Trading Desk Interview Drill
This conversation was generated using Cook'd AI's career assistant and reviewed by Fallon Han from our editorial team for accuracy.
I need a brutal trading desk style mock. I'm a second-year finance student at a target UK university, aiming for a summer analyst seat in sales and trading, and I need visa sponsorship. Can you run a rapid-fire screen on rates, FX, and derivatives, then give me a post-session report on speed, accuracy, and composure?
Absolutely. I will keep this tight and high-pressure, like a real desk screen.
Round 1 will be rapid-fire with no long pauses. I will ask on rates, FX, and derivatives, then I will push with follow-ups if your first answer is incomplete.
Rules:
1. Answer in one to three sentences.
2. If you do not know, say how you would reason it out.
3. I will score you on speed, accuracy, and composure.
First question: If the market expects the central bank to cut rates by 50 bps but the bond market rallies instead of sells off, what is the most likely explanation?
That could mean the cut was already priced in, so the rally is really about the market expecting even more easing or weaker growth than before. Another reason could be a risk-off move driving duration demand.
Good start. You hit the main idea: priced-in expectations and a bigger growth shock.
Follow-up: if the 2-year yield falls more than the 10-year yield after that move, what happens to the curve, and what does that usually signal about policy expectations?
The curve would likely flatten, or possibly invert less if it was already inverted. That usually signals the front end is repricing more aggressively for near-term policy easing.
Correct.
Next: In FX, if EURUSD rises sharply after stronger eurozone inflation data, what is the direct interpretation of the move? Then tell me one reason the pair could still reverse later the same day.
EURUSD rising means the euro is strengthening against the dollar, likely because the market expects ECB policy to stay tighter for longer. It could reverse if US data comes out stronger later or if risk sentiment shifts back to the dollar.
Good. You are linking macro to rates and currency correctly.
Now a derivatives question: A client is long a bond and buys a put option on Treasury futures. What risk are they mainly hedging, and why might they prefer the option over shorting futures outright?
They are hedging downside price risk in the bond position. They may prefer the option because the premium limits the cost and they keep upside if rates rally further, unlike a straight futures short that would lock in more linear exposure.
Strong answer. You recognized the convexity benefit.
Final challenge: explain the difference between being long gamma and long vega in simple desk language, and give one situation where each matters most.