Raj Malhotra spent well over a decade working as an equity options trader, splitting his time between BNP, Bank of America and Nomura. He was promoted to managing director before age 30. After only 13 years on the trading floor, he retired. He's been doing some standup comedy since and is now a trading mentor. We asked him what he misses most about the business and why he's glad he is no longer in it.
You've been off the trading floor for a few years now. Tell us a few things that you miss about the job and the environment.
I certainly miss the rush of walking onto the trading floor especially when you know it’s going to be a volatile day. When you are the big risk taker and you have the respect of everyone on that floor, people stop what they are doing and look. You know they are doing their best not to stare but they aren’t looking away either. Subconsciously they are trying to pick your brain.
The feeling is like if you are a World Champion boxer walking out of the locker room for a title defense or like a Gladiator entering the Coliseum ready to do battle.
I miss the quiet peace seconds before the opening bell when the market opens. When you hear that bell, it’s time to battle. You have done your preparation now execute your game plan.
I also miss the lighter moments and fun that were most common in the summer and usually on slow Fridays. Contests in good fun like push-up contests and eating contests that created camaraderie from managing directors all the way down to interns. Unfortunately, fun has been eliminated for the most part on trading floors.
What are a few aspects of the job and the lifestyle that you definitely don't miss?
One thing I don’t miss and is in even more abundance today, is the excessive regulation, supervision and compliance. I am not naïve or blind to say that Wall Street executives have done things that weren’t ethical, greedy or fiscally responsible. However, the response isn’t to create unnecessary “controls” that actually do nothing except give cover to people that have no idea how the system works. I am in favor of real solutions to fix real problems but adding unnecessary regulations that won’t prevent the next financial crisis or event is a waste of time and money. This is a reason why so many talented people have the left the industry.
I also don’t miss waking up at 6am! If I want the day off, my boss always gives it to me since that boss is me!
Do you still have friends working as traders at large banks? What's life like for them these days. Or have they all run to the buy-side?
I still have friends working at both large banks and buy-side. The problem is that there are just fewer jobs on both sides. The jobs at big banks are mostly now filled by traders that haven’t really seen volatile markets. They see days like early February and complain about the high volatility when that is indeed more of a normal long-term market than the one-way Bull Market of 2017. These traders should be welcoming that not lamenting volatility.
The market needs volatility for good traders to thrive. Not to take anything away from a lot of people currently working but it’s easy to trade a low volatility market. It takes a special breed to thrive in a high volatility market.
You've been a trader at banks on three different continents. How was it different working with Americans, Europeans and traders in Asia?
I have seen trading at many different places and countries, and I believe good traders are good traders and it has nothing to do with culture, background or even academic degree. In fact, I mentor students around the world and encourage them to use their local knowledge and their different backgrounds to come up with good trade ideas.
I would generally say that Asians are the biggest risk takers, Europeans the most conservative and Americans somewhere in the middle. However, all good traders regardless of risk appetite have similar characteristics like trade discipline, cutting losing positions without fuss and ability to think outside of the box.
Raj Malhotra is a senior trading mentor at the Institute of Trading and Portfolio Management (ITPM).
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