FIRST-HAND With millions at stake, you're liable to have explosions
Charles, a former derivatives trader, tells of the high-tension lives of those who live for `the deal'
Sunday 05 March 1995
There is a joke in the business that the futures, options and derivatives traders are hotshots in their twenties, alcoholics in their thirties and running pubs in the country by the time they are 40. This business is driven by the newcomers who are unburdened by experience of recessions and risk. They are really miraculous at first. Then to a man - or a woman - they learn about risk and calm down. Otherwise they are gone. You learn how to handle risk or you are finished.
We are all dealing with seriously large amounts of money all the time. It becomes very impersonal. The average 27-year-old trader is not going to be bothered to trade under £2m. It's irritating and too small to deal with. Most are dealing with about £100m a time. That's the nature of the game. It's so volatile; every day banks' trading desks trade more than the gross national product - on paper. They are doing hundreds of millions a day, day in, day out. It numbs your mind.
When I started out it was before all this explosion with derivatives became serious. It was different in those days - trading was dominated by agriculture, pork bellies, soya beans and suchlike. We were the gun slingers then, but we learned our lessons. There's a new crop like Leeson every 10 years, and each learns a lesson. After they've had a crisis they become experienced and they never do it again. Eventually all the gun slingers calm down.
In the meantime, though, there are huge rewards for the brave and the outlandish - the Leesons, in fact. The thing you worry about as a supervisor is that one of your traders is making a mistake and hiding it. The cardinal rule of the business is, if you make an error, acknowledge it and get out. I've come across people who think they are doing the right thing by not telling you what they have done. They are fired on the spot. I've sacked two traders for cover-ups.
Everyone makes errors. They are depressing because they are sudden and usually huge. I can't think of a year when I haven't made some kind of error. Ifsomeone's good they'll stop trading, walk round the block, come back and just get on with it.
There's a lot of emotion and extravagant behaviour. The trading floor is a great long room with screens in the middle and everyone working very closely together. Everyone wants to advance and get a bigger bonus. There's competition, especially with other banks. You want to get as many deals as you can. You're in a constant state of readiness - it's more intense than any other job. You're standing there ready for a big move, you get on your phones, call your clients and move millions in seconds. There is a high state of adrenalin at all times. You have to make huge decisions in split seconds. It happens so fast. Your client can lose millions if it goes wrong. The clients are probably just as explosive, on edge and shouting and so on. So when something goes wrong you're liable to have an explosion. I mean throwing pencils and swearing and destroying things and slamming the phone down.
When you're in that state all day long it's not hard to understand that you're going to explode once in a while. You're going to snap. If smoking was allowed on trading desks it would be the highest concentration of smoking known to man. People let off steam once in a while by getting really mad. There's a lot of banter and foolish behaviour like jokes and teasing people and sticking signs on their backs. It's public school boy stuff. But a real release of tension comes after doing the deal. That's why so much champagne is sold in the City.
Interview by Marie Woolf
A trader's view - Business
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