As a recruiter for major financial institutions, I often hear managers complain, that although the academic quality of new recruits coming from business schools and universities has never been higher, the willingness to take risks is non-existent.
'They just don't understand how the markets really work, and are reluctant to enter trading positions despite having done all the correct analysis", said one banker.
In the 'old days', the ability to trade and take risk was considered something you just had - or you didn't. The financial instruments were not very complex, so the banks often took the more ambitious trainees from elsewhere in the organization to train as dealers. This was in the days where you didn't need a degree to get a job with a bank. The ambition was there, because many of the trainees did not want to sit there as bank clerks for the rest of their careers.
Despite not having degrees, MBAs or PhDs, these ambitious trainee dealers became experts, relying on their 'gut feelings' to earn money. Trading means that you have to be very pragmatic - if you are wrong, you had better admit it quickly and get into a trade in the opposite direction.
The training was very much 'sink or swim', with trainees being given instructions by a mentor (normally the chief dealer) and an amount of capital to trade with. Some of the most successful fund managers around today started in this way.
The intellectualizing of trading floors, which started in the late 1980s, has meant that many university graduates have obtained their first taste of trading after they have been in the bank for some time. They have not been prepared for the 'rough and tumble' of the markets in advance.
Some of the current problems in the markets can be directly attributed to these traders' inability to accept a loss and to admit they were wrong and therefore have ended up like rabbits in a car headlamp - frozen into inaction!
So, what can the astute financial student do? He can develop the risk taking and trading skills while still at business school or university by using TraderMetrics and participating in the virtual forex market.
Spot foreign exchange may be a 'primitive' market compared to some, but it is the most traded in the world, with some $2 trillion traded every day. get your trading skills in this market and you can take them anywhere!
So, take my advice: Register and Download TraderMetrics
(the evaluation version is free) and sign up for the virtual market and server software. You will be able to create virtual markets with your fellow students, or join the growing community of virtual forex traders.
There is no simulation in the world that represents the market so well, so act now and make sure that you get ahead in a career that is going to get tough in the next few years.