Hiring a Head of Trading: What the Job Title Does Not Tell You

Head of Trading is one of the most misleading titles in the industry. At one firm it describes a senior dealer who manages a small desk and a set of broker relationships. At another it describes a market-maker with quantitative oversight, execution responsibility and a seat on the risk committee. The title is identical. The job is not.

If you brief a search without resolving that ambiguity, you will receive a shortlist of people who all look credible and none of whom are interchangeable. The market will sense the uncertainty, and the best candidates will wait to see whether you actually know what you want.

Start with the trading model

The single most useful thing a client can do is describe, plainly, how the firm makes money from trading. Is the model principal or agency? Where does execution risk sit? How much of the flow is internalised versus hedged? What is the relationship between the trading desk and the risk function — does one own the other, or do they sit as equals?

A Head of Trading at an agency broker optimises routing, hedging and counterparty relationships. A Head of Trading at a market-maker owns pricing, spread and inventory risk. A Head of Trading at a prop or funded-trader business may be closer to a portfolio or risk manager than to an institutional dealer. These are different skills, and often different personalities.

Separate the technical from the leadership requirement

Below the seniority line, the essentials usually include:

• Honest command of the firm’s liquidity, execution and hedging model
• The ability to defend pricing and risk decisions to the board and the regulator
• Judgement about when to hold risk and when to lay it off
• Experience managing the people and systems around the desk, not just the desk itself

The preferences — a particular platform, a specific instrument focus, a history at a named competitor — matter, but they are not the same as essentials. Keep them separate in the brief.

Interview for the decisions, not the vocabulary

Anyone senior in trading can speak the language. The differentiator is how they reason under uncertainty. Ask what they did when the market moved against their book, when a liquidity provider changed terms, or when a large client’s flow became toxic to the firm’s risk. Listen for how they weighed the commercial relationship against the risk, and whether they can articulate the counterfactual — what would have happened if they were wrong.

That is also where an operator-led search earns its place. A recruiter who has stood on the desk can tell the difference between a candidate who has genuinely owned trading risk and one who has been adjacent to it.

Decide before you search

Write down what the role must deliver in the first twelve months, where the decision rights sit, and which of the requirements are genuinely non-negotiable. Then close the market. The clarity you create before the search begins is the single biggest determinant of the shortlist you receive.