The Fastest Way to Become a Trader on Wall Street

Posted a year ago
Fastest way to become a trader - header

Want to make it big on Wall Street?

Even better, want to get there before you’re 30? Or even 25?

You can if you put your mind to it!

There are a few tricks of the... trade… and I’m here to share them with you.

This blog will show you everything you need to do to fast-track your way to Wall Street, from high school to your first grad job at the trading desk!

Let's start right at the beginning...

Step 1: Study the right subjects

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Picking the right subjects at school will give you a head start and prevent any obstacles down the track.

I hope you like numbers!

Prerequisites:

+ Australia/NZ: Mathematics

+ UK: A level Mathematics

+ US: Mathematics

Highly recommended:

+ Australia/NZ: Economics, Financial Literature, Physics

+ UK: A level Further Mathematics, Economics, Statistics, Physics, Computer Science

+ US: Physics, Statistics, Personal Finance and Investing

Step 2: Get a degree

Charisma and tenacity may have got you in the door of a Wall Street firm back in the 80s, but today you’re going to need both of those things and a degree.

While finance and economics are the most common majors among traders, there are actually multiple study pathways.

Let’s have a look at the top degrees for an aspiring trader.

Best undergraduate degrees for traders

UK Scholarships - Loans

Time-wise, your best option is to study in Australia, New Zealand, or the UK, where you can get your degree done in three years.

In the US, you’ll spend four years as an undergrad. (It may not be the quickest route, but what I tell you later might convince you to take this option.)

Finance

You can’t go wrong with a finance degree if you want to become a trader.

As a finance student, you’ll gain a solid understanding of many trading concepts, such as the translation of accounting statements, derivatives, fixed income securities, and corporate finance.

Economics

In an economics degree, you’ll learn about business cycles, economic indicators, currencies, interest rates, as well as monetary and fiscal policy.

This gives you an economic intuition that you can draw on in a trading career to understand the news flows and current events that may lead to trade decisions.

An economics degree also covers basic regression and statistical analysis, both of which are necessary in futures trading.

Computer Science and Statistics

Computer science grads are increasingly in demand as trading becomes more technology driven.

The big firms now employ armies of computer scientists and statisticians in their risk management teams, or to program complicated trading algorithms used extensively in high frequency trading, statistical arbitrage, or market making.

If you are quantitatively-minded, computer science would be an excellent major for a trading career.

Applied Mathematics, Engineering, Physics

Mathematical models can be used to predict the risk of any given event – and there’s a lot of risk involved in trading!

Maths, engineering, and physics concepts are very useful to understand quantitative concepts, and can be applied to economics in creative ways.

As you can see, there's no specific degree that will make you a trader, but choosing the course that aligns with your strengths and interests will ensure you excel in your area of trading.

Best universities for traders

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Where you study can be just as important as what you study.

It’s no coincidence that every Ivy League college and elite university in the New York area has alumni working on Wall Street.

The trading game is seriously competitive, and the big firms are under pressure to recruit the most talented of the pack.

Where would you go if you wanted to source the best minds?

To the best universities, of course!

Yep, the big dogs on Wall Street don’t muck around. These firms know the US colleges that are producing tomorrow’s trading stars and they’ve formed “feeding” arrangements with them to make sure they get in first.

Okay, that sounds creepy, but it’s not!

It just means that that the university gives the firm permission to source students directly for its internship and graduate programs.

In many cases, the only way to hear about these jobs is through one of these “feeder schools”.

For example, at University of Pennsylvania, an Ivy League college known for its strong focus on financial services careers and prestigious Wharton School, around 25 students are hired by Goldman Sachs each year.

In fact, UPenn has more alumni working on Wall Street than any other university!

So remember when I said that extra year as an undergraduate in the US would be worth it? Now you know why:

A degree from a top US college can be your ticket to Wall Street!

You get to fast-track your trading career without ever having to leave campus for an introductory interview.

Talk about a good investment!

Top 5 Wall Street feeder schools

College application timeline

These five US colleges dominate the undergrad recruiting pipeline on Wall Street.

Applications, at the ready!

1. University of Pennsylvania

Top 10 feeder school: 14 Wall Street firms

Top feeder school for: Goldman Sachs, Morgan Stanley, Bank of America Merrill Lynch, Barclays Capital (tied with Harvard), Citigroup, Blackstone Group, Houlihan Lokey, Moelis & Company, Nomura Holdings (tied with NYU), and Susquehanna International Group.

2. New York University

Top 10 feeder school: 18 Wall Street firms

Top feeder school for: JPMorgan Chase, Wells Fargo and Company, UBS AG, Lazard (tied with University of Michigan), Nomura Holdings (tied with UPenn), Macquarie Capital (tied with University of Michigan and Harvard), Credit Suisse (tied with Harvard).

