Sales and trading interview questions can be some of the toughest in all of finance. What they do is very different from one part of big investment banks to another. This is because sales and trading
In every sales and trading department, there are people who work with dozens of different products, such as mortgage-backed securities, interest rate swaps, distressed debt, and equity derivatives.
Note: Usually, each “product” or asset class will have its own desk with salespeople, traders, and maybe even other people (like sales traders, quants, and structurers).
In a superday for a summer analyst or full-time job, you’ll be interviewing with at least three people from the sales and trading division. These people could be from any desk, so they can’t help but judge you based on how well you’d fit in with their team.
This basically means that people who are being interviewed need to know a lot about what goes on on a trading floor in order to do well. In other words, you need contextual understanding.
People don’t expect you to know how to think about gamma in a complex equity derivatives trade or how to think about how an out-of-court restructuring affects bad bonds during an interview.
However, it is very important to know how these things fit into the bigger sales and trading division and what the main functions of the major desks are.
Too little information is available on sales and trading interviews, so I made Sales and Trading Interviews. It has 13 guides and over 300 questions for sales and trading interviews, including breakdowns of all the major desks.
You should read this if you want to get into sales and trading. I wish I had it when I was applying for and starting my job as a summer analyst at Goldman Sachs.
Now lets review some questions. Also, at the end of this page, I talk about some common types of sales and trading interview questions and give you general tips on how to prepare for them.
Ace Your Sales & Trading Interview with This Comprehensive Guide
The world of sales and trading is fast-paced, exhilarating, and highly competitive. Landing a job in this field requires not only a solid understanding of financial markets but also the ability to think on your feet, demonstrate your risk-taking aptitude, and showcase your passion for the industry. To help you stand out from the crowd and impress your interviewers, we’ve compiled this comprehensive guide to sales and trading interview questions.
Understanding the Sales & Trading Interview Landscape
Sales and trading interviews are different because they test both technical knowledge and personal traits. Interviews for investment banking jobs are mostly about your technical skills and ability to model finances. Interviews for sales and trading jobs, on the other hand, are more about your personality, your motivations, and your ability to work well under pressure.
What Interviewers Look For
During your sales and trading interview, expect questions that assess your:
- Hunger to trade or sell: Do you possess a genuine desire to succeed in this field? Your enthusiasm and drive will shine through.
- Quick thinking: Can you analyze situations rapidly and make informed decisions under pressure?
- Risk-taking ability: Are you comfortable taking calculated risks and staying calm in volatile market conditions?
- Willingness to challenge the norm: Do you have the confidence to go against the grain and propose innovative strategies?
- Solid rationale for pursuing S&T: Why have you chosen sales and trading over other finance-related careers?
Preparing for the Interview Building Your Arsenal
To prepare effectively for your sales and trading interview, consider the following steps:
1 Craft Your Compelling Story
Develop a narrative that showcases your journey into the world of finance. Make sure to talk about your education, any relevant work experience, and why you want to work in sales and trading.
2, Master the Market
Stay informed about current market trends, key indices, and recent news stories. Be prepared to discuss your insights and opinions on these topics.
3, Deepen Your Product Knowledge
Choose a specific product or strategy you’re interested in, such as options, commodities, FX, or swaps. Thoroughly research this product and be ready to answer detailed questions about it.
4. Hone Your Mental Math Skills:
Brush up on your mental math abilities. Practice solving quick calculations involving addition, subtraction, multiplication, and square roots.
5. Prepare for Brain Teasers:
Expect to encounter some brain teaser questions during your interview. Practice solving these puzzles by thinking out loud and explaining your thought process.
Navigating Different Question Categories
Sales and trading interview questions typically fall into four main categories:
1. Fit/Behavioral Questions:
These questions aim to assess your personality, motivations, and overall fit for the role. Be prepared to discuss your strengths, weaknesses, and past experiences that demonstrate the desired qualities.
2. Market Questions:
Expect questions about current market conditions, key indices, and recent news stories. Demonstrate your understanding of the market and your ability to analyze trends.
3. Product/Client Questions:
These questions delve into your knowledge of specific products or strategies. Be ready to explain the intricacies of your chosen product and how you would interact with clients in a sales or trading role.
