"Go West, young man" may have been sound advice in the mid-19th century, but is it still valid for a trader in the 21st century? Technological advances have leveled the playing field to such an extent that a trader could just as easily trade from a laptop on a California beach, as he or she could from a trading desk in a Manhattan office. Nevertheless, there are certain benefits and drawbacks that go with the territory when it comes to being a trader on the West Coast of North America.
- Better Work-Life Balance: The laid back atmosphere of the West Coast translates into a better work-life balance for a trader, compared to the hard-charging environment of the East Coast. In addition to eschewing pinstriped suits and Wingtips in favor of khakis and loafers, West Coast traders may have time for more leisure activities because their work day can end as early as 1 p.m. (which is equal to 4 p.m. on the East Coast). The relatively early break from work leaves enough time in the day for fun stuff like picking up the kids from school, exercising, golf, barbecuing dinner for the family, and so on. The downside is that the West Coast trader also has to get to bed early, but that's not necessarily a bad thing. After all, Benjamin Franklin said that early to bed and early to rise makes one healthy, wealthy, and wise. East Coast traders, however, may think otherwise.
- Higher Quality of Life: The younger cities of the West Coast also offer a higher quality of life than their East Coast counterparts. For proof, we turn to consulting firm Mercer's annual "Quality of Living" ranking that covers 230 cities worldwide. The cities are ranked for their quality of life based on a host of factors grouped into 10 categories, ranging from the economic environment and housing, to recreation and the school system. In the 2015 rankings, San Francisco ranked Number 27, while New York ranked Number 44. Vancouver – a booming city on Canada's West Coast – was the highest-ranked city in North America at Number 5; Toronto (in eastern Canada, if not on the East Coast) ranked Number 15. A city that offers a higher quality of life and a better work-life balance can make it less stressful to live in a big city, which is an important consideration for traders given that their occupation is typically associated with high stress levels.
- Proximity to Silicon Valley: West Coast traders are geographically in much closer proximity to Silicon Valley than their East Coast peers. Silicon Valley firms are reshaping not just the US, but also the global economy. The disruptive technologies pioneered by the likes of Apple, Inc. (AAPL), Google (GOOG), Microsoft Corporation (MSFT), and Amazon.com, Inc. (AMZN) have already made these companies the biggest in the world (by market capitalization) within a couple of decades. The US West Coast may not have the bulge bracket brokers and investment bankers of the East Coast, but it leads the country in terms of wealth creation, innovation, venture capital, and entrepreneurship. These traits may not provide any tangible benefits to traders in the short-term, but in the long run, massive wealth creation should generate substantial demand for financial services such as wealth management and trading.
- Time Difference Works Better to Trade Asia: Oddly enough, the greater time difference between the West Coast and Asia – compared to the time difference between the East Coast and Asia – works in favor of the West Coast. For instance, Tokyo is one of the biggest centers for trading foreign exchange and Japanese stocks. The Tokyo Stock Exchange is open from 9 a.m. to 3 p.m. Japan Standard Time; this translates into 8 p.m. to 2 a.m. a day earlier in New York, and 5 p.m. to 11 p.m. in San Francisco. A trader would therefore find it more convenient to trade the Tokyo market if he or she is based in San Francisco than in New York. While New York traders have an edge in trading in London and other European financial centers because the time difference is only five or six hours, the time differential between the influential Asian financial centers of Shanghai, Singapore, Hong Kong, and Mumbai and the West Coast works in the latter's favor.
- Away from the Epicenter of the Trading Action: Let's face it; the trading volumes in New York and Toronto dwarf those in San Francisco and Vancouver respectively. In addition, technological advances may have leveled the playing field, but they have also made it possible for major players such as high-frequency trading firms to access stock prices a fraction of a second before the rest of the investing public through co-location, which is the practice of physically locating their computers as close as possible to the exchange's computer servers. These strategies are not possible for West Coast firms that are located a couple of thousand kilometers away from the epicenter of the action.
- Career Prospects May Be Limited: For the moment, career opportunities for a trader are limited in cities like San Francisco and Vancouver, as opposed to the job openings available in the traditional powerhouse financial centers of New York and Toronto, since the number of trading and financial service firms in the latter are exponentially higher than in the former. This may change in the years ahead as West Coast trading firms benefit from the Silicon Valley surge.
- Wake Up at Unearthly Hours: West Coast traders have to be in front of their trading desks at 6:30 a.m., so as to be ready for the 9:30 a.m. EST New York Stock Exchange market open. This means stumbling out of bed at 4 a.m. in order to catch up on the news, listen in on a conference call, and commute to work.
- Cost of Living May Be Higher: Since cities like Vancouver and San Francisco consistently rank as being among the most desirable cities to live in, the cost of living in these places may be higher than on the East Coast, largely because of surging real estate values and limited availability of rental units.
The Bottom Line
At the end of the trading day, a West Coast trader gets a better work-life balance and quality of life, but gives up some career prospects and the chance to be at the center of the trading action. Whether that tradeoff is worth it is purely a matter of individual choice.