Pitching a strong trade idea is the most nerve-racking and challenging part of the sales and trading interview process. It entails both specialized and storytelling skills. But with great problems comes great praise. A well-constructed and reasonable trade idea can leave a enduring impression on your interviewers and help you land your dream jobs at Wall Street’s major banking institutions. That’s why the Wall Strategies Experts have put together this Ultimate Trade Idea Guide to help you aced it! In this guide, we covers how to create an original trade idea and prepare your pitch in details. What is a trade idea?
A trade idea can be an investment thesis to either buy or sell a particular security such as shares, bonds, or derivatives. The thesis of the trade idea is supported by various arguments that may be quantitative and qualitative. Qualitative arguments include management experience, product rollout, customer perception, and industry theme.
Quantitative analysis can be based on fundamental evaluation and technical analysis. In any case, the essence of a trade idea is to build a winning investment narrative that is constant and logical. Why is trade idea important? Not only are trade ideas time-consuming, they’re extremely difficult to get right also.
Even professional traders and investment advisors can miscalculate and lose cash on their investments. Good investors are profitable over time because their predictions are more likely to be right. The secret to their success is their methodical way to analyze the market that is both constant and logical. No-one can predict the near future.
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Your job as an intern or analyst is never to pitch a trade proven fact that is 100% profitable. You are, however, expected to present a thoughtful investment thesis and support it with proof. They are not looking for the right idea; they are searching for a strong and logical thought process!
Many interviewers view trade idea pitching as a litmus test for a candidate’s specialized skills and personality fit. First, the ability to understand complex ideas is essential for both investors and salespeople. Trading and Sales experts use very abstract concepts. Being able to understand the marketplace impact of interest, unemployment rate, and even monetary policies demonstrates your ability to learn and master challenging concepts and apply these to the true market. Second, assisting an investment thesis with logical arguments and evaluation is the substance of Sales and Trading. Each pricing and hedge on Wall Street is supported by an investment thesis.
For a trader to successfully control the risks on the book, critical and impartial market analysis is needed. Blindly following market can lead to disaster while original thinking promise a stellar career. For a salesperson, their job is to make the trade happen and support their customer. A salesperson has to be able to come up with original ideas and exhibit it logically and passionately with their clients.
Lastly, they want for passion. Many applicants think that pitching trade ideas is a technical challenge strictly, and they fail to identify it as an important chance to demonstrate that you are a good fit for the S&T industry. No matter if you finish up as a salesperson or a trader, your job shall focus on selling securities to the bank’s clients.
Though you can discuss your interest in the resume cover letter, a passionate and strong trade idea pitch will further convince you interviewers that you will have longevity and success on the market. Can I reuse a trade idea I came across online? Simply copying and pasting some arbitrary ideas from Seeking Alpha won’t help you win that golden ticket.