ULTIMATE GUIDES

The Ultimate Guide to Thriving in Data Science: Trader

November 15, 2017

When you think of data science, trading is probably not one of the first words that comes to mind. However, the applications of data science to trading are worth taking a look at. In addition, the career experiences of traders, outlined here, can help you succeed in other roles. In chapter three of Citadel’s Ultimate Guide to Thriving in Data Science, we take a closer look at how a data scientist can thrive in a role generally associated with financial backgrounds. Traders simultaneously manage risk, identify investment opportunities, and make critical trading decisions in a fast-paced environment. As critical as it is rewarding, this position requires a unique skillset and focus on quick critical thinking. To understand what makes a good trader, it helps to hear from the best. Read on for insights from some of Citadel’s traders, and individuals in related roles, to find out whether you might want to pursue a career in investment management and trading.

Job Overview

We previously covered the “mapmakers” and the “tool builders” of the industry. It’s time to look at the mountain climbers of the industry – traders. With maps and tools in hand, they peer out at the terrain and make decisions about how to most efficiently, and safely, get to higher ground. More literally, here are the primary roles of a trader:

  • Monitor and respond to incoming market information, economic announcements, and general trading
  • Communicate with portfolio managers to help manage portfolio risk and identify investment opportunities
  • Make process-driven trading decisions across a large distributed portfolio, and execute those decisions efficiently and effectively
  • Use analytical problem-solving skills to troubleshoot trading systems, develop new trading tactics and improve operations and platforms
  • Leverage trading metrics to identify inefficiencies and opportunities to increase profitability and optimize performance

Hard Skills – The Essentials

At Citadel, we seek out the world’s most talented minds. Here are some of skills required to be a strong trader:

  • Managing risk in uncertain conditions
  • Recognizing patterns in large datasets
  • Developing relationships with business stakeholders
  • Understanding financial math, including asset pricing theory, probability and statistics

We also look for our traders to have moderate coding abilities. Most Citadel traders know how to code, but their skills are not expected to be on par with those of a software engineer.  If you’re still a student, we recommend taking as many computer science classes as you can fit into your schedule.

Laurent Dupras-Boileau, Trader on the Global Fixed Income team at Citadel, notes that he trades a dynamic portfolio. To keep up with the constantly changing environment, each morning, he looks at how the markets have moved overnight, which may include identifying a piece of news, such as a change in corporate leadership or a drought that’s impacted a major city, which impacts the markets. From there, Laurent takes a step back from the market and spends time communicating market information to the portfolio managers. Lastly, Laurent executes on trades and reviews opportunities to improve profitability.

Soft Skills – Tricks of the Trade / Pro Tips

Steve Palazola, Data Analyst for Surveyor Capital at Citadel observed that “when you work on an investment team, technical skills are necessary but not sufficient.”

“You should want to constantly earn the win. This means you think about how you and your team’s approach impacts the bottom line.”
The ability to thrive in a fast-paced, high-pressure environment may be the single most important quality a trader can possess.  You must be a competitive and driven person who is not only comfortable working under pressure, but thrives under it.  Candice Berger tells us, “you should want to constantly earn the win. This means you think about how you and your team’s approach impacts the bottom line.”

In your interview, be prepared to demonstrate your capacity to stay cool, calm, and collected.  As we heard from Candice, “After I interview a candidate, I often ask myself ‘would I trust this individual to deploy millions of dollars of capital?”  Not only should you be comfortable with so much responsibility, you should ask yourself if you’re inspired by the idea of deploying capital at this scale.

Like the other roles we covered in this Guide, strong communications skills are par for the course. Because of the fast-paced nature of your work, a successful trader knows how to communicate quickly and concisely.

Advice

Because we entrust our traders with such a high level of personal responsibility, you will have to be comfortable taking complete ownership of something, and the highs and lows that go along with it.  However, significant personal responsibility does not mean you are on your own.  As with other positions, the ability to work in a team environment is not just important, it is paramount to your success at Citadel. Candice tells us that “it is critical to leverage the people that are around you and accept what you know and what you don’t know.”

The Citadel Approach

For traders, we try to offer up “the best of both worlds”, according to Candice. Specifically, we aim to provide traders with the autonomy to make the most of their ideas and the resources of a firm that has billions of assets under management.

Whether you’re considering a career as a quantitative researcher, a software engineer, or a trader, the financial markets offer intriguing opportunities. Only you can decide if this industry is for you, but we hope this Guide helps you make an informed decision that will propel a long and successful career in data science.