There are a variety of tribes on Wall Street — the traders, the bankers, the analysts, the managers.
Each requires a specific skill set.
Business Insider caught up with James Koudounis, the CEO of Japanese investment bank Mizuho Securities USA, to get a sense of what makes a good trader. Based on his response, it’s clear he thinks the game has changed.
Gone are the days of swinging for the fences.
“Awareness of risk is critical in today’s environment. We’ve seen that going after the ‘big trade’ at all costs is no longer a workable strategy,” Koudounis told Business Insider. “Traders should be hungry, but also need to think about when it makes sense to pull back and manage risk.”
Mizuho Financial Group‘, Mizuho’s parent company, is the second largest financial services group in Japan. They don’t have a huge presence in the US, but its Americas business was the right size (on the smaller side) and had the right balance sheet (a strong capital position) coming out of the financial crisis.
As such, Koudounis is focused on growing the company and they have been expanding their credit and equities businesses substantially over the last year.
There are two ways to get a good trader. You can hire them or you can train them.
The layoffs of the financial crisis created a ton of opportunity to hire great traders as they left big banks.
Training them, though, is about to become a bit more difficult. The market is changing. Rates are going up, China is slowing and the world is looking different.
“A lot of the up and coming young professionals on the Street today were not working during the turbulent period of the global financial crisis in 2008, nor previous market dislocations like what happened during the collapse of Long Term Capital Management (LTCM) or the Asian Contagion,” Koudounis said.
“Good traders today need to heed the advice of senior mentors to fully understand how things can go terribly wrong if you are not managing the risk in your portfolio properly.”
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