3. University of Michigan - Ann Arbor

Top 10 feeder school: 14 Wall Street firms

Top feeder school for: Evercore, Jefferies & Company, Lazard (tied with NYU), BNP Paribas, KeyBanc Capital Markets, Macquarie Capital (tied with NYU and Harvard).

4. Harvard University

Top 10 feeder school: 10 Wall Street firms

Top feeder school for: Barclays Capital (tied with UPenn), Credit Suisse (tied with NYU), Moelis & Company, Deutsche Bank (tied with Cornell), Macquarie Capital (tied with NYU and and University of Michigan).

5. Cornell University

Top 10 feeder school: 8 Wall Street firms

Top feeder school for: Deutsche Bank (tied with Harvard).

Other top feeder schools worth a mention

+ Princeton University: Top 10 feeder school for Deutsche Bank, Credit Suisse, Susquehanna International Group, Morgan Stanley, UBS AG, PNC Financial Services.

+ Boston College: Top 10 feeder school for UBS AG, Jefferies & Company, Deutsche Bank, HSBC, Barclays Capital, Goldman Sachs.

+ Columbia University: Top 10 feeder school for BNP Paribas, JPMorgan Chase, Citigroup, Credit Suisse, Morgan Stanley, Barclays Capital, BMO Capital Markets.

Step 3: Do a trading course

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Now that you’re at university, it’s time to get serious!

Don't think that you can sail through your degree without actively preparing for your Wall Street calling.

Even being at a feeder school is no excuse to take it easy. You still need to stand out from the rest.

More important than the degree you study – or the institution you attend – is to gain practical skills and experience in trading.

Uni will give you a strong knowledge base, but I hate to break it to you, you won’t actually learn how to trade. That’s because many of the practical skills needed for a career in trading aren’t covered in the university curriculum.

In a finance degree, you’ll learn a lot of theoretical information, but there isn’t likely to be any specificity in stock-picking or financial instruments.

That’s why, even if you’re the top student, there will still be a pretty huge gap between your skill set at graduation and the skill set required to begin successful equity investments and trading.

This leaves you with three options:

1. Learn trading in an MBA

2. Learn trading on the job

3. Learn trading NOW!

Since we’re pressed for time, doing your Master’s isn’t an option, as it will delay things by a couple of years.

Option two is not ideal, either. How are you going to get the top job without the skills?! No Wall Street firm is going to look twice at you without a demonstration of your trading excellence.

I guess that leaves you with the learning now option. But how?

Don’t worry, I’ve got all the answers.

What you need is targeted advice, real scenarios, and hands-on learning, and you can get that by signing up for a trading workshop!

A short course is all you need to learn the basics of financial markets and how to trade them.

This is hands down the best career investment you can make as a trader. But that doesn’t mean it has to be a big one, time-wise or money-wise.

Most courses will offer student discounts, and there’s bound to be one that runs over a few nights or the weekend.

If you’re serious about landing a job with a top global hedge fund or investment bank on Wall Street in your 20s, then this is an unmissable step.

Not only will you build the practical skills you need to start investing, but after sitting through two full days of intense trading chat, I guarantee you won’t want to do anything but trade!

It’s great for networking, too, because you’ll be in a room full of other budding traders, all of whom are at different stages of the learning journey.

After the course, you’ll know what area of trading you want to go into, and you’ll have a solid foundation to build upon in your quest to become a big time Wall Street gun!

This is a great way to complement and enrich your studies with genuine interest and specialist skills, which will help you later on when you look for an internship (Step 5).

Step 4: Start trading

Fastest Way to Become a Trader on Wall Street - start trading

Now that you’ve got the skills, it’s time to start putting them to work! When it comes to trading, practice is critical.

But you don’t want to go too hard too early, so start by opening a demo account with a broker online to get a feel for the market and simulate live trading.

At the same time, stay up to date with the markets and take note of how your decisions impact them.

Of course, you won’t experience the psychological pressure of having your (or your parents’) hard earned cash on the line, but this is the best way to familiarise yourself with trading software and hone your strategies without the risk.

Once you’ve built up some confidence, you can start trading for real!

You don’t have to invest a massive amount (you’re on a student budget after all!), but making and losing real money will ensure you focus more and develop your trading skills a lot faster.

Undergraduate investment clubs

Take a look at what your university offers in this regard, too.

Many universities have student-run investment clubs, which give you the chance to take part in portfolio management scenarios using real funds (that aren’t yours!). These are great hands-on, practical learning platforms that will accelerate your understanding of finance and give you some solid trading experience to show off to potential employers!

It’s no surprise that the top Wall Street feeder schools lead the charge with on campus investment clubs.

