I spent most of my career working on FX desks in banks. Exactly 4 years ago, I resigned from my job at Nomura to start working independently. For the first 3 years I worked at the Thalesians, a quant think tank which I had co-founded. I am still involved with the Thalesians, helping to organise quant talks (there are some in autumn coming up!). However, my main full time focus over the past year has been a new company Cuemacro, which I founded. At Cuemacro, I’ve been building data products and doing bespoke projects for clients looking to understand currency markets from a quantitative perspective. I’ve also been running some (small!) amount of cash on systematic FX strategies on my personal account (I’ll leave discussion of that for another article!). I’m glad I made the change. At the same time, what exactly have I learnt from 4 years of being working in markets as an independent? If you’re considering a career change from your job in a bank, hopefully, you’ll find some of the points below useful (or you might have questions about this too).
It’s tough being independent, but you get to choose the path
Perhaps, it was a case of thinking the grass was greener, when I was working in a bank. I didn’t quite anticipate how hard it would be to work outside the banking environment. Many people quit banking to do something totally different. I have to admit, I very much admire folks, who do a career change to a totally new area. In my case, I was seeking to do something similar to what I had been doing in my banking career, looking at currency markets from a quantitative perspective. Given that the gist of what I was doing was “similar”, I perhaps underestimated the whole business side of being independent.
Within a bank, you are very much part of a team. Hence, for example as a research person, you rely upon many other parts of the business, such as the sales and trading teams. Outside of that environment, suddenly you have many other roles to play. Of course, my main focus is creating products and solutions for clients. The change though is that I’m much more heavily involved in the sales process. Business does not just magically come through the door. . Whilst in a bank, the sales team will be the main point of contact for clients, now it’s me. Sales is very much a different skill set to researching currency markets, and I’ve had to get up to speed on that.
There are other aspects of being independent, which are tougher too. It also becomes trickier to keep track of the market, when you’re not sitting on a trading desk. However, with a bit of extra work it is doable (along with Twitter, which is fantastic resource, as of course is Bloomberg). The plus points are of course, that you can choose the path of what you do in your work. The key is of course, that you use this freedom wisely!
Listen to what the market is saying about your idea
My initial idea had been to create a research subscription product to sell to clients. In effect, I wanted to continue doing precisely what I was doing in a banking environment, publishing insights on currency markets from a quantitative perspective. I still think the idea is great! However, 4 years ago when I started, the street was very much conditioned on getting research for free from banks. It is very hard to compete with a free product, and this was the message I was getting from potential clients. I’m not suggesting everyone is always right, but it’s important to listen. Who is also your market for your product and services? In my case this has actually changed over time. This environment may change of course when MIFID 2 comes into force in 2018, when banks will no longer be allowed to give away research for free. Will it level the field between banks and independent companies selling research subscriptions?
Sometimes a strategy should change
Sometimes, it’s important to acknowledge what you’re doing is not working as well as you hoped and to change things. It’s of course difficult to identify this point, given that it will take a long time to get stuff off the ground. In trading, you don’t simply sit on a position forever: you manage your risk and have stop losses. About 2-3 years ago, I got heavily involved in the Python community and started building financial Python libraries, after witnessing the burgeoning interest in Python in the finance community, both at the Thalesians and also at other quant events. When I quit my job, I had never anticipated that I’d end up spending a lot of my time creating Python libraries. I eventually open sourced some of my code base, mostly because of attending talks by the likes of Yves Hilpisch and Thomas Wiecki, who are well known in the Python community. Open sourcing my code has been a great way to show the type of work that I do. At the same time, I’ve kept a lot of the more proprietary code I’ve developed closed source, in particular specific trading algorithms I have developed. If you’d asked me 4 years that I’d end open sourcing any of my code, I would have told you, probably not.
Over the past year, I’ve also focused much more on doing bespoke consulting projects for clients as well as building out data projects, a big change in what I was doing before. This seems to have worked better than the initial strategy of focusing on publishing papers for research subscriptions.
I’m happy I chose to work independently
I’ll be the first to admit, I made mistakes along the way. It is frustrating to make mistakes, but the key of course is to learn from them. However, I’m glad I started to work as an independent. I very much enjoyed working in a bank, but wanted a different challenge and to learn new skills. Being independent, has been an eye opening experience and I’ve learnt so much by doing it, and am keen to continue on this path. It’s not necessarily the case that being independent will work for everyone though. If you are planning to quit your job in a bank, all I would say is try to plan what to do next.