CAREER ADVICE

Ask a Trader: Skills to Refine in 2019

February 22, 2019

As part of Citadel Securities’ trader development program, The 110, we provide an opportunity to ask questions to some of Citadel Securities’ experienced traders from our private Office Hours Facebook group.  We want to share both the questions and answers with you. This month, we covered questions surrounding the most important trading skills to learn in 2019. Don’t forget to tune in next month when we answer more questions on a new set of topics.

What skills can a trader from the sell-side bring to Citadel Securities?

At Citadel Securities, we play an important role as a global market maker that provides liquidity to the markets and drives price discovery. While other sell-side firms may play a variety of different roles in the industry, the skills of sell-side traders generally are quite applicable to our firm.  The following are four key skills that help successful traders at Citadel Securities:

  • Strong relative value framework – A strong relative value framework is an important foundation for providing liquidity in a variety of market conditions. It is crucial to understand the relative value of securities as you assess the broad market landscape.
  • Risk management – Once a trade is executed on the sell-side, that risk becomes the responsibility of the trader, who then needs to decide how to manage the position. Skill and judgment related to risk management is invaluable at a firm such as Citadel Securities given the scale at which we operate.
  • Understanding of client needs – Sell-side traders bring a deep understanding of how clients approach the market and make decisions. This experience with seeing clients make decisions allows a trader to better anticipate how to provide liquidity to clients in many market conditions.
  • Crisp Communication – Citadel Securities works with thousands of clients across the globe. We aim to communicate with clients consistently, concisely, and in an insightful manner. The skills that go into communicating this way often can be cultivated on the sell-side given the close nature between sell-side traders and clients.

What is the most important skill a trader can learn in 2019?

If the expansion of the US economy continues through June 2019, we’ll have observed the longest US economic expansion in history.  As Ken Griffin noted to Bloomberg, this could indicate the US economy is approaching the end of an economic cycle over the next few years.  The most important skill for traders in this environment is to develop a deep understanding of the impact economic cycles have had on debt and equity markets in the past in order to be prepared for a variety of outcomes in the future.

What is the best way to practice trading skills other than finding a mentor?

One of the best ways to practice trading skills outside of working with a mentor is through complex resource-based board games. These games help develop your skills in estimation, probability and strategy, which are essential for a successful trading career.

At Citadel Securities, some of our favorite games include:

  • Settlers of Catan
  • Agricola
  • Splendor
  • Fantasy sports

Have questions of your own that you’d like answered from our traders? Be sure to ask 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.