What do you guys think about the future of trading as a career? With the advent of electronic trading, will trading as a career be adversely affected? Any information you could provide on this would be much appreciated. Thanks.

Well depend on the time frame I guess. but for a practical time frame let say over next 10 years I expect traders to be in good demand. Even with computer’s and mathematical models there are need for traders that understand the risk, reward...bla, bla bla.I believe the floor traders will disappear. Basically because more and more exchanges will go electronically over next few years.On the bright side I see demand for several new derivatives markets. For example derivatives on real estate in different locations. The electricity derivatives market should pick up volume again in 6 months to a few years. Main problem in US everybody mainly did OTC transactions and lost money on credit risk when Enron and others blow up. In the "near" future we will possibly get a clearing central also in US that will minimize counterpart risk. But may be it will take years. The Scandinavian electricty market has been much mores sucesfull. Mainly because they early on got a clearing central that worked okay.

QuoteOriginally posted by: CollectorWell depend on the time frame I guess. but for a practical time frame let say over next 10 years I expect traders to be in good demand. Even with computer’s and mathematical models there are need for traders that understand the risk, reward...bla, bla bla.I believe the floor traders will disappear. Basically because more and more exchanges will go electronically over next few years.q]i basically agree with the collector here, but want to add the the good floor traders disappear from view, butthey still exist. it is the same firms making markets on the ise that were once on the floors. and the skills of floor tradingare still necessary in making markets.however, there is less need for the average traders. now we can have one person trading a lot more things,whereas once he would have been physically limited to trading one or two products.

I think that trading is becoming much less entrepreneurial and much more IT driven. The management of the trading firm I used to work for once told me that they would prefer to pay four average traders £100,000 than one good trader £400,000, and are actively pursuing this policy. Traders and market makers are becoming less hand-on descision makers and more "operators" of the integrated systems they use (such as ORC, RTS, etc).

In my opinion, as a fresh would-be derivative trader (in November), I think there is still a need for the 'human component' of trading - eg, appreciation of risk, understanding of market sentiment, etc...My belief is IT systems are based on finance theories, ie whatever finance technologies available to us at the moment. It's by no means all encompassing. I believe there are still elements which can be grasped better by experienced traders than an average trader using the state-of-the-art IT technology.Then again, I'm waiting to experience the real trading world, so I would like to hear from experienced traders.

well... my main concern for trading as a career is that i know it won't be something i'll be doing for 10+ years, due to either changing economy/less demand for traders, or some other factor. i am wondering what else someone that has been a trader for some years can do after they stop trading. no offense to traders, but it doesn't seem like they'd be qualified to do much other than trade like its nobody's business. its funny, cuz i think back in the 70s and 80s, traders were considered to be the "peons" of wall street (at least this is what i got from reading "Liar's Poker"). basically, it didn't demand much respect and didn't require much education. given that, i can't imagine what they would do after they lost their job or had to quit. can they move on to other areas of wall street or are they pretty much SOL?

Train, why do you say you won't be trading for 10 years? i know a number of people who have been.also, after a few years in any industry you will find your qualifications eroding. things move onand you just won't be in the forefront of knowledge anymore.I see traders like pilots now. sure, planes can fly on autopilot most of the time but when stuff goesnuts you want an experienced person at the controls. also, he can give valuable feedbackto the engineers.

Let us first of all define exactly what we mean by trading. The following two definitions apply to all asset classes really and all time frames:Flow trading / market making - will the demand exist in 10+ yrs? I guess so - you need someone to manage inventory, make the prices and keep each asset mkt liquid. The key is to move into non-commoditised assets or make damn sure you are at one of the big players in a commodity-like asset such as fx or a lot of equities now or carve out a niche in a specialised area.Prop - will this still exist in 10+ years? Difficult to say - first of all due to the banks overriding desire to smooth earnings, a lot of prop functions have shifted - either into spun-off hedge funds, or affiliated but off-balance sheet hedge fund structures. But new players have entered the market such as reinsurers looking to invest premiums in the markets, former treasury units such as ANTS at Abbey National in the UK and so on. If you add up all the hedge fund prop roles, the banks and the new players you could probably make a convincing argument that there are more prop-trading roles now than ever.......But!!! appearances can be deceptive - hedge fund traders are often acting more like buy-side dealers at the big pension funds and mutual trust / unit trust managers - just executing. A top guy at one of the biggest 'market-neutral' US hedge funds once told me - "if you desire a long and extremely rewarding career in prop trading, always become an analyst first - avoid the quick bonus rewards of trading, as 4-5 years down the line you'll just be taking orders whilst the analyst will be giving them and making the trading decisions". I think the guys probably right. The only really long-term successful prop-traders that have hedge funds were effectively trader / analysts at the beginning - and slowly became hedge fund managers with traders executing.To sum up - I think the level of diversity in what the term 'trader' encompasses is huge - will the role exist for the indefinite future? - yup. Will it prove to be a rewarding role in terms of intellectual challenge and perhaps moneys? - really depends first on the asset class and second on the institution - end up doing cash fx execution at some regional bank, then you may have to wonder whether life could be better elsewhere??

well said balrog.also remember there it is possible to trade other than in a bank or a large fund.read "market wizards". most of those guys started with their own money.i'm always amazed at the number of trader applicants we hire who have neverput any of their own money at risk.

I go along with what Balrog says as well. In addition, I would caution anyone against believing too fully the computers-will-replace-traders story. With respect to market making, it seems unlikely (to me) that a computer can become as adept at the who's-got-what-and-what-are-they-going-to-do-with-it game as a truly skilled market maker. With respect to prop trading, there is a paradox: any trading algorithm you can discover, I can discover too and apply enough money to it to take away the profit opportunity. The only system that I can not replicate is the brain of your head trader.Finally, I have always believed that trading is an esoteric interest. I mean that, as a way of making a living, it appeals almost infinitely to a very small percentage of the population and not at all to everyone else. Train, perhaps from your questions you are in the majority camp?

"If all tickers were delivered from market centers in continuous digital streams, if prices were arbitraged between markets in some simple fashion and inter-market friction was describable by a simple model, and if correlations were fully understood, all that would be left would be to front-run trend-trader evolution."Any time you think you can write down an algorithm that describes a market, someone else can write it down too and make it out of date. Naturally the algorithm includes cleaning the data in the first place. All the econophysics research into minority games etc. shows that even with small numbers of agents complexity (and unpredictability) arises quickly even in a world as pure and simple as the one you describe. Any game where the preferences of the individuals are not homogeneous or known with certainty can lead to complexity. Think about a market with trend-traders and hedgers. Or think about strip poker.

“I believe the floor traders will disappear. Basically because more and more exchanges will go electronically over next few years.”I agree with Collector on this. I had the opportunity to observe a number of exchanges across the U.S., Canada, and Latin America in recent years and came to the same conclusion but I believe it will take a few decades.Traders will disappear only after Quants discover an algorithm for fear, greed, and ambition; when one product fulfills all the needs of the entire population.

trading will not disappear . 10 years later . markets will still be around . As along as there are markets , there would be traders/market makers . THat said , the products are getting more and more specialised and sophisticated , the skill set that will be in demand becomes a moving target . If you are willing to continuosly learn , trading can be a good career . Secondly , you may not find employment with a firm after say u r 40 years old , but if you are good you would have made enough money to start out on your own ( as a trader ) . Jobs are getting specialised these days . So whether it is a trader or a quant or an engineer , he will find it difficult to "do" something else later . Unless of course u become a ceo . then u need to know nothing but talk well and sound intelligent .