This columnist is usually reluctant to respond to requests for career advice that occasionally find their way into my e-mail box.
Yet from time to time, there is a move so obvious for anyone finishing college or university this year, or contemplating their next step up the career ladder, that it is worth pointing out.
And right now it is this:
Forget hedge funds, tell the derivatives boys they can dump their baffling mathematical formulas in the dustbin under the desk.
Instead, become a currency trader. They are set to become the new kings of the financial markets.
The sovereign-debt crisis, the demise of the dollar and the creation of new reserve currencies all mean that the great financial reputations and fortunes will be made in foreign exchange in the coming few years.
In any decade, one sector of the financial markets is usually dominant. In the 1980s, it was mergers-and-acquisitions deals.
In the 1990s, it was the venture capitalist who backed technology companies, and the bankers who arranged initial public offerings for dot-com companies on the stock market.
In the 2000s, it was hedge funds, along with the derivatives traders that supplied them with products.
But in the 2010s, it will be currency trading.
Deutsche Bank AG reported last month that its currency-trading platform for retail investors had a 40 per cent increase in customer numbers in 2009. Ordinary investors clearly see exchange trading as an area of the market they want to be in.
According to a Bank of England study, daily trading volumes rose 13 per cent to $1.43 trillion (Dh5.2 trillion) in October compared with April last year. In the US, foreign- exchange trading volumes rose 28 per cent to $675 billion a day in the six months ended in October, according to a Federal Reserve-affiliated study.
Several good reasons
There are several good reasons for expecting currency trading to be the focus for financial markets this decade. One of them is the sovereign-debt crisis. Governments took on huge debt to combat the financial meltdown. That didn't really fix the problem. The only way the markets can discipline governments is via the currency markets.
You can add into the mix some low-probability, yet high- impact, events. Perhaps Germany will get fed up bailing out Greece and Portugal and leave the euro. This scenario is not likely, but it would create shockwaves through the markets for years.
There are usually two conditions for one sector of the financial markets to be dominant: There must be lots of innovation, and lots of volatility.
Right now, currency trading ticks both boxes.
That's why if you work in the markets, figuring out clever ways of swapping euros into yen, and dollars into pounds would be the best thing you could do. It will be the fastest way to make your fortune.
