Interviewing Joshua Fernando, a young professional trader
Joshua is a young trader who works for a major financial institution in the United States. In this interview, he gives us valuable insights into his view on financial markets and career topics.
“Many people would consider the work environment of a trader as “toxic”. That’s probably true, but it’s a product of the nature of the work. You have to have thick skin when it comes to this industry, or you simply won’t last long.”
This is how Joshua Fernando describes his vision of the world of work in the financial sector, in no uncertain terms. At just 22, he not only holds a full-time position as a derivatives trader for one of the top 1% banks by assets in the US but is also completing his studies with an MBA. Joshua’s skills include trading swaps and options on crude oil, natural gas and other commodities such as pentane, isobutane, natural gasoline and ethane.
In this interview, he gives us useful insights into financial markets, working in this environment, recent trends and much more.
How did you end up working as a derivatives trader?
“I am 22 years old and started my job as a derivatives trader in a rather unorthodox/lucky way. I interned with my current company about 3 years ago (same boss, even the same desk) in Oklahoma City. At the end of my internship, they gave me the offer to return as a full-time employee.”
Joshua initially said no to this offer but stayed on good terms with his team. Then, he began a period of work within investment banking, in which he focused on Oil & Gas while completing his first degree at only 20 years old.
Then, he left the IB field and went on to work for S&P Global Platts, the division that deals with energy and raw materials, with a training period in London before returning to the US, to work in the role of Senior Associate in Houston.
“Once the pandemic hit, I decided that I would do an MBA since I no longer had to spend ~3 hours each day commuting to work. Part of the school application required recommendation letters. Naturally, I asked for a recommendation letter from my old boss from the internship in Oklahoma, among a few other people. He not only gave me a recommendation letter but another offer to come back and work for him. I didn’t say no that time. In a way, the pandemic actually resulted in me getting my dream job, like I said before, a good amount of luck was involved in this.”
With a laugh, he adds that, curiously, his supervisor has been hired by this bank three times. So far, Joshua has been hired ‘only’ twice by the same bank.
The duration of his working day, like that of many people who work in the financial sector, is very variable: it starts at 7:30 and can end at 13 as well as at 10 in the evening.
How does your typical working day look like?
“I have 7 screens with Bloomberg and a bunch of excel documents open. Typically, I will be on the phone with a counterparty while modelling prices out in excel to formulate bids and offers. Once a trade is on the verge of getting executed, I get laser focused on what I am doing and just kinda shut out the world. Once we have executed the trade and everything checks out, I snap back to reality and take a few breaths while my heart rate comes back down lol. Then I just repeat the above throughout the day. Sounds boring now that I wrote it out, but I really do enjoy it, there’s nothing quite like it.”
Being able to use Excel, as is well known, is one of the most important skills for a career in finance, and Joshua uses it daily to determine the price levels of his trades.
Can online courses be useful for a career in finance as a trader?
“I would say online courses in Excel can be very useful not only for a trading career but for most careers. If you are the go-to Excel person in the office, many doors will open up and it will be hard for them to fire you. Online courses for trading are a hot topic for me. I think they have value in terms of learning the foundations of trading (Definitions, market dynamics, etc.) but I would stay away from them in regards to actual strategies. I find a lot of these courses have a huge focus on technical analysis. The trader that sits across from me was a former floor trader on the CME, he used technical analysis back before the advent of computers in this industry. It worked well then, but not nearly as much now. This is mainly because of all the algorithms that are running the market now. Instead of online courses I would recommend reading dictionaries like McMillan on Options. Yes, it will be a very dry read, borderline psychopathic. But, it will be the most objective way to learn. My first day of my internship, I didn’t even know what an option was. My boss still asked me to write a 20-page proposal to risk management on covered calls. He put the options dictionary above on my desk and basically said to figure it out. I read it front to back and it helped me a ton with the learning curve of this industry.”
Analytical skills are key in this field, but Joshua has a clear idea of what really matters.
What is more important in this work environment, passion, or analytical skills?
“Passion. Analytical skills can be learned, and from my experience, they follow the passion anyways. I would much rather hire a person with passion and no analytical skills, than the opposite. The person with passion has an innate drive to “figure it out”.
It will sound cliche, but you really have to enjoy the work and the environment. In terms of the work: It can be extremely stressful, and one mistake can result in your portfolio losing comically large amounts of money every second (and you will likely be fired as well). You have to enjoy the rush and remain calm and collected throughout. In terms of the environment: In the modern perspective, many people would consider the work environment of a trader as “toxic”. That’s probably true, but it’s a product of the nature of the work. You have to have thick skin when it comes to this industry or you simply won’t last long. I personally find it quite refreshing to hear a colleague curse out a counterparty. I view it as authenticity, you know exactly how someone feels with no filter. I prefer that over someone who is passive aggressive or hiding their real emotions… traditionally these facades in personality are found in most other lines of work. All of us really do like to be here, it doesn’t feel like work. Just a bunch of guys taking on the world.
