GUEST COMMENT: 6 questions you should always anticipate at a trading interview

Whichever role you go for in an investment bank, some questions are inevitable. You should always be prepared to say why you want to work for that bank. You should always be prepared to say why you want that job. And you should always come with some questions of your own.

If you're interviewing as a trader, you should also be prepared for the following:

1) Tell me about a time you took a risk?

The key to this question is not the 'Risk' itself but the analytics surrounding the risk. Talk about your thought process was before taking the risk, how you weighed up the opportunity cost etc and then the results of taking the risk. Do not be surprised if your interviewer throws other possible outcomes at you and wants to see your reaction and how you would handle it.

2) How do you handle stress? Do you think you can handle it well?

The market has a way of turning cool, calm, collected individuals into irrational, impulsive, and

angry players. If you fall into the latter group, you will not succeed.

3) Which attributes do you think are vital to a good trader? Demonstrate you have these...

A good trader is able to digest large amounts of information and to play out scenarios that tie in together. If you want to be a trader you'll need to think for yourself and piece together various scenarios and outcomes. You'll also need to keep your objectivity when things unfold in a fast and volatile market.

To prepare for this question, focus on competencies and abilities suited to trading roles.

Examples are listed below but it is good to note that in first round interviews these can come as a question on their own i.e. 'Give me an example of a situation where you have had to make a tough decision...'

* Being disciplined

* Being decisive and able to make rational decisions in a timely fashion

* Being a hard worker and motivated individual

* Working as part of a team

* Being organized and prepared

* Having good Intuition

* Having Patience and being able to maintain your cool

* Confidence

* Being Focused

4) If I were to give you 250,000 where would you invest?

Follow the markets, make sure you have an answer to this question and can rationalise and justify your decision.

5) Are you willing to put the interests of the company and a client before your own?

I beg of you not to waffle on about the ethical implications of this questions, it is simply a direct loyalty question and you just need to answer yes.

6) Technical Questions

Technical questions will depend on who is interviewing you i.e a yield guy vs. a commodities guy or equities guy will all tend to ask their questions based on their product.

They may take a general route and ask you macroeconomic questions....questions revolving around inflation, unemployment, gdp, fx rated and try to obtain your view on the economy.

· What is the dollar/yen exchange rate today? Where do you think it will be in one year and why?

· What is the current price of oil? What have we seen in the last 3-6months? Where will it go?

· What is your view on the current sovereign debt situation?

You may be asked questions such as:

· You purchase some Ford Motor Company bonds. How can you hedge your interest rate risk?

(Go short treasuries, so you are left only with the firm-specific Ford risk)

· Graph the price-yield relationship of bonds.

· What is an inverted yield curve?

· Describe what you understand of convexity?

· How would you explain credit spread?

· If the yen/dollar exchange rate is 110 yen/$ today and the one year forward rate is 115 yen/$, what does this imply?

· What is a call option? Would a price of a call option go up or down when the maturity of the option is longer?

There are also the brainteaser style questions:

· You have nine balls, one of which is heavier than the others. You have a balance that doesn't tell you how heavy each ball is. You can only use the balance twice. How can you identify the heavier ball?

· If you have 128 players on the football pitch and each player shakes each player's hand once, how many handshakes are there in total?

· If one tap fills up a swimming pool in 2 hours and another tap fills it in 4 hours, how quick will it be if both fill them up at the same time?

· What is the sum of 1 to 100?

The author is a front office markets professional at a US investment bank.