The key to acing a sales and trading interview is preparation—and beginning your preparation as soon as possible. It’s a lot easier to begin learning finance concepts gradually than it is to become a fixed-income derivatives expert in two weeks. It’s also a lot easier to gradually research and learn about current events that affect stock and bond markets than have to cram the night before your interview. So start reading The Wall Street Journal, Bloomberg Businessweek, Fortune, Forbes, and other business periodicals now.
To help you further prepare, below are some of the most common (and important) interview questions you'll face in sales and trading interviews. It's essential that you know how to answer these questions, and that you answer them well.
1. Why do you want to become a trader/salesperson?
This question is not so relevant for someone with industry experience but is especially important for career switchers. For example, if you went back to school to get an MBA or a degree in quantitative mathematics, you need to have a good reason for the career switch. This story should involve personal reflection and things that you’ve done in the past that suggest that you might be good at trading in the future. Maybe you’ve traded a personal account and not lost everything. Maybe you’re quick with the numbers. For salespeople, the important thing is that you love to sell. If you have a story of a time when you sold the equivalent of “nonexistent oceanfront property in Kansas,” by all means, tell it.
2. Why are you interested in sales and trading rather than investment banking?
This question deserves some thought. You can’t really say customer focus, since investment banking and trading are both highly customer-driven activities. You need to think carefully about what in your personality and past work experience makes you more suited to sales and trading versus investment banking. There is some disdain among traders for investment bankers and vice versa, although you’ll never get either to admit it. You could potentially use this information to your advantage during the interview, but be careful, since there are always exceptions to the rule.
3. What would you do with $1 million?
A more applied version of this general stock market question is, “Assuming I gave you $1 million to invest, how would you go about investing it?” Here, the obvious point is to talk about products that your interviewer cares about. Don’t recommend high-yield bonds to an equity salesperson, and don’t try and pitch a portfolio of foreign equities to a bond trader. A lot of times, your model portfolio will apparently draw the derision of your interviewer. This is typically going to be a test of your nerves—don’t back down. Try to justify your initial portfolio recommendation succinctly and articulately. On the other hand, don’t be disagreeable—this is a guaranteed ticket to rejection.
4. Talk to me about the economy.
This question can come in a variety of forms: “Where do you see the dollar trading and how will this impact the long-term government bond market?” or “What is your outlook on inflation and do you think there is a risk of deflation?” or “Why is the Federal Reserve so concerned about inflation?” If you subscribe to The Wall Street Journal, are a frequent visitor to popular financial blogs, and wake up to CNBC every morning, you should have no problem with these questions.
5. Pitch me a stock that you would buy or sell now.
Whatever you do, keep your answer brief. Salespeople and traders have very limited attention spans, so if you find yourself describing what the company does for more than one minute, you’re probably not going to sound very convincing. You need to show that you can take the best parts of a stock story and articulate a convincing case quickly. This is what salespeople do every morning, and if you can’t do it in in a room with a friendly interviewer, what makes you think you can do it with customers who get calls from 20 salespeople every morning? The ideal scenario here is that you give your pitch, and the interviewer asks a few follow-up questions that you are able to discuss intelligently because you are very familiar with the story.
6. What is the greatest risk you have ever taken? How risky are you?
There is a common misperception that traders enjoy taking wild amounts of risk. This is simply not true. Traders are paid to take appropriate risks. Be sure that your example demonstrates that you performed due diligence that convinced you that the risk was worth taking, regardless of the eventual outcome.
7. What is the probability of flipping 3 heads and 1 tail?
Although you might not get this exact question, you will have to field a brainteaser or two, and so you'll need to know how to respond to these types of questions. As for this one, it's a gambler’s trap. Coin flips are memory-less and there’s just as much a chance of rolling four heads as there are rolling of rolling two heads and two tails or three heads and one tail, etc. Each outcome has a probability of (0.5)^4 = .0625. Don’t get trapped thinking that there’s more of a chance that the fourth flip will be a tail just because the previous three flips were heads.
This post was adapted from the newly updated Vault Career Guide to Sales and Trading.
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