Maybe you think you’ve got the hang of discussing markets, only to arrive on the trading floor and discover an alien language swirling around you. That was the experience of Ben Schenkel, a newly minted Graduate who will walk you through his story and some of the essential lingo you should know as a trader.
My first couple of months on the Nordea trading floor have been the ultimate crash course in markets. Just starting out here, I can already feel myself growing from the on-the-job training at the heart of the Graduate program. It’s been such a learning experience to sit with the currency traders, grasp their approaches, and understand how they actually (and carefully) operate in the market on behalf of Nordea’s diverse clients. The idea is that someday soon – when it’s my turn to go live as a trader – I’ll be prepared to manage the excitement, intensity, and unpredictability all involved in the business of trading.
Like many newbies to the trading floor, I wasn’t sure what to expect about the atmosphere. At Nordea it has definitely lived up to my impression of being a fast-paced and stimulating environment, with new challenges to respond to each day. That much I could see coming. After all, I was drawn to banking for those precise reasons.
What I couldn’t know in advance was that my colleagues would be such a great highlight. They’ve welcomed me into the Nordea team. They’ve equipped me with the analytical tools and guiding principles I’ll rely on to succeed as a trader. Perhaps most surprising to me, my colleagues have all been remarkably patient with my questions – no matter how naïve those questions have been sometimes.
That brings me to the theme of this blog post: how to speak like a real-life trader. I’ve found this aspect, the snappy bullet-like language, to be one of the hardest aspects of becoming a finance professional.
Since Nordea is a leading global bank, naturally we use English as the official working language. I happen to be a native speaker – but not even that could prepare me for the terminology that my colleagues were using. Some of it totally puzzled me. Nor did it help that I come from an academic background in economics rather than pure finance.
A quick example to illustrate what I mean:
One of the pros at the trading desk (who will go unnamed) was guiding me through a chart on his computer screen. I don’t remember the context, but at one point I commented that a currency was “appreciating.” Technically correct, I guess, but it still drew a raised eyebrow from my mentor. It didn’t take me long to realize that my word choice belonged in a textbook more than it applied to a chart like the one I was being shown. Basically, what I learned in school doesn’t always match how communication works on the trading floor.
One of my most valuable lessons at Nordea has been to express myself both quickly and precisely. The dynamic nature of the FX market means that there usually isn’t time for long statements or needlessly formal words like – you guessed it – appreciating. It’s critical for a trader to be intensely focused on the market and to pay attention to whatever influences it. The longer you dwell on making a point, the greater the risk of distracting yourself and not responding in time to a sudden move in the market. It can slip away from you. Fast.
Practically speaking, how did I work on cracking the trader code that had me so mystified? The short answer: notebooks.
Anytime I heard expressions that sounded strange to my untrained ear, I would write them down and ask for definitions at an appropriate time. This practice helped me reach a level of comfort where I could better follow what was happening in the market, and progress to discussing tactical issues with my expert colleagues.
I assume that many of you reading this blog are interested in possibly joining Nordea Markets. As a useful head start, then, I thought you might enjoy and benefit from a short rundown of industry jargon you’ll likely encounter on a trading floor. If you’re attracted to the buzz of the market, here’s a chance to get familiar with some buzzwords. Trust me when I say they’re not all explained on the Internet. (Obviously I looked there when I could tell that the traders were too busy to share their own wisdom!)
You may appreciate knowing these non-textbook words or phrases in advance:
- Getting soft / Looking heavy: When there seems to be more sellers than buyers in the market at that moment. Warning: this can apply to you if you’ve been enjoying the Nordea cafeteria a little too much.
- Dealt with me: This doesn’t mean that you’re hard to put up with. On the contrary, this tends to be a good thing because it refers to customers deciding to engage in business. They’re “dealing” on a price, hopefully not with it.
- I’m square: At least in FX trading, this indicates holding positions that give you a balanced exposure to the currencies in a given pair. Your long and short positions balance each other out when you’re square. Don’t mix this up, as I may have, with the mid-century slang for a hopeless bore.
- Be given vs. Lose: From the perspective of a market maker such as Nordea, these describe what happens as a result of an executed trade. The market maker is given the asset when the other party is a seller, and it loses the asset to a buyer. Not to be confused with winning or losing profit based on how the trade turns out.
- Hit the bid vs. Pay the offer: These are the actions taken by the party who trades with a market maker. Either you hit the bid if you wish to sell at the bid price, or you pay the offer if you wish to buy at the offer price. It can also be said that the party is on the left-hand or right-hand side.
- Book it: Not a command, as in American slang, for you to run away a hurry. Rather it’s when a trade gets entered into the trader’s “book,” his or her inventory of positions.
On a final note, don’t get too confident even after you’ve mastered the skill of convincing people you’re a veteran trader. You may have learned the terms of the trade, meaning you can efficiently describe what’s up (or down) in the market. The next step is to acquire the actual tricks of the trade. That’s the much harder part to learn – and also my primary focus at the current stage of my learning curve.
Rest assured that financial markets shouldn’t have to defy description. But keep in mind that they can defy easy explanation and disobey the soundest-seeming predictions. Hence the importance of treating the markets with caution and humility, a point my colleagues at Nordea have emphasized to me many times over.
If you can think of any interesting terms that I didn’t include, feel free to leave them in the comments. As my Graduate year continues, I’ll keep posting with other insights on my journey into the electrifying world of finance. Hope you learned something already!