A Day in the Life of a FX Spot Desk Trader (Part 1)
06:00 Alarm goes and I'm out of bed. Hopefully I have managed to sleep all through the night, although on odd occasions I will get a phone call or a text message if anything particularly important is up. Not so often these days though. The people I work with know how much I value my beauty sleep. Quick shower and shave and I'm usually out the door some time before 0630
06.30 On the way to the tube station I will have a quick scan through the news headlines on my phone, check my e-mails, check the spot market levels in Asia etc. By the time I get to the tube station my phone has downloaded all the early morning research pieces that I've been sent so I have something more stimulating than the free papers to read on the train. It's a pretty short hop down to Bank (usually around twenty minutes), but by the time I'm there I usually have a better idea of what has happened of note overnight. Over the years I've found I have improved immensely at 'skimming' the morning reading, and can fit a surprising amount into the time available.
07:00 Usually around this time I arrive at the office. The junior on the desk is more often than not already there a few minutes ahead of me, and he has some early morning stuff to do for us, which, these days needs minimal supervision from either myself or any of the other more senior traders on the desk. Nothing earth shattering - a quick check of highs and lows in Asia, a look to see if any barrier options should have been triggered, and he also writes a few quick notes to put on our internal chatroom system here for the whole of the trading floor. It's a good exercise for him to be able to get up to speed quickly and to be able to precis and disseminate before the information becomes stale. To give him his due he's gotten pretty good at it since he started with us around 18 months ago. While he's doing this, I'll be logging into all the trading systems we have on the desk, and talking to a few market contacts either electronically via individual or group chats on Bloomberg, Reuters etc, or down a sqwawkbox line.
The conversations vary wildly depending on who I am speaking to. Some conversations will be with contacts in Asia, getting a bit more colour on what was going on overnight, some will be with London contacts at assorted banks, hedge funds, prop trading houses etc, while other conversations will be with counterparts in the U.S. who may have woken up in the night to see what's going on. Some of them are habitual overnight traders, some merely take a look at their screens if they happen to wake and some will have been woken as a result of 'call levels' left with friends and colleagues stating specific trading levels at which they wish to be disturbed. A friend at a New York based hedge fund calls me up and we chat for a few minutes about the markets, what's happening at home, baseball scores (he's a long suffering NY Mets fan) and anything else. His wife is out of town this week visiting family and I've known him long enough to know that he usually gets restless when that happens and more often than not ends up trading a bit more overnight than would usually be the case.
07:09 As we're speaking euro/yen is plummeting through some short term stoplosses, gathering pace on a thin and illiquid day in London. My friend has a core 'long risk' position that he's very comfortable with, but he will job in and out around that to keep the scoreboard ticking over so to speak. He actually sold some eur/jpy and nzd/jpy via my Singapore guys in Asian time, and as we're sitting chatting he asks me to work a bid to buy half of that eur/jpy amount back, just below where the market's sitting. My Yen trader has just stepped off to grab a coffee, and so coincidentally I am actually covering the yen seat myself for a few minutes. So I'll watch my mate's order here. He leaves me with a little discretion as to how and where to execute (as he trusts me not to abuse him). All taken care of, he hangs up and goes back to sleep, knowing I'll call him if there's anything he needs to know.
07:18 Price request comes in from a sales guy on the floor, asking for a predatory corporate customer of his. - "gbp/jpy in 50 please". I make him a price - "48/60". "YOURS - you get 50 at 48" replies the sales guy, a little too quickly for my liking. This smells a bit. The customer in question has a bit of a reputation for 'drive-bys', a practice frowned upon in interbank FX circles, whereby a client will call several banks within a few seconds and execute multiple large clips of the same currency pair in the same direction. So that the end result is that the client ends up paying away a spread appropriate for, say, only 50 million sterling when they might have had ten times that amount to execute in total. And then you have several banks tripping over each other in order to try and get out of those positions. Sure enough, it's a mess. gbp/jpy looks heavy immediately, and I can hear the dollar / yen voice broker over my speakers getting hit repeatedly. I am definitely going to have my work cut out here, but I am looking to sell some yen in any case, around these levels, for my buddy in New York. Another salesperson, this time from the desk that services the world's central banks, is asking us a price "Georgie" (our sterling trader). "Bid in the cross please mate - just 25, usual guy, full amount, in competition".
By 'The Cross' George knows he means eur/gbp. eur/gbp is trading around 81/83 at the time, having ticked down from 85 right as the guy started asking for the bid.. "I'll take that one George" I shout. "Mike - show 81.5, maybe 82 if you have to. Make sure we get these please". I notice the newest of the summer interns looking over from the end of the desk, a bit puzzled. I beckon to him. "Meat" (his nickname - fresh meat), come here, watch and learn. Meat plonks himself down in the empty seat next to me. "81.5 you got ‘em Rich" Mike shouts out. I just got my 25 Euros. I immediately hit the Reuters Matching system, offering out 10 million of the Euros at 82. I get paid for (i.e. manage to sell) two million only, and then the price starts moving lower. 80 given, then 80 offered, 79 trading, 78 trading. I shout across to George "pick me up another 27 somewhere down here please George. George starts working his keypad furiously, pausing a couple of times to lean into the microphone on his dealerboard and talk to his sterling voice broker. Not much later his price comes back "79.5 or thereabouts". "Into me at 80" I shout back. I'll buy the Euros from George at 80 and anything better than that he can keep in his P+L account for his efforts. As an exercise I get Meat to start jotting down a few numbers on my paper pad, as the deals from the other salespeople and traders will take a little while to be booked to me.