Mar 20, 2023
Will Bachman talks to Tai Wong, a Harvard and Radcliffe class of 1992 alumni. Tai has been a trader for thirty years but believes that his best trade was asking his high school girlfriend to marry him. They married after she finished business school and they now have four children. Tai shares that his family has been together for 27 years and have had the opportunity to travel to many places together, but one of his favorite locations is Norway.
A Career in Finance as a Trader
Tai initially became interested in finance after a summer internship at JP Morgan where he worked on the foreign exchange trading desk. Tai is a sell side trader, meaning he works for a bank and prices and facilitates client business, as well as making bets with the institution's money. He has eight years of experience in currency trading, and five years experience in helping to build a successful large scale client trading platform for currencies at UBS. He has also been trading precious metals like gold, silver, platinum, and palladium, as well as base metals like copper, aluminum, and nickel, for the last 15 years. Being a trader has had a significant impact on his personality, teaching him to be direct, loud, and decisive.
He considers his 'real' job to be being a father, husband and son, but he loves his day job too.
Spoofing and Manipulating the Market
Tai discusses how the past 10 years have seen a shift away from human trades in markets such as gold, silver, crude, and natural gas. He explains that 80% of trades are now done by machines, which take the human element out of trading and make it more anonymous. He also mentions spoofing, a crime where traders will show false offers or bids to try to manipulate the market. He explains that traders have tried to fool the machines by using techniques such as spoofing, though this has been made illegal since 2000. The shift to machines has resulted in fewer one and two lot trades, as well as fewer requests for quotes as machines can be programmed to execute trades over time.
Tai describes his daily routine which involves waking up to check Bloomberg on his phone to see what has moved since he last checked, and then scanning the headlines.
Using the Bloomberg Tool for Trading Insight
Bloomberg is a remarkable tool which tracks an immense amount of data and is used by 250,000 people per month, making them around $8 billion. When in the office, the Bloomberg tool is used to log in overnight and use pricing tools for options, sheets that show risk, futures and liquidity. It can be confusing for those who have not used it before, and is similar to what air traffic controllers have to do. The conversation then shifted to an example of a moderate potential trade. Bloomberg allows traders to monitor the market and look for opportunities to buy and sell, and can use a variety of tools to determine the best time to enter and exit the market. For example, a trader might monitor the market and look for a particular stock to rise or fall after an announcement, and use technical analysis to determine the best time to enter the trade. The trader can then use limit orders and stop loss orders to protect their capital and maximize their profits.
Life as a Trader and The Big Short
Tai reflects on his experience as a trader, discussing the rapid decisions that are often made and the importance of developing a thick skin. He talks about traders’ skepticism of authority and dislike of arbitrary rules and notes how their experience impacts their personality. Tai remembers the many crises he has witnessed and the feeling of watching the markets move in response, and he reflects on his experience at Lehman Brothers when it went bankrupt in 2008.
He noted that the movie The Big Short did a good job of recounting the episode and was almost 100% accurate except for the empty trading floor scene. He further explained that many people continued to go to work each day after the bank went bankrupt and that the paychecks kept coming.
The Complexities of Trading in the Metals Market
Tai discussed the complexities of trading in the metals market, and the need to understand the nuances of each metal type. He broke metals trading into two parts: precious metals and palladium. He explained that palladium is expensive, and prices rose when Russia invaded Ukraine due to concerns about supply. He noted that the U.S. government did not put it on a restricted list, meaning supply was not interrupted. He concluded that it is important to understand the jargon and nuances of each metal market in order to be a successful trader.
Influential Professors and Classes
Tai remembers certain classes and professors that he found inspiring include Martin Feldstein and American Economic Policy, John Shearman, Professor of Fine Arts with whom he took a course on Michelangelo, Ezra Vogel who taught Industrial East Asia Foreign Cultures 26, and Richard Pipes who taught about the Russian Revolution.
Timestamps
04:30 Exploring Norway in the Summertime
05:53 30-Year Wall Street Trading Career
11:17 Exploring the World of Metals Trading
18:57 Exploring the Impact of Automated Trading on Financial Markets
24:20 Bloomberg Trading Tools and Risk Management
25:05 Hedging Gold Futures: A Discussion of Trade Mechanics
31:29 Counterparty Reputations in Financial Trading
34:23 Exploring the World of Commodity Trading:
36:31 Colorful Traders and Jargon on the Trading Floor
39:36 Experiences on Wall Street and Regrets of Not Taking Certain College Courses
CONTACT INFO:
linkedin.com/in/tai-wong-cfa-9547641