Profile: Money on the brain: Emerging from the turmoil of the exchange markets, currency dealers are carrying an air of danger and glamour. Richard Thomson looks inside their heads

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The Independent Online
YOu want to make a lot of money? You want to be like the guy at the New York bank who got a bonus of dollars 24m (now pounds 16m) last year thanks to the profits he made during sterling's defeat on Black Wednesday, but who still resigned in disgust because he thought he hadn't been paid enough? Be a currency dealer.

After all, dealers are glamorous, powerful (they are the 'Anglo-Saxon speculators' whom French and German politicians accuse of destroying the Exchange Rate Mechanism), well- paid and young. They are an icon of our times: in shirt-sleeves, bags under the eyes, a telephone in each hand, simultaneously shouting at a colleague and reading a dealing screen. Every time you opened a newspaper during the last few weeks, there was a picture of a currency dealer.

But have you got what it takes? Are you well enough educated - have you, for example, got a degree in astrophysics or quantum mechanics? Can you calculate 13x14 in your head - NOW? Can you lose pounds 200,000 in two minutes and not pass out? Can you concentrate for up to 12 hours a day on a dealing screen without going totally bonkers?

Or put it another way. You are being interviewed for a dealing job at Megabank. The smoothie behind the shiny table looks at you with narrowed eyes and says: 'If it's a quarter past six, what's the angle between the minute and the hour hands?' (Work it out for yourself). If you snap back 'Ninety degrees' and smile complacently, you're out. No cigar. Or if 30 seconds passes and you still haven't answered, you may as well start heading for the door - your mental processes clearly aren't fast enough. But if you say, 'Uh, it'll be just over 90 degrees because, uh, the hour hand won't be exactly on the six because its quarter past the hour . . . ' at least you may still be in with a chance. That's because, right or wrong, you have demonstrated some vestigial ability to think, that you have a passing acquaintance with logic. And these days, banks need dealers who can think.

In the old days - five or 10 years ago - thinking was not something dealers were required or expected to do. Dealing rooms were populated by bright East End school-leavers with an ability at lightning-fast mental arithmetic. According to the head dealer of a US bank in London: 'In the old days dealers just quoted two numbers - the buy and sell prices - a bit like trading in a street market.'

Moreover, markets were much smaller and slower-moving, which allowed dealers to go out for long liquid lunches. They got a reputation for heavy drinking, throwing paper darts around the dealing room, foul language, and impenetrable jargon.

But times have changed and the barrow boys have gone. 'They just don't survive in modern currency markets,' says Chris Taylor, head of foreign exchange trading at Barclays Bank. 'These days dealers get an overload of information. You need people who can sift it and come out with the salient facts that will move the markets. They also need an understanding of basic economics.'

Markets are more international and more interconnected than ever before which means they react to an ever more complex set of stimuli. 'Nowadays its more about taking a view.'

The result is that modern dealing rooms are full of dauntingly well-qualified graduates. Some banks, such as Citicorp, will rarely consider an applicant without a degree. 'Dealers need the discipline that comes from four years at university,' says a senior trader. 'They take risks, but they don't gamble - that's the discipline.' The days when dealers used to bet on which raindrop would reach the bottom of the window first have, apparently, gone. Dealers themselves are keen to explain how boring and responsible they have become.

'We don't want cockiness or machismo in our dealers,' boasts one bank. 'That's dangerous. They have to be able to admit when they've made a mistake so they can get out of bad positions before they get any worse.'

'They have to have good, balanced judgement and be able to stand their ground in a frenetic dealing room,' says Chris Taylor.

'They are the kind of people who calmly switch the water off and call a plumber if a pipe bursts,' says another dealer. They are the people who remember where to find the fire-extinguishers if there's a fire.

'They have to be fun-loving, not librarian types,' says Taylor, rather unconvincingly. 'Sometimes they go out go-karting.' Grim as this sounds, however, when the markets really begin to move there does seem to be some life left after all in the stereotype of the dealer as a kind of over- paid football hooligan - a man in an Armani suit yelling obscene jokes across a crowded trading floor, with a drink problem, an aggressive manner, a Porsche parked nearby and a salary too big for his own good.

The noise and drama of a dealing room, after all, are deliberate and dealers are addicted to it. 'We purposely create noise,' says a senior dealer. 'It creates adrenaline and that gets people going. A quiet dealing room is lethargic and that's when you lose money.'

Within the currency market there are several sub-species of dealer. At the heart of the jungle are the pure market-makers, usually the youngest and loudest members of a dealing room. Their job is to quote prices to anyone who calls up and asks. Specialising in one or two currencies, they dodge in and out of the market trying to buy low and sell high. The amounts of money they can deal in are strictly set by their organisations to keep the risk within carefully calculated limits.

What matters to them is what happens in the foreign exchange market in the short term - this week, today, the next three-and-a-half minutes. They frequently do not even have much of a view on how currencies are likely to move a whole month ahead. That is too long a time-horizon.

In the old days, as a dealer grew older and slower he was put out to grass in a dull administrative job or he left the City altogether. These days currency dealing is a career. As market-makers reach their late twenties many retreat from the controlled chaos of minute-to-minute dealing into 'proprietary' trading - using their bank's own money to make a profit. This requires a more strategic approach, operating in several markets simultaneously and holding positions for days or even weeks rather than just minutes.

A third important sub-species is the options dealers, the boffins of the currency markets, the intellectual elite. Required to understand the complex mathematics needed in handling financial derivatives, they are the so- called 'rocket scientists'.

In its search for the people with the right intellectual and strategic approach, Bankers Trust, the US bank, has recruited currency options traders by advertising in chess magazines. (When bankers recently fielded a team against Gary Kasparov, the Russian grandmaster, they came close to beating him).

But the quality of life of the average currency dealer is low. They arrive in their offices between 6.30am and 7.15am, and usually stay until 5.00pm or 6.00pm. Glued to their dealing screens in case the markets move, they eat a lunch of sandwiches and junk food at their desks. 'The difficult thing is concentrating for 10 hours a day,' says a dealer. 'You go home totally drained. The last thing you want to do is use your mind. You slump in front of the TV. You don't even want to talk.'

B ecause of the hours, the social lives of dealers tend to be meagre to non-existent. They socialise in packs - hence the common sight in City wine-bars of 10 weary dealers huddled round a group of empty bottles at 6.30pm. They often marry people who are in the same business, who understand the stresses and strains. The divorce rate is high.

In the past, it was typical for dealers to live outside London. A substantial house in Kent, Sussex or Oxfordshire remains common, but increasingly dealers are having to move back into London. The long working hours simply do not allow time to commute from outside.

So what's it all for?

Money. 'The people who do this are those who like to see the monetary reward,' says a senior dealer. Dealers, in other words, like to earn lots of money. Which they do. Salaries of over pounds 100,000 including profit-related bonus are common. Particularly in the US, dealers sometimes earn well into the millions.

The long working hours, after all, are partly their own fault. They could go out to lunch if others were employed to man the dealing screens while they were out. But more employees would mean spreading the profit bonus across more people - less for each individual - and dealers would prefer to take the extra money. They like having their houses and their fast cars, even if they hardly have the time to enjoy them. It tells them they are succeeding.

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