So, I think it can be best summed up by the following anecdote: A new trader asked a senior trader on my floor “what would your dream job be if money wasn’t an object?” Senior trader, without thinking twice replied “I would still be here, doing this.”
Stress is an element that strongly characterizes the working world of finance. Many articles have been written about this topic recently, also following the publication of an internal Goldman Sachs report which highlighted the difficulties of some young analysts.
How stressful is it to work in this environment?
“Extremely. I am 22 and have way too many grey hairs. But I enjoy it and don’t really interpret it as stress, I just see it as “action” (I guess the grey hairs mean my body views it as stress though lol). It’s a very interesting dichotomy now that I think about it. Once you start looking at the notional values of the trades you are executing, it almost gives you vertigo, one mistake and you will probably lose all your bonuses, if not your job. Not to mention your team’s bonus will get hit too. Also, pay structures in this line of work are very heavily performance-based. So, each time you trade you are personally responsible for a good amount of money you take home. This is very motivating for all of us though, it’s the reason I don’t hit snooze in the morning. At the same time, everyone is keenly aware that one mistake, and your career could be over the same day.”
Despite his young age, Joshua has already had the opportunity to personally work with some historically unique events. On April 20th, 2020, amid the first wave of the pandemic, the price of the US oil benchmark fell to around minus forty dollars. Joshua describes it as the most unusual moment of his career: “I remember just leaving my desk and taking my dog for a walk. I was in shock the whole day, to be honest. “
Hot topics in the financial world in recent months include cryptocurrencies and “meme stocks”. These issues have also received the attention of young people. According to Joshua, young investors (Generation Z) should focus on the long run, to counter the overall generational predisposition to be “short-sighted.” According to him, the financial sector today is generally becoming more and more complex. One of the reasons this is happening is the growing automation of processes due to software implementation.
Will the financial industry be more automated in 10 years than it is today? And to which extent?
“I believe so, it’s already moving that way. You can see evidence of it in job listings from major trading houses. Many years ago, they looked for various business degrees and analytical types. Now almost all of them ask for some kind of programming or computer science background.
Some of the counterparties I talk with daily are actually being forced to convert their clients to their company’s online platform, basically eliminating their job. It’s a bit sad to think about, pretty soon there won’t be the excitement of chatting with the person on the other side of the trade, but from a financial standpoint it makes perfect sense.”
What is your view on the crypto market right now?
“I think the whole crypto space is rather interesting. It is almost reminiscent of the .com bubble where you had all these rather random/pointless websites popping up and getting crazy valuations. We are seeing the same thing in crypto as well. I think there will be a culling in the crypto space that leaves only a drastically lower number of currencies than there are now, however these ones that remain will have a lot more true utility.”
Do you think the “meme stocks madness” will somehow impact the markets over the long run?
“Yes. A friend and I actually ran a sentiment analyzer on Wsb Reddit for a few years before all of the craziness occurred. Once the global spotlight hit Reddit, we noticed that sentiment on a stock at a significantly lower level triggered what looked to be fund buying of the underlying. Basically, it looks like most funds caught on and are running their own sentiment analysis programs. The irony of it is that when everyone is doing it, it no longer has value.”
One of the most discussed topics in the financial markets in recent months is the possible excessive increase in inflation soon. The consumer price index in the US grew by 5% in May 2021 on an annual basis, but according to the Federal Reserve, this is just transitory inflation, which will not cause instability in the medium term. Many economists, however, have expressed doubts about the effective transitoriness of inflation, and numerous investors have shown themselves to be very concerned about the politics implemented by central banks.
Is inflation transitory? And why?
“Personally, I don’t think so, I think they will keep raising rates to stint the march of inflation but eventually it might end up like the 70s where they raise rates and inflation just spikes with it. But this is a hot topic so honestly who knows. My guess is about as useful as anyone’s.”
Nabila is a digital financial education project, so we also asked Joshua about his vision on the pages and on the people who deal with financial topics on social media. Their importance is greater in the USA than in Italy, but also in our country more and more young investors go to social networks to look for info on financial markets.
Are social media pages healthy for financial education? How could they improve?
“I want to say no, but of course there are exceptions. For the vast majority though, no they are not healthy. I have seen many friends throw money into the market after watching a TikTiok user flash their Robinhood 1D chart. This situation is even worse when the page promotes some illiquid crypto, then it just turns into a legal (but morally grey) pump and dump.
I don’t think it is up to the pages to improve. I think it is the content consumers’ responsibility to judge the content they are consuming, and either reject it or accept it. The accepting or rejecting becomes a lot easier when you start thinking about the intent of the person behind the platform.”
Finally, we asked Joshua who he thinks is the best investor and the best trader of all time.
“Best investor: Michael Burry. Best trader: my coworker who will not be named. He’s done some crazy sh*t.”
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