Arbitrage

Hey! I am a complete noob when it comes to trading so I apologize in advance.

I am studying Economics at university at the moment and I intend to apply for graduate positions at pro trading firms in another year. One of the firms I want to apply for is Optiver. I understand their method of trading is Arbitrage. So I wanted to practice a bit of trading using this method so I can improve my chances of getting a job.

Whats the first place to start? Would Forex trading be the way to go? I have never traded for real money before. I have entered a share trading competition before and the strategy i used was techniqual analysis from the information of the first steps thread by FTSE beater.

Thanks would appreciate any help.

Squidg,

Arbitrage is very short-lived (seconds) and provides miniscule profits which are only viable where costs are negligible, aand therefore only open to institutions with deep pockets; it is not accessible to mere mortals. So forget trying to trade it. However, there are plenty of textbooks which explain the principles of arbitrage. If you can discuss with confidence and show a good knowledge, this will help.

Lack of trading experience should not be held against you (it's not expected of new graduates)- after all you are too busy studying for your degree. Just study the theory.

Grant.

Thanks for you help grantx. I read somewhere that at these interviews they want to see that you are interested in the financial markets and someone said that the best way to show this is to have actively traded.
So maybe i might just open up a forex account and deposit a little bit of money i can afford to lose and trade. I guess my next step will be to read the forex forum on this site.
Do you think this is a good idea? Or should do you think it would just be better to trade shares?

Squidg,

There are people on T2W who know more than I about the entry requirements for arcades.

Trading is a bad idea. If you think you have the time to trade, you would be better to use the time to study for industry exams.

Consider this: two graduates apply for a position. One has a 2:1 and has "dabbled" in the markets. The other candidate has a 1st and never traded, but having studied the markets he can discuss with confidence most aspects and shows greater awareness. My dog can open a trading account but its grasp of capital asset pricing theory is somewhat shakey.

I would argue a 1st with no pre-conceptions or ideas re trading presents a clean slate to employers - they don't need the burden of erasing bad habits.

Grant.

Squidg,

It is pretty certain to say that you aren't going to be able to get an experience of Arb trading; as Grant says it needs minimal transaction costs, buckets of wedge, and super slick systems to work. Aside from reading up on the theory, you might like to practise the aptitude tests you'll be given to do - things like complicated mental arithmetic, logic problems, even sudoku, under pressure - your careers advisory dept. should be able to point you in the direction of these kinda things (if not; just get on amazon and pick some up. Think "puzzler" for smart guys and an egg timer).

Come your interview, the practise you've had should give you an edge in the tests; and they test you on this kind of thing for a reason - to trade Arb you have to be sharp.

from a Tibra Capital co-founder

Hey Squidge,

Arbitrage is a term that's pretty losely applied to what a market maker (such as Optiver) does as a core business.

Technically, arbitrage exists only when profit can be made with zero risk, but in practice, market makers carry positions on a daily basis. I guess the reason it's called arbitrage is because as market makers we try to remain neutral to any moves in the market or changes to the underlying volatility.

Optiver obviously isn't the only firm out there - I worked there for about 6 years in fact. I left in 2006 and formed Tibra later that year along with a bunch of ex-Optiver and ex-IMC traders and developers. I don't want to get into too much detail here, suffice to say we were all very unhappy with the way the respective companies were being run.

Oh, and don't bother opening a trading account trying to pick the direction of the markets - it's just one more bad habit we have to beat out of you

Hope this helps.

squidgy_wiji said:

Hey! I am a complete noob when it comes to trading so I apologize in advance.

I am studying Economics at university at the moment and I intend to apply for graduate positions at pro trading firms in another year. One of the firms I want to apply for is Optiver. I understand their method of trading is Arbitrage. So I wanted to practice a bit of trading using this method so I can improve my chances of getting a job.

Whats the first place to start? Would Forex trading be the way to go? I have never traded for real money before. I have entered a share trading competition before and the strategy i used was techniqual analysis from the information of the first steps thread by FTSE beater.

Thanks would appreciate any help.

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