Sales and Trading Internships: What You Need to Know
Within the world of finance, sales and trading internships are relatively unique. While in investment banking or equity research you can actually do most of the work of an analyst (although maybe not efficiently or effectively!) and be judged on that, within sales and trading you’re not going to be able to really do the job during your short stint there given that you won’t have your licenses.
Because of this, those evaluating your performance on a desk are going to need to use implicit signals to figure out if you’d be a good fit. This is something that many summer analysts fail to fully appreciate before stepping onto the floor.
As a result, every year you’ll have talented interns who don’t get full-time return offers. Not because they would actually have been a poor fit, but because they weren’t able to communicate to their desired desk that they would be a good fit.
The analogy I always use, because it seems to drive the point home, is imagine that the process of getting into medical school after college involved you needing to shadow a surgeon for a few months. Needless to say, as a college student, you wouldn’t be able to do anything in the operating room, so the way you’d be judged on whether or not you should be admitted to medical school would need to be based on the kinds of questions you ask, your seeming level of interest, and if you really get what being a doctor is all about. In other words, you could only be judged on implicit signals, as they can’t reasonably test you on explicit signals (i.e., your ability to operate, your ability to communicate with patients, etc.).
When you step onto the floor you need to be relatively proactive and, especially if you’re in a rotational program like Goldman’s, you don’t have that much time to figure out how the process of getting a return offer really works.
With all that said, keep in mind that the vast majority of interns come into sales and trading more or less blind to how the process works, and still get return offers. But in this post hopefully I’ll be able to provide a bit of clarity on how to stand out and game plan your internship. Thereby removing the stress of feeling like you aren’t quite sure what you’re supposed to be doing.
Table of Contents
In order to provide a bit of structure to this post, I’ve broken it down into a number of sections. In the end, I think you should think about successfully navigating the internship as involving four steps: figuring out the right desk, building relationships, adding value and impressing the desk, and then securing the offer.
In general, you should think about sales and trading internships as coming in two varieties: those that are rotational, meaning you’ll end up rotating on two or three desks, and those that are fixed, meaning you’ll only spend time on one desk through your entire internship.
For rotational internships, these are really just three to four weeklong interviews with the desk where you won’t be expected to really do much of substance for the desk (i.e., a trader won’t likely be asking you to do a little analysis for them or anything like that).
Rather, the way you’ll largely be evaluated will be based on two things: how you interact with everyone on the desk during your short stay there, and how you perform on the “tests” that they’ll give you and everyone else who rotates on the desk.
The rationale behind this evaluation approach is pretty straight-forward. If there’s a rotational program, then the desk will be getting quite a few interns rotating through it over the course of the summer. However, the desk won’t have the capacity to hire all of them. For example, the rates desk at Goldman may give two or three return offers, but they’ll have probably ten or twelve interns rotating through the rates desk over the summer.
So the question then becomes, how do you delineate between all the interns that you’ve briefly been exposed to? If you’re giving everyone a unique task, then that can lead to a lot of arguments as to who performed better. But if everyone is giving roughly the same task, and everyone on the desk can see how they performed relative to each other, then it gives at least one data point to go off of.
What’s most common is that during your rotation you’ll be given a “project” to work on in your free time. This is usually a trade pitch. So, for example, if you’re on the rates desk, you’ll be asked to pitch a rates idea (i.e., a 2s5s flattener) by putting together a little PowerPoint and then getting up in front of everyone in a conference room to make your case.
For some desks, they’ll have you pitch something every week to see how you’re progressing. For other desks, they’ll have you do one pitch at the end of the rotation and, obviously, will expect it to be a bit more in-depth.
It’s important to keep in mind that the expectations for any trade ideas are normally quite low. Because usually interns will be quite unfamiliar with the asset class they’re rotating on (i.e., won’t know anything about interest rate swaps prior to starting on the rates desk).
The most important thing with a rotational internship, as we’ll get into in the next section, is to make sure that you’ve met everyone on the desk and that you put a significant amount of your free time into working on the projects given to you. The former point is particularly important, and often overlooked because interns are naturally a bit shy and don’t want to bother people during market hours. But you don’t want to end up in a situation where a few people on the desk really like you and others have no idea who you are.
