Moving from Tech to Trading? 87
DJ Paradox asks: "I've been working in IT for around 11 years now and more recently in IT Security within the Finance/Investment Bank arena. I'm looking into the prospects of a change to an entirely different field, working on the trading floor. I've read a few books on trading but most of them seem to be geared toward the Do-It-Yourself-Day-Trader instead of a professional career. I don't have a finance degree but have a permanent position with a good sized global bank and a manager who is willing to help. So I ask Slashdot if anyone has recommendations for courses, books, websites that I should cover to get a head start in this transition. Have any of you made a similar jump? Should I try to move towards a more trader-aligned tech group first and build relationships? Should I try to go for Equities or Futures & Options trading? What markets would be the best to start/learn with?"
why are you asking us, talk to the traders (Score:2, Informative)
that would be a long-ass road to travel from IT security though. can you code?
long story short, find a job where you get to learn about finance, and if possible, get to know traders and what they do.
All well and good, but... (Score:2, Informative)
You would probably need to start by going to training for and passing the exams for the Series 11 and Series 63 exams. Furthermore, you would need to be sponsored by your employer to take these exams. You knew that, right?
Oh, and plan on starting at the very bottom and taking a massive paycut for the privilege.
No no no no no!!! (Score:5, Informative)
It has been proven (see The Great Mutual Fund Trap [amazon.com]) that day trading is a way to lose. People always jump in too late and jump out too early and have their profits eaten up by fees (which they pay whether they win or lose). The guys in that book reported on an analysis done of Etrade and Ameritrade records. The numbers were very clear.
The only way to win is:
Here's a little info from the book:
They tracked over 1000 mutual funds for 10 years. Of the 1000, 1 (count them... ONE, uno, single) fund gained every year over the DOW. Mutual funds are run by fund managers who know a lot more than you, and have huge resources. Turns out that it is completely random as to wether a fund can beat the DOW.
Every now and them, one fund manager wins big for their fund. And they become hot property. But its random. They will eventually fade.
A side note: there is also a survivorship bias - any mutual fund that does poorly for very long is usually folded into another - that is, it disappears. So the ones that survive are the best, and they aren't better than the DOW on average.
Index funds are the way - they have very small fees, insulate you from any sector tanking, they track the dow, and require 0 effort on your behalf.
The book was a huge eye opener for me, and for the last few years has proven itself.
Stocks and bonds... (Score:4, Informative)
Don't dis a finance degree. I did grad work in physics and work at a supercomputing center, and I have a large amount of respect for how hard finance can be. I've taken a few finance classes, and it ain't basketweaving. It's *hard*, in the same way physics is hard. If you think you are going to waltz into that field and compete with degreed people, you are either smarter than I am, or delusional.
Stick with stocks and bonds, but spend a year or two practicing. You don't need to trade stocks every minute/hour/day to make good money. Just look at Warren Buffet. Buy a copy of Ben Graham's "Intelligent Investor" and "Securities Analysis", Marcia Stigum's "The Money Market", Annette Thau's "The Bond Book", Robert Hagstrom's "The Warren Buffet Way", and Jim Collins "Good to Great. Read them, several times, and then test your knowledge with your own money before you blow someone else's.
Re:Awesome question, I have one too. (Score:3, Informative)
I think Scottrade has commissions of $7, which E*Trade aproaches if you make enough trades (their commissions start at $15 and go down as you make more trades to $7). But as someone else said, if you've got only $1000 or so to play with, I'd suggest buying and holding some stocks for long-term investments and not really day-trading. Day-trading requires buying/selling stocks on slight upticks, for which the stock commissions (remember, you get them buying AND selling) really eat into for you to make a profit. Ie, a stock increase of a few cents would be useless to you (unless you're playing with penny-stocks which is highly inadvisable), but would be great for someone who bought a few thousand shares.
Follow that dream of yours. (Score:2, Informative)
As for the things you can do, well that kind of depends on where you are. In the UK you will need to do a number of exams set by the securities and investments institute http://www.sii.org.uk/ [sii.org.uk] Im not entirely sure what your requirements would be in the US. I used to work as a technology risk analyst for an investment bank and our entire team had to the introduction to securities and investments exam.
To get a job on a trading desk, you generally have to go through a whole heap of hoops, but in most cases, it helps if you are a desk support person *note* not trading support (which relates to the support of the hardware/software used by traders)
These jobs require a fair amount of training to be conversant with the setup, i.e. multiple screens,special phones etc. So banks generally train their staff at training centers dotted around the country/world just so they can see those that will cut the mustard
One thing i will say is that you should give day trading / spread betting a go. It will really test your nerve and help you decide if you really want to go ahead with this
Good luck.!