FX trading opportunities in the interbank space continue to contract with banks hamstrung by increasingly onerous regulatory requirements. The major clearing banks are increasingly unwilling to take any risk on board, operating as pure e-brokers, and this obviously means that there are very few dealing jobs and no trading jobs. (I’d be thrilled to hear from any young traders who’ve managed to get a job (non-intern of course) with a bank in recent times).
That said, demand for traders in the retail space is on an exponential curve. This demand seems to be coming from 2 main areas; firstly there are traders who have tried to manage their own accounts but through lack of time and/or lack of expertise have failed to make much progress. These participants, who want to stay active in the FX market, are increasingly turning to managed account services. Secondly, and this has been a very interesting development, has been the development of the Chinese market. These participants, particularly the bigger accounts, seem more interested in investing with well-performed traders rather than trying to learn a new skill themselves.
Also in the retail space, there seems to be a gradual move away from the signals and copying model. The UK FCA has already introduced regulatory requirements for trade copying and it is probably only a matter of time before other regulators follow suit. I suspect that most investment products going forward will be some variation on the managed account model and will all come under a regulated environment.
The Hedge Fund and Fund-of-Funds markets remain robust with seemingly no lack of wholesale funds still happy to take on some market risk. 10 years ago it was nigh on impossible for an individual trader to get a seed allocation from a hedge fund and I seem to remember that there were around 70 boxes that had to be ticked before one could get even a small starting allocation. These requirements have been heavily diluted across the industry, mainly due to the lack of trained traders coming out of the interbank space. There are also an increasing number of advertised jobs and trading positions, even for juniors, with Quant Traders particularly sought after at the moment.
For all young traders starting out, remember that trust is still the key ingredient when it comes to investment. Build a consistent trading profile for yourself and take all the necessary steps to ensure that you are compliant.
[p.s. Don’t be shy in pressing your case forcefully with us if you think you have the talent to become a professional trader. Fill out the form and follow it up regularly; there are thousands of hopefuls and you need to set yourself apart.]
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