  We want to share both the questions and answers with you. This month, we covered key skills needed to become a successful trader, and provided a short list of helpful subjects to learn. Don’t forget to tune in next month when we answer more questions on a new set of topics.

What are some of the top skills that help someone succeed early in their career as a trader at a firm like Citadel Securities?

As you begin your career, it’s crucial to balance your development of technical skills, such as risk-taking, with “soft” skills, such as communicating effectively. Below, we’ve outlined four skills that our traders recommend focusing on out of the gate:

• Risk-taking: Develop an understanding of when and how to take on risk in under uncertain conditions. A great way to do this is by playing strategy games such as chess, Civilization, and StarCraft.
• Communication skills: Become organized and consistent in communication and planning, while executing on a systematic approach to problem solving.
• Resilience: Take ownership of business problems. Always work with integrity as you overcome obstacles to achieve long-term goals.
• Bayesian thinking: Train your mind to think about possible events in terms of probabilities and expected values. For more on this topic, check out the book The Bayesian Choice by Christian Robert.

What are the subjects that, if learned, will help someone succeed early in their career as a trader?

As implied by the question, it takes the combination of skills and knowledge to succeed early on. We’re life-long learners at Citadel Securities and often discuss the subjects that someone should master at different points in their career. Here are the areas of knowledge that a couple of traders attributed their early success to:

• Statistics: We’re always trying to understand whether the data that is in front us is truly relevant to the decisions we’re making. You should continuously challenge yourself to understand the breadth and depth of statistical methods. We recommend keeping Statistics (Fourth Edition), by David Freedman, Robert Pisani, and Roger Purves, on your Kindle, iPad, or by your desk.
• Game theory: The principles of game theory help traders understand the potential motivations for other market participants. In turn, traders can  better assess the efficacy of their own potential trades. Check out Thinking Strategically.
• Python: The complexity and volume of data we analyze makes it helpful to be familiar with a coding language such as Python. Many of our traders have found the book Python for Finance: Analyze Big Financial Data, by Yves Hilpisch, useful as a hands-on guide.
• Options and futures: You’ll want to cultivate both functional and domain knowledge. The domain knowledge should include specific types of securities and derivatives of those securities. You should add Options, Futures, and Other Derivatives to your reading list.

What advice do you have for someone who is trying to switch into trading from another finance occupation after the first couple of years in their career?

The transition to trading, from another finance role, will give you a new perspective on the markets. Be prepared to inquire about the fundamental purpose and drivers of different financial markets. Stay attuned to broad market trends and what’s currently driving change in the markets.

In addition, showcase your level of resilience. We highlighted through an earlier answer that resilience is a key skill for traders. If you’re transitioning into trading, the significance of this skill is more pronounced.

Great questions this month. Keep them coming on Facebook.

Interested in learning more about The 110? Find out how you can join the next generation of elite traders through tailored programs that include coursework, trading rotations, case studies and mentorship opportunities here.