UPenn’s Wharton School has multiple student-led organisations for Wall Street wannabes, including the Wharton Investment and Trading Group, the Wharton Hedge Fund Club, and the Wharton Investment Club.

Within these clubs, there are many investment teams – each with their own leaders – that focus on different industry sectors.

Harvard also has a few investment clubs, most notably the Black Diamond Capital Investors, which is not only the largest student-run hedge fund at Harvard, but one of the most successful student finance organisations in the US!

Another renowned group is the Duke University Investment Club, which currently manages a $50,000 portion of the Duke Endowment in coordination with the Duke University Management Company (DUMAC).

At the Cornell Investment Club, Cornell University students are in charge of running the portfolio of fixed income and equity securities, currently with $75,000 in assets.

But with a $400,000 (that’s five zeros!) fund, the Boston University Finance and Investment Club (BUFC) puts them all to shame. Plus, BUFC student members get to go on an annual Wall Street trip to network with alumni and visit the top companies.

The first place a Wall Street firm looks for top trading talent at a feeder school is the investment clubs, so it pays to get involved – in more ways than one!

You’ll gain more real world skills than in any of your academic courses, and the reward for being an avid club member can be a coveted internship at a major investment bank.

Note the word “avid”, because merely joining a club and showing up to meetings won’t be enough to catapult you to Wall Street.

Everything you do, you have to do with 110% effort!

Get involved in club events and if you really want to challenge yourself, compete! There are case competitions you can enter, such as the annual Point 72 Stock Pitch Competition, which gives you the opportunity to go head to head with students from other unis. Usually there's a cash prize up for grabs, too, and you know what that means... more money to invest!

Don't stop there – aim for an executive position in your investment club. Student leaders make up the biggest proportion of interns at the top firms.

Immerse yourself in the trading world

If you're serious about getting to the top of the trading business, you need to live and breathe it.

You need to pursue your passion with a fervent intensity.

Learn everything. Think independently. Do your own thing. Trade actively. Follow the markets. Lose money. Take every opportunity to make yourself a better trader.

Spend all your free time poring over credit analyses and books written by your favourite hedge fund managers.

Do your research. (No, watching Wolf of Wall Street doesn’t count!)

This is what’s known as self-education, or “self-study”.

Remember, you are competing against similarly intense and focused students at your university (and around the world). You’ve got to take your learning into your own hands –there’s no room for complacency!

The more you immerse yourself in the trading world, the more you’ll get out of it.

Step 5: Get an internship

Fastest Way to Become a Trader on Wall Street - internship

Now it really gets exciting! It’s time to apply for a Wall Street internship.

The easiest way to get access to a Wall Street firm trading desk is to reach out to an investment bank. Obviously, it helps if you’re at a feeder school to get a foot in the door, but you still have to prove yourself once you’re there.

Begin applying for summer trading internships at the major investment banks as soon as they put the call out.

The trading positions are going to be the most difficult to get, so apply for stock analyst or trader assistant roles, too.

This is where all your trading “extracurriculars” are really going to show their worth.

Companies are looking for vocational studies as well as academic, so mention the trading workshop, your stock portfolio, investment clubs, and case competitions on your application, and include any relevant skills, experience, and achievements.

These are evidence of your passion and dedication to your craft, and they’re going to make you look a lot better than the student who didn’t do any of these things.

For every trading internship role at a bank, they receive around 2,000 applications, but your proactivity and willingness to invest time and money in your own trading development will ensure that you stand out in any recruitment process.

If you score an interview (which you will!), make sure you research the role at the bank and go in armed with a sound knowledge about it.

With all the trading activities you’re involved in, you definitely won’t be short of content in your interviews! Make sure you cover all bases, though. Talk about the trade you placed on your trading account, but be ready to explain your logic as to why you placed it.

Then, once you get this entry position, don’t take it for granted. Work hard and sharpen your trading skills like your life depends on it!

You may be interning for 10 weeks, but we both know that’s not where it ends.

Which leads me to...

Step 6: Secure a grad job

Fastest Way to Become a Trader on Wall Street - grad job

This is the best step of all!

It’s when you officially become a trader.

Obviously you’ll kill it as an intern, and your firm will have no choice but to offer you a full time graduate position upon completion of your degree.

Put that champagne on ice!

Final Thoughts

The path to Wall Street is complex and intense, but it doesn’t have to be long.

Attending a top-ranked US university may speed up the process, but there’s no reason why you can’t be one of the world’s best traders if you study elsewhere.

What’s most important is that you follow these six steps and pursue your passion for trading and investing like it’s the only thing that matters.

Talent and drive will take you far.

Then, once you get there, you’re going to be rewarded in the hundreds of thousands – and eventually millions – of cash dollars!

What are you waiting for? Let’s make it rain!

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