Building a Trading Team

C

cycletrader

We have the opportunity to build a trading team to manage a Hedge Fund. We have time until summer 2004 to develop a well working team of traders with five to ten traders.

Now, I'm not here to look for traders I'm here to see if anyone on this board has any experience with building such a team.

My questions regarding this issue:

- For selecting Traders what are tests that could be used, what personalities are favorable, what kind of questions could be asked in the interviews?

- Then how much time should the traders get to become profitable?

- Are there any key issues that help building a good team? I have read some books from sports regarding this issue, but maybe some of you have real life experience?


Well I do have several more questions, which I would bring up when there is some dialog. It would be interesting to hear what others that managed a trading team have experienced.


would be greatful to hear some insights

thanx in advance
 
Cycle

Welcome to the board.

I've had some experience with building a team in the past, however what you don't say is whether the traders will be following a strategy that your hedge fund wants followed, or they're supposed to come up with their own trading ideas etc.

This is a fundamental point and makes a hell of a difference when you're trying to recruit. If for example you already have the trading plan then the recruitment policy is not hard at all. But if you're trying to find future top trading talent then it's very very hard, and to tell you the truth trial and error will play a dominant role. Usually you'll find that the ones you think are going to do well don't and vice-versa.

Come back with whether you have a strategy for your potential recruits or not and I'll see if I can help
 
I agree, it's really only an issue if you asking them to have discretion with their decisions. If they are trading a system they can just press the buttons.

If they have discretion, I wouldn't give them much time to become profitable. They should be coming in with a clear method ("edge", although I'm getting sick of that term!). Their learning curve should have been covered in their past experience before they come to you.

That expierience would tell them that their edge will someday cease to work, so it is a process of reinventing their styles, to continue to be successful.
 
I am a TA @ one of the largest hedge Funds in the world...I am telling you right now...you need good Sell-Side Institutional Alliances... more than anything else. Your team should be based around this. Where are you going to be located? How much capital....?
 
You might like to establish if your prospects are the youngest child in the family. The youngest child tends to be more experimental with a higher natural tolerance for risk.

Also, conduct a standard IQ test and look for individuals that rate highly in the spatial and mathematical quadrants.

These skills are essential for good traders and system developers.

Runningbear
 
Regarding the Youngest Child Theory...I COMPLETELY AGREE....!

I have always been the gambler in the family...Always testing risk.....
 
Quote from cycletrader:


...
- For selecting Traders what are tests that could be used, what personalities are favorable, what kind of questions could be asked in the interviews?

- Then how much time should the traders get to become profitable?

- Are there any key issues that help building a good team? I have read some books from sports regarding this issue, but maybe some of you have real life experience?


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More...

We use a number of criteria:

Part of the process is a multi-step interview, a set of technical tests, detailed reference checks, and comprehensive background investigations. We also have an in-house training program that is required.

Effective hiring and team building is really something that is mastered after much experience. I probably did not get this right until after I had built my fourth group - where I had nearly complete control on the entire process.

If you do not have a lot of experience at this my advice would be to hire a firm to assist you that does .... it is extremely important to get this right and there is very little room for error.
 
I still feel that getting too technical with multiple tests is not necessarily the way to go, although if it works for you or your company then go for it.

I think many good traders on this board would fail dismally:D

I've seen people with high intellect and the best qualifications do well, I've seen them do badly. I've seen kids off the street do well, I've seen them do badly. I've seen traders lose money in their first year, about to give up and then 'click' go onto make small fortunes. I've seen very promising early traders fail never to be heard of again after a few years.

My approach would be simple. Interview a number of people, take say 10 on, then sort of continue the interview process over the next 6 months by watching them, how they operate in the trading world, and in the office. Then realize that 2-3 will make it (assuming the training that I'm giving them is good), 2-3 will break even and the rest fail.

It may take you a year or two to assemble your team from scratch, or perhaps within a year if they already come from the trading world.

However if you're teaching a system then it's pretty easy, follow orders, work as a team, but ask questions.
 
Quote from cycletrader:

We have the opportunity to build a trading team to manage a Hedge Fund. We have time until summer 2004 to develop a well working team of traders with five to ten traders.

Now, I'm not here to look for traders I'm here to see if anyone on this board has any experience with building such a team.



I am just curious, where do you plan to look for a potential traders ? What background do you prefer ?
Walter
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