Wednesday, November 17, 2010

How Wall Street Trading works

Here is how many front-office functions work. A young person enters a training program, then is assigned to a desk.

Let's say a lad is assigned to an equity trading desk. He is gradually allowed more and more responsibility as he learns the ropes.

Then one day he has reason to believe he can win big on a trade. He has a hunch or gets a lead. So he bets the farm on that trade. He goes for it. He puts all his eggs in that basket.

If he wins, he is a hero, everything he does after that is considered heroic. The person that successfully does that most often moves to the top of the pyramid.

If he loses on his first trade, he moves into consulting or goes to take an MBA, then moves into consulting. Or he moves to the operations department.

This is a huge overgeneralization. But maybe it is a good model for your business if it is stuck. Bet the farm on one big trade. If you're already failing, throw long into the end zone.

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