4. Brainteaser/Math Questions:
These questions assess your problem-solving skills and ability to think on your feet. Practice solving these puzzles and explaining your thought process clearly.
Additional Tips for Success
- Practice Makes Perfect: Conduct mock interviews with friends or colleagues to refine your answers and gain confidence.
- Ask Thoughtful Questions: Prepare insightful questions for your interviewers to demonstrate your genuine interest in the role and the company.
- Follow Up with a Thank-You Note: Send a thank-you email within 24 hours of your interview, expressing your gratitude and reiterating your interest in the position.
Recommended Resources:
- Heard on the Street: For various quantitative questions
- Short-Cut Math: For mastering mental math skills
- Options, Futures, and Other Derivatives: A classic reference for derivatives
- Exotic Options Trading: For in-depth knowledge of exotic options
- Interest Rate Swaps and Their Derivatives: Understanding interest rate swaps
- Foreign Exchange: A Practical Guide to the FX Markets: Mastering the foreign exchange market
- The Handbook of Fixed Income Securities: A comprehensive guide to fixed income securities
By following these tips and utilizing the recommended resources, you’ll be well-equipped to ace your sales and trading interview and land your dream job in this exciting and rewarding field. Remember, your passion, preparation, and ability to showcase your unique strengths will set you apart from the competition. So, go out there and conquer your sales and trading interview!
Can you give me a simple example (with numbers) of how delta hedging works?
As I said in the question above, if you work in sales and trading as an equity derivatives trader, you will always be looking to hedge out of your position to make sure you make money on every trade you make.
But how do you do this? How do you know what to hedge and how much to hedge? Well, in equity derivatives, this quickly becomes very complicated. This can be especially true for trades that are hard to describe and would take hours of work to properly price.
But if we want to keep things simple, we know that an option’s delta just measures how much its value changes when the underlying changes (all other things staying the same).
So if were looking at a delta of 0. 5. Based on our model, if we (as traders on the sell side) sell calls on a certain number of shares, we will then buy half that number of shares to protect ourselves from risk. Because if the underlying goes up in value while we sold calls, we will lose money while our client makes money, but the long equity position we took as a hedge will make up for our loss in the value of the calls we wrote.
For an interview purpose, this is everything you need to know about delta hedging. In fact, it would be pretty cool if someone working as a summer analyst knew this.
What are mortgage backed securities? How should we think about them?
This is a very broad question, but quite commonly pops up in an interview context. I wrote a desk guide on mortgage-backed securities with more in-depth questions, but let’s take a quick look at the big picture here.
You can think of a mortgage backed security (MBS) as a way to own a lot of different mortgages and the cash flows that come from people paying their monthly mortgages.
When someone owns an MBS, they will get the principal repayment and interest from the mortgage pool that the MBS covers every month.
There is no such thing as a free lunch in finance, and just because you buy an MBS doesn’t mean you get to keep all of the mortgage payments that come in. The issuer of the MBS will take a servicing and agency fee. This is because they put together the mortgages, issued securities based on them, and are in charge of keeping the pool running.
Goldman Sachs Sales & Trading Interview Questions
FAQ
What is sales and trading interview questions?
What should I say in a trading interview?
What makes a good sales and trader?
How to prepare for a sales & trading interview?
Use STAR method to answer questions effectively, and show proper etiquette during the interview process. When approaching a sales and trading interview, you should be able to showcase your understanding of the trading floor, specifically, the distinction between desks, how S&T employees work, and how banks make money.
How many sales and trading interview questions are there?
Because of just how little information is out there on sales and trading interviews, I created Sales and Trading Interviews, which contains over 300 sales and trading interview questions and 13-guides (including breakdowns of all the major desks).
Why are sales and trading interview questions so difficult?
Sales and trading interview questions can be some of the toughest in all of finance. The reason being is that there is no division within major investment banks that is more diverse in what they do than in sales and trading.
What is a sales & trading interview?
The sales and trading interview is meant to test for finance knowledge, market interest and ability to handle stress. For sales, interpersonal skills and the ability to communicate why a trade makes sense to a client is important. For trading, being calm and remaining rational is key.
