I read a fascinating article today entitled” that was from an internet hedge fund newsletter. Thought some of you here my like to see it. I didn't write it but it is a good article about how new traders have been recruited and developed.

Karen Unwin of the Marex Trading Academy argues that funds must take a much more systematic way of the recrunt, training and development of qualified traders.

Most authorised traders don't make money - as few as three out of ten make the successful transition to senior trader and generate substantial profits for themselves along with the finance. The cost of salaries and trading losses is large, and training is often undervalued. Junior traders are assigned to a senior trader, who may have a lot of trading experience but little experience, or ability, in coaching and developing others.

The amount of skill and knowledge imparted varies a whole lot from trader to trader, and there's absolutely no means of monitoring what they were supposed to understand, or if they actually learned it. At some stage the decision is made the junior trader has gained sufficient experience to be alloed a degree of risk - and - proceeds to either lose or earn money.

The investment in salaries, high-cost office space, ad hoc training courses along with the valuable time of senior traders and managers may add up to USD100,000 in the first year, even before any trading losses have been taken into account. Any other investment is managed carefully and assessed regularly against expectations - and - investing at a junior trader shouldn't be treated differently.

The old apprenticeship model is obsolete, inefficient and costly. Taking a structured approach to recrunt and developing traders, using contemporary learning procedures, can enhance the yield on the investment that trading desks make when they take on graduates.

Discovering potential gift
It begins at the very beginning with the recrunt procedure. Large banks may have a sophistied human resources function that makes sure the recrunt is as powerful as you can, but most funds nevertheless rely upon internships, CVs and interviews. The likelihood of a good match to the role could be improved by as much as 60 per cent if applicants have been tested for the essential skills and approaches, and structured interviews are employed.

Internships are a handy way of identifying possible talent - but they only tell you if the intern can perform the use of their internship, not the function of a trader. Their effectiveness could be significantly enhanced when the time is utilized to check the intern against certain trading skills and skills.

Structuring development
Once the right people are chosen the next challenge is to speed up the training procedure and be sure that there aren't any gaps in their knowledge and skills that will come back to haunt them probably in a very costly manner - just at a subsequent date. Trader direction should recognize the knowledge and skills required, across the spectrum, and also plan how they should be acquired. This may be the time to earn some external experience. Not everybody who is proficient at trading can instruct it to someone else.

It is also important to ensure the right approaches to learning are fostered. Trading is an endeavour where you never quit studying, and you are 100 per cent accountable for your own results. The juniors must accept personal responsibility for their own development rather than sit waiting to be edued - an attribute you may watch out for in the recrunt procedure.

Now's traders have to be egic. The closure of the flooring has left behind the responsive, gut-feel trader. As the juniors develop, be sure they make evidence of the egies as they develop - if they can't clarify it, they can't do it.

Tracking your investment
Introduce a process of benchmarking of where a trader should be by particular points in their own development and devise ways of quantifying them. These might include areas of knowledge to get assimilated, trading egies to have trading and mastered egies to be devised and cleanly implemented. These measures allow trader direction to recognize those who can, and cannot, make the grade at an earlier phase - thus saving money on salaries and trading losses.

The apprenticeship model does not have to be thrown outside, but it does require an overhaul, from how traders have been recruited to the approach of the ongoing development. Trading is regarded as an extremely attractive career and there is no lack of possible candidates - that the challenge is in not wasting the money, time and effort spent .