Trading interview question

I’ve got an upcoming interview for an trading position. One of the questions i know they will ask is how will you handle losing money. They already know me pretty well and know that i’m focused and not prone to losing it…but anyone have some creative answers that would demostrate that i’m not gonna run screaming out the door or end up in the hospital with a heart attack after 3 days?

How have you dealt with major losses in your life? Draw comparisons. I loss is not getting a B+ instead of an A. enough said.

I would definitely be upset but I would also try to learn from it …analyse what led to the loss and take/ setup measures to minimise it in the future …

What desk are you interviewing for?

“lose money, I never lose money…come on now” LOL

I take losses as a tuition. A price to learn from my mistakes, if you will. Each loss bears an education, and while I will always try to avoid them, I will also embrace them. My #1 rule is to be as unemotional about lossess as possible, because trading is a probability game, where the majority of time is losing. The more emotional I get, the worse my decisions I will make. Thus, I will cut my losses short, and let winners run, but when I fail to do that, I will learn from my loss.

It’s an energy trading post…BosyBillups that’s exactly what i want to say…thanks!


Taking a loss makes you ask yourself if you have been following appropriate risk controls. Some losses are just the price of entry… there will be good days/weeks/months and bad d/w/ms. If you lose money, the first question is whether you risked too much to begin with. If that’s true, that’s a bad sign and you need to figure out how to correct it. If you didn’t take too much risk, then the question is whether your error in predicting direction or magnitudes of change were foreseeable. If it wasn’t, then it’s just the price of entry. If it was, then that’s not so bad, provided that you learn from it. Of course, another question is how you and your supervisor deal with losing money, since losing too much can cost you your job. So you and your supervisor need to have some kind of understanding as to what sorts of losses “come with the territory” and what kinds get you “kicked out of the territory.”

>I take losses as a tuition. A price to learn from my mistakes,… That sounds like textbook answer…and they will probably know it since it can be found in any trading book. So if I were you, I would twist a little. “Losing is a part of the game, so you cannot be bothered too much. However, I will of course be upset when it happens. It is only human. I know from my experience (insert your favorite activity to deal with stress) helps and make me feel better. Then I can come back and face my losses more objectively so that I can figure out what went wrong and what I should do next time similar thing happens.”

I agree zigy - it’s become cliche. Just wanted to give an idea of what to say.

losses are part of the process… sometimes it helps to step back and remind yourself what strategy you are trading… focus on the process and dont be outcome biased… there is no need to rationalize the losses… as long as you maintain good discipline and are not short of ideas, trading losses dont warrant more than a few minutes of analyses and review to make sure your strategy and / or thought process is sound… gotta keep them trading losses in perspective - there are losses, and then there are losses…

And that’s why we use stop losses.

I like nailit’s response lots better than Bosy’s. I would add that maybe you shuld think about your losses a little bit: a) Your portfolio may need adjusting b) You need to make sure that losses haven’t fundamentally changed the security. Losses can compound themselves by causing liquidity problems and changing the market particpants who might trade the security. Extreme examples are bonds that downgraded bleow investment grade and stocks that get de-listed c) If a security has dropped 50% in value since you bought it, you better still not believe what you believed when you bought it. Almost all markets are more efficient than off by a factor of more than 2. There needs to be some reinterpretation going on and you need to be clear about it.

^therein lies the difference between a PM and a Trader

Actually, that’s risk management speaking when I call you in and say WTF is going on with [blah]? Edit: Risk probably doesn’t know anything about the security but you need to do a good show.

You’re interviewing for an energy desk? Dude - be original and dont give them some of the corny cheesy text book answers mentioned here. Energy desks especially among the BBs have the most arrogant and egoistic traders I’ve come across - so have a response accordingly

Energy trader? Just say “hide it in some weird place and double my bets to try to make it back - After all, I’ll lose my job if they know about the losses, so I may as well double up in a martingale until I’m found out!” They’ll be so impressed that they’ll promote you to be their star energy trader, launch hedge funds for you to run, and if you’re lucky, you’ll manage to lose $800m and be famous for a while!