How to Become an Institutional Stock Trader
Becoming an institutional stock trader is a process that typically takes many years along a well-defined career path. While there is more than one way to become an institutional stock trader, by far the most common path is attaining a college degree in a quantitative discipline, going to work at an investment bank as an analyst, earning an MBA, returning to investment banking as an associate, and then transitioning to a hedge fund or other institution as a trader.
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Instructions
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Earn a degree in a quantitative discipline from a "target" school. Quantitative degrees in fields such as math, physics, computer science and engineering are highly valued by investment banks, especially as they relate to trading. Getting a math degree is not enough, however. It has to come from the right school, and you must maintain at least a 3.5 GPA. Target schools are those schools from which the major investment banks specifically recruit. The banks will often do their recruiting on-campus at these schools. Examples of target schools are Harvard, Yale, Princeton and MIT.
It still is not enough to have a solid GPA in a quantitative discipline at the right school, though. Extracurricular activities that relate to trading (investment clubs, for example) increase a candidate's chances at receiving an offer from a bank. Even more important than extracurricular activities are summer internships at investment banks, beginning your sophomore year in college.
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Spend two years as an analyst at an investment bank. Entry-level employees at investment banks are known as analysts. They do the grunt work of the investment bank, typically work 80+ hours per week, and spend the majority of their time doing research and working with Excel. To become an institutional stock trader later in your career, it will help a great deal if you first work in the Sales and Trading (S&T) department of the bank. There you will receive exposure to trading and will begin to learn what it takes.
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Earn an MBA. After two (or even three) years as an analyst, the typical career path includes a return to college to earn an MBA. Again, the school you attend is of monumental importance to your career. It is best to earn your MBA from a top-10 school, otherwise it is considered less valuable. Examples of target schools for the MBA are Harvard Business School, Stanford, Wharton, MIT Sloan and Columbia.
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Return to investment banking as an associate. After receiving an MBA from the right school, the next step is to become an associate at an investment bank. Associate is the next rung on the banking ladder (followed by VP and Managing Director). Work hard as an associate, then after a year or two begin the recruiting process for what is known as the "buy side" (hedge funds, asset management and anything that deals with trading assets). This is typically handled through headhunters and by networking with friends and acquaintances in the business.
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Go to work for an institution as a trader. Having distinguished yourself over the past five to eight years in investment banking, you are now able to become an institutional stock trader. The degree in a quantitative discipline will come in handy because you will often be expected to write complex computer trading algorithms.
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