With a fixed placement internship, the structure is largely similar but, as you’d expect, a bit more intensive as you’re going to be on the desk for a longer duration. You’ll still be expected to do lots of shadowing (i.e., pulling up a chair beside people on the desk, observing what’s going on) and you’ll still likely have to do some trade idea pitches to the desk.
However, because you’re there for a longer period of time you may be asked to do some more tangible project-oriented work for individuals on the desk based on your background. For example, if you’re on the rates desk, and you know how to code a bit, you may be asked to analyze spreads of certain off-the-run treasuries or figure out how liquidity has evolved recently over various parts of the curve.
While it’s always fantastic when you can add value to the desk, it’s important to keep in mind that you’re never going to be given any kind of more tangible project that is absolutely essential to the desk. They’re giving you the project to judge your work ethic and whether you can put together something interesting. Everyone understands that you’re coming in with a relatively limited understanding of the underlying asset class and you have many competing demands for your time (i.e., trying to get to know people on the desk).
Landing on the floor for such a short period of time can make the whole internship feel like a whirlwind. However, I’d try to think about navigating a sales and trading internship as involving four steps: figuring out the right desk, building relationships, adding value and impressing the desk, and then securing the offer.
When it comes to the first step, involving figuring out the right desk, there’s obviously a stark difference between a rotational and fixed placement internship.
With a rotational program, you’ll be placed on a series of desks based on your stated preferences and those of the desks you prefer. So, given that you’ll be rotating around, the expectation of everyone is that you’ll float around the floor, meet lots of people on different desks, and really try to figure out the right desk for you. No one is really going to take it too personally if you don’t think their desk is the right fit for you. Indeed, your real job during a rotational internship is just to find the place you fit in best.
On the other hand, with a fixed placement internship, the desk you’ve been placed on will be operating under the assumption that they’ll be giving you an offer at the end of the internship (if you perform well) and that you won’t be exploring other desks.
With that said, if the desk you’ve been placed on for the entire internship isn’t a good fit, then you should begin talking more with other desks as early as possible to try to see if there is any possibility of getting an offer there (even though you won’t formally intern for them). This is always slightly awkward for the desk you’ve been placed on, as you’re, by definition, implicitly telling them that you don’t want to get a return offer from them.
But you always want to get a return offer to a desk that you think would be a good fit, so you need to be thinking right away about whether or not the desk you’ve been placed on is right for you and whether it’s a possibility that you could get a return offer from another desk. This is always a delicate dance, and I’ll discuss it more in the next section.
After identifying the right desk for you, the second step involves building relationships. The reality is that every desk will have some people who love talking to interns and some people that would rather the interns not be around (for obvious reasons, they’re distracting!).
So your aim should be to try to build strong relationships with those that seem to take an active interest in interns, while still talking to everyone on the desk at least a few times. This second point is particularly important. Many interns shy away from talking to those on a desk who seem a bit more standoffish, but then when it comes time to give offers those standoffish people are often offended that the intern didn’t make an effort to talk to them more.
Therefore, even though it can be awkward, try to spend at least a few hours shadowing everyone on the desk. Even though some more misanthropic traders don’t like talking to interns, that’s fine. Just ask if you can shadow them for a few hours and, if they don’t want to talk, then just observe. Even if it seems like they don’t appreciate it, they will by virtue of the fact that few others will have saddled up next to them.
The third step, adding value and impressing the desk, can sound a bit daunting. However, all this really means is trying to be helpful in whatever way that you can and then impressing the desk with the deliverables they ask you to complete (i.e., the weekly pitches you may have to do).
As I stressed earlier, no one is expecting you to make an unbelievable impact (especially if you’re just there for a three or four week rotation!). However, what they want to see is that you’re trying your best to proactively support the desk.
So, while you should focus most of your time on the project or deliverables you’ll be asked to complete, if you have any free time, you should be asking people on the desk if there’s anything you can help them with. Most of the time they’ll say no, as there’s really not too many things you can practically help with, but they’ll appreciate the offer.
Since every desk will have a slightly different way of evaluating interns, you should think about how you’re going to be evaluated during your first week (i.e., did they really stress the importance of pitches, did they stress the importance of getting to know everyone on the desk, etc.).
