The TRUTH about TRADING for a BANK

I receive a lot of emails from traders across the globe. Occasionally in these emails a trader will mention that his or her ultimate goal is to be a trader for a bank. Though I do see the initial appeal of trading for a large institution or bank, upon deep reflection and study, there is actually very little advantage for doing so. I believe that trading your own account(s) and possibly managing your own trading fund is much more rewarding and has a lot more to offer. In the past, I have been tempted by advertised trading vacancies and job offers from banks and institutions, but let me explain why I have never decided to pursue these 'opportunities'...

#1 Trading with others Capital is risk-free...

It's true that you will be given bank capital or client capital to trade with, if you make a loss, you don't personally lose a single penny. But is the capital really risk-free? A good portion of your income will be dependent on performance. If you don't make money, you don't get money. If you make too many losses, you lose your job. The capital is financially risk-free but is not totally risk-free. The risks involved are your reputation, your bonus and possibly your job. The risks of trading bank capital or your own capital, ultimately have the same consequences, if things go horribly wrong.

#2 You will work a lot of hours

You will be expected to work around 12 hours a day (not including your commute). Some traders (depending on the time of year, department and responsibilities), will be expected to work 14+ hours a day. Trading is fun and it is one of my biggest passions. I also have other passions too. If I traded for a bank, the pursuit of my dream lifestyle and interests could no longer exist, simply because I will be working most of the time.

#3 I will make a lot of money...

The basic salary for a bank trader ranges from £30,000-£50,000 per year (+ bonus). This initially sounds like a lot of money and is much more than most other starting salaries, but it is not as good as it sounds. As mentioned above, you will be working a lot of hours. Your job is likely to be based in a major ciy (London, if you are in the UK), and you will likely have to live in the city centre or close to the city centre. Try living in central London on £30,000-£50,000 per year... Suddenly the salary does not seem as appealing.

#4 Location or Commute...

If you don't want to fork out the cash for central city living and fancy commuting from and to the outskirts every day (for your 7 hour dinner, sleep and breakfast), you will possibly need to commute 3-4 hours a day and pay for train fares. The other alternative is that you live in the city, if you don't like living in cities... Tough! Some like the city life though, I do and wouldn't mind living closer to central London. My Wife and kids on the other hand...

#5 Why trade for yourself...

To save this post being much longer than intended, I will summarize my final reasoning like this; choose your own hours, be your own boss, have uncapped earnings (the more you have the more you make), enjoy a 10 second commute, trade your own strategies... Trade for yourself!

Obviously trading for a bank does have some advantages that I have not mentioned and the lifestyle is attractive to some. If you would like to trade for a bank or large institution, I wish you all the best. The purpose of writing this post and creating the video below, is not to discourage you but to help you consider alternatives before committing to an ambition that may not be worth it. With the increasing amount of social trading sites, some traders are able to trade with investor capital without the need of regulation and from the comfort of their own home. Check out Darwinex as an example.

Please watch my video below on The Truth about Trading for a Bank...