Patrick Chi is a trader at Citadel Securities. He joined the firm in August 2020 after graduating from Columbia University with a degree in applied mathematics.
6.45am. I wake up and check my messages on Slack and look at Bloomberg just to see how markets did overnight.
I’m a trader on the American Depositary Receipt (ADR) desk. We make markets in more than 3,000 ADRs, which means we provide our clients with liquidity in the form of a bid and offer on all of those names. ADRs are US listings of international securities. They give US investors an opportunity to invest in foreign companies. We think of the ADR as a derivative of the local market security, which trades when the US market is closed. Therefore, when I wake up, I look to see how our largest take-home risks performed in local markets overnight. This generally takes about 10 minutes or so.
If all is well, I might then snatch another 20 minutes of sleep or go for a run. Either way, I get to the office around 8am. If I haven’t been for a run, I’ll walk to work; the office is about 30 minutes from my apartment.
8am. When I arrive at the office, I conduct a more detailed appraisal of how the overnight trades went. We build up overnight reports and look at the prices we expected the ADRs to trade at and the prices they actually traded at (this is known as the slippage) and evaluate our performance.
8.30am. I catch up with some of our people in Asia; they share news about what happened there overnight. I also do my own read-through of the overnight news, catch up with our analysts who provide additional market color, and chat with our European team members on Slack. The desk I’m on trades 23 hours a day, five days a week; we trade ADRs during US hours and local listings overnight, so we have to be vigilant about monitoring news during that entire timeframe. We’re expanding our global team and expect to have even more colleagues in Asia soon.
9am. I have a meeting with the other members of the trading team. This usually involves my manager, who’s the head of the ADR desk, plus two other juniors. We go over what happened yesterday and what strategies we could improve upon. We develop a game plan for the trading day ahead and summarize key macro events that are approaching, plus earnings events and corporate actions that are coming up. This is a brief but important meeting that sets the tone for the day.
9.30am. The markets open. Immediately, I’m in a different mindset and the adrenaline is flowing.
My team and I aren’t watching every single ADR that we cover, but we’re focused instead on how our system is trading in terms of the liquidity it’s providing for investors and the prices it’s quoting for the securities. My job is mostly about watching trades take place electronically and recalibrating where necessary. If I see executions that could be improved, I make adjustments.
10.30am. I have a quick chat with the quantitative researchers (QRs). The QRs provide us with the models that calculate the fair value of the securities and, as traders, we’re trying to monetize these models. We’re always bouncing ideas off of each other.
11am. A client comes to me with a request for quote (RFQ). In an RFQ, a client goes to a bunch of market makers and the market maker with the fastest and most competitive quote wins the RFQ. We respond to these throughout the day, and when we win the quote we provide liquidity to the client. A lot of RFQ clients trade in the latter half of the day, which is when it gets pretty busy for me.
11.30am. European markets close and there’s usually a lull. We’re busy into the European close but then things start to quiet down a bit until the US market gets more active later in the day.
11.45am. I eat lunch around this time. Lunch is provided by the firm, so I usually just go to the kitchen on my floor but I sometimes order Uber Eats or Seamless with my coworkers.
12.15pm. Since US trade flows typically develop throughout the day, it’s during the afternoon when we typically start to see some dislocations from our models. The real monetization of ADRs comes from the discrepancy between US liquidity and foreign liquidity, and as US liquidity develops, markets start to move. As this happens, we start building much larger positions and we get much bigger liquidity events.
1.30pm. There’s another quick meeting with the quantitative researchers. We have a lot of these throughout the day. We also meet with the technologists who convert the models into code. A few days a week, I attend these meetings. Other days, another member of the trading team does. Usually, just one of us is needed and the others stay focused on working with clients and keeping an eye on the markets.
2pm. I’m back to trading and responding to RFQs. This part of the day is fast-paced and exciting.
4pm. Markets close. At this point, my colleagues on the trading team and I move into the end-of-day process. This used to be fairly time-consuming, but it’s recently been streamlined. At Citadel Securities, we are always looking for ways to improve and make everything we do more efficient. During this process we look at the risks we see developing overnight and discuss what we want to send to Asia and Europe for what we call the “overnight unwind.” These are the trades we want to unwind overnight in the US. We come up with a list of names we can send to our traders in the local markets.
5pm. At this point, I usually shift to project work. As traders, we have projects focused on determining whether there’s a pattern to trades that do well or underperform.
6.30pm. I chat with another QR and we discuss the results of the analysis project I am working on.
7pm. I send the list of overnight trades to our traders in Europe and Asia. Our Asian traders don’t arrive in the office until 6.30pm to 7pm, and one member of our team stays behind to send the list to them. If it’s complicated, we’ll call them up and discuss what needs to be done.
7.30pm. I leave the office. I’ll often schedule dinner with friends for around 8pm or so. When I get home, I’ll watch some TV.
Midnight: I go to bed! I’m trying to get to sleep earlier, but somehow it never happens!
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