Also, keep in mind that part of what “impressing the desk” means from an internship perspective is just fitting in. For example, you should try to quickly get a feel of if there are certain time periods where traders don’t like being disturbed, and make sure you aren’t disturbing them during that period. Having a bit of emotional intelligence goes a long way – especially with rotational internships where they’re getting such a short look at you. The inescapable reality is that much of a desk’s impression of you will be based on your general “fit” with the desk (in other words, that they liked having you around).
The final step is, obviously, securing a full-time return offer to the desk that you want to be on. If you’re doing a fixed placement internship, then this is relatively straight-forward. As long as you’ve built relationships, added a bit of value, and impressed everyone then you’ll be extended an offer (assuming that the desk is giving out return offers, which is almost always the case if they’ve taken an intern).
If you’re not interested in returning to the desk you’ve been placed at, then you need to carefully evaluate if there’s another desk you are interested in that would be able to extend you a return offer. This is something you should do subtly as you don’t want those on your current desk to be offended by you not wanting to return.
In the end, it’s always better to have one offer then no offers. So if you’re at all interested in your current desk, and are unsure of if it’s viable to get an offer elsewhere, then I’d recommend trying to secure an offer at the desk you’ve been placed on. Then, in your first few years, you can try to pivot to a desk you’d rather be on (but you may find out that you actually really enjoy your desk once you begin!).
With a rotational internship, securing a full-time offer is a bit less straight-forward as obviously you haven’t been just placed on one desk throughout the duration of your internship.
Something that happens all the time with rotational programs is that an intern will do well on their first rotation, and would be inline for a return offer, but then they go rotate elsewhere and never return to the first desk. Then, when the internship wraps up, they’ve become a bit forgotten by that first desk or the first desk assumes that the intern had no interest in returning full-time so they extend offers to others.
So if you have an interest in a certain desk, but now are rotating elsewhere, you should be routinely coming back to the desk you had interest in to talk to people and keep yourself top-of-mind. This is a delicate balance, as you don’t want to totally disregard those on the desk you’re currently rotating on, but everyone understands that rotational programs are big match making operations and that you need to spend time on the desks where you’re most likely to get a return offer from.
This is a common issue at Goldman. Interns do well on their first rotation, but then never stop by the desk afterwards because they don’t want to be disrespectful to the desk they’re currently rotating on. Further, they don’t want to cause any awkwardness with the new interns that are currently rotating on the desk.
However, like I said, everyone understands that you need to spend time with the desks you actually have an interest in returning to, so make sure that you stop by the desk you’ve had interest in every few days even while rotating elsewhere. You don’t want to overdo it, but you also need to make your preferences clearly known. If you’re at Goldman, then Human Capital Management will keep you updated on if you’re on-track for an offer with a certain desk to help you figure out if you should be spending time on a desk you previously rotated on or just move on.
Like I said, stopping by old desks you rotated on is always a bit awkward! But keep in mind how busy everyone is on the desk. If you’re not being proactive then they’ll just assume (incorrectly) that you’ve moved on and aren’t that interested in returning.
In the end, sales and trading internships are quite unique and, in most ways, are really just extended interviews except that you’ll be evaluated, partly, on how well you do on some little projects along the way.
With that said, the most important thing to keep in mind is that you need to build strong relationships on the desk that you want a return offer to. Every year talented interns come in and don’t land on the desk they want. Not because they wouldn’t be an ideal fit, but because they don’t get to know those on the desk well enough.
Generally, a desk wants there to be unanimous agreement regarding who to give a return offer to. So even if you’ve really impressed a few people on the desk, if you haven’t spoken to some other people, they may raise objections to giving you an offer – in particular, if they’re offended that you didn’t take the time to talk to them.
Anyway, hopefully this post has helped shed a bit of light on how to navigate a sales and trading internship. If you haven’t yet received an internship offer, be sure to check out the sales and trading interview questions I’ve put together or the long sales and trading overview.I’ve also started writing a weekly newsletter where I break down the major themes impacting markets, from a sell-side perspective, partly by going through sell-side research reports from GS, JPM, etc. The newsletters (that I send out each Sunday evening) will often take you 25-40 minutes to read fully, and the first part of each edition will always be entirely free to read. So if you want to know what’s been going on in markets, be sure to check out past editions of the newsletter and feel free to subscribe if you’d like.