Essential skills for a successful elite trader

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Ivar Schot

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15 September 2021

Everyone wants the best candidate for every open position. Especially when your company is growing rapidly, the right employee will accelerate your success. Therefore, there is a lot to gain in terms of growth and financially, but also a lot to lose if you don’t make the right assessment when filling the relevant vacancy. Now, imagine you are searching for new recruits in the trading business, you might think: what are the essential skills for a succesful elite trader, and how do I recognize them? With this blog we will adress these questions.

Trading

A good example of the type of candidate, where you choose for certainty, is that of a ‘trader’. Whether a trader trades in currencies, forex or commodities, with long or short cycles, as a market maker and/or as a Quant trader, there is always a lot at stake. The question arises: in the selection process, do you take an old-fashioned gamble or do you prefer to make a data-driven decision, a scientifically substantiated choice?

The brightest minds in class

Now, as a trading organisation, there are many ways to find and add the right traders to your workforce. From campus recruitment to large social media campaigns, the common denominator is that they target the brightest minds in the class. After all, the smarter the trader, the easier it is to create an edge in his or her portfolio. With this, you can achieve even higher returns than an ‘average’ trader. But is the smartest boy or girl in the class always the best trader? Or are there other factors that determine future success? 

The trader of the past

Most traders have a background in econometrics, mathematics or technical physics, beta studies in which success seems to be correlated with IQ. And that seems to be correct, one of the components of an IQ test is the testing of numerical skills, precisely the skills that appear to be available within the studies mentioned. But having exceptional numerical skills alone is not the key to success. Much more is needed to achieve an exceptional result.

IQ an outdated concept?

By means of the famous IQ test and the testing of numerical skills under time pressure, the selection process seems to imitate the real skills of a trader in his daily work field. Please note: most applicants take several such tests in their search for a job as a flash trader. There is therefore a learning effect, something that is difficult to take into account in your considerations.

In addition, it is good to ask yourself whether numerical skills and the ability to perform under time pressure are the decisive factors that can predict the success of a trader. Especially in today’s labour market, with shortages looming in many sectors, it is time to look at new, innovative ways to improve your selection process.

The distinctive cognitions of a trader 

When you monitor the actual behaviour of a trader, independent of the market in which he or she operates, you will never see him or her complete an entire day of tasks from an IQ or Aptitude test. You will see them observing, taking in details, making a complex analysis, making important decisions and at the same time considering the smallest change, the smallest detail. All this at a lightning speed. When your mental capacity can put a lot of information in context at once and you can combine the hyper-focus, which is sometimes necessary, with lightning-fast decisions, then you have the skillset of the trader of the future. Research at 4 large trading houses has shown that selection does not need to be more stringent than an average procedure. However, identifying the right skills and assessing them is extremely important in view of the shortage in the current labour market. Where possible, you want to broaden your talent pool and not let any talent get lost during the selection procedure.

As J. Bernlef once said: ‘To see something, you first have to be able to recognise it’

Are you curious how trading organisations are already selecting differently on the basis of specific cognitions? Read the case of IMC – The BrainsFirst Challenge – Are you wired like a trader? Contact us and we will take you through our brain approach.

Would you like to to discus our brain-aproach? Book a meeting with our trading-expert Ivar Schot!