The biggest gamble of all

What is a City worker supposed to do when redundancy strikes? Few jobs can match the roller-coaster thrill of the market. Now, Clare Rudebeck discovers, self-financed dealers are setting up shop right in the heart of the financial world

Getting the sack can have an unpredictable effect on a man. Some have been known to retreat into fantasy. In Japan in the mid-Nineties, stories emerged of laid-off businessmen not quite getting round to telling their wife or the neighbours. They would rise early, put on the familiar uniform of suit and tie, and rush out to catch the morning train as usual. They would then spend their days in the cinema, playing pinball, or going for long walks, killing time until they could return home to their unsuspecting families.

Gideon Brown lost his job in the City of London last year, and was unable to find another job with a City firm. But every morning, he gets up before 5am as normal, dresses smartly and heads out to catch the London train. It is the same train he has taken for the last 16 years - from Cuffley, Hertfordshire. "There are only a few people on the platform at that time in the morning," he says. "But then, as you get closer to the City, the atmosphere somehow builds up." He arrives at 6.45am and leaves again at 6pm.

But this isn't a tale of descent into a fantasy world and days spent feeding the ducks. Gideon Brown is one of a growing number of ex-City workers who have become "independent dealers". Their new offices look very much like their old offices. Located in London's Docklands or the Square Mile, these "arcades" are packed with traders staring at screens, waiting to pounce on a figure that might make them a fortune. But there are several important differences: they receive no salary, they have rented their desks, and they are trading with their own money. Not to mention the fact that they don't need to be there at all: they could trade just as easily from home.

Brown is trading with £20,000 of his savings and certainly isn't under any illusions about the risks. "Of course it's a risk because I could lose all of that," says the 39-year-old, who worked for the investment bank Cazenove for 15 years.

But it's a gamble that he - and about 1,000 other independent dealers in and around London - are willing to take. They are driven by a complex psychological cocktail - pride and an addiction to the adrenalin-rush of trading both feature strongly. No doubt there's a dash of greed in there somewhere, too. But there's also an attachment to all the little things that signal their place in the world - the suit, the early mornings, the commute, and the business lunches.

For each trader, the cocktail will be mixed differently. Keeping to the old routines is very important to Gideon Brown. It's a family thing. His father, Arthur, also commuted daily into the City. He worked for Cazenove for 40 years. "I think he was one of their longest-serving members," says Brown. "We had the same commute, except that he went by motorbike and I took the train." That is why he is prepared to travel for three hours every day in to the centre of London, though he has little need to. Since the late Nineties, anyone with the right software and a broadband connection has been able to lose all their savings from the comfort of their own laptop.

But Brown wouldn't consider working from home. "No one wants to be on their own all day, do they?" he says. He would much rather pay for the privilege of having a corner of the City to call his own. It is true that IT support and internet connections are much better in the City, but there are also distinct social advantages to working there. For example, when conversing at dinner parties. "When people ask me what I'm doing now, I say, 'Well, I'm trading futures'," says Brown. "People know that you're back in the game. You've managed to get yourself back up there."

So, are these men - and they are nearly all men - gambling all for the sake of their fragile self-image? Are braces, antisocial hours and boozy lunches more important to them than financial security and the opportunity to see more of their wives and children? Or are they on to a good thing?

One old City hand is sceptical. "There's nothing that greed and avarice won't overcome," says Brian Winterflood, chairman of Winterflood Securities, who has worked in the City for 50 years. "Of course, some people will make a million in no time at all, but others will get burnt. It's not so different from betting on the horse-racing."

However, the companies that run these independent trading floors, such as the Candlestick Trading Company (CTC) and Schneider Trading Associates (STA), claim that it can be a dream job rather than a dangerous fantasy. STA has offices in the heart of the City, just down the road from the Lloyds building. They have 200 independent dealers on their books, of which approximately a quarter are ex-City workers. And some of them are doing very well indeed. "Three or four of our traders arrive for work at about 5.30am every day," says STA's managing director, Jeremy Brown. "They go through all the figures, trying to work out which markets are out of line. The markets open at 7am, and by 7.15am, they are pretty much done."

Similar stories are bandied around at CTC, which is where Gideon Brown works. Its director of operations, Arjun Rose, says that some of the company's 50 independent dealers are earning as much as professional footballers. However, sometimes this is as much by luck as by skill. "On one occasion, an ex-trader from the City had put a position on the market overnight," says Rose. "But he'd forgotten about it. He must have been out drinking during the day. When he came back in the next morning, purely by luck, he'd made a phenomenal amount of money. He went home again and took a holiday for a few weeks."

Gideon Brown says that the job can also have distinct advantages if you don't feel like going to work. During his 15 years in investment banking, he took off only half a day owing to illness. But he called in sick during his first week at the CTC. "If you're working for a company, you've got to turn up," he says. "But now I don't go in if I feel unwell, because I know I won't perform."

Performance is everything. There is no pension, no salary, and nothing to catch you if you fall. Both CTC and STA stress that they risk-manage their traders very carefully. But those who don't perform, don't survive. "If you've just had a run of bad luck, then we will stand behind you," says Schneider's Jeremy Brown. "But if you just haven't got it, then it's... (searches for the right euphemism) ...it's just not for you."

CTC's Arjun Rose concedes that few people give up the security of their day-job to go into this business. "It's not a nice thing to say, but to be honest, being made redundant is the only thing that makes people feel OK about taking the risk of coming in to this kind of industry. It's not like you'd give up your £50,000 salary to have a go at it."

Both Rose and Brown are understandably coy about the number of ex-City traders who have since become ex-independent traders. "Some," says Brown. "Three or four have lost their money," says Rose. Apparently, fear is a greater enemy than lack of skill. "I don't know anyone it hasn't worked out for, personally," says Gideon Brown. "But I heard of one guy, at CTC, who was too frightened to hit the trigger. He didn't make any orders in case he lost money. He froze, basically."

Trading with their own money rather than company funds is a shock for many traders. But their response is unpredictable. Schneider's Jeremy Brown says that traders can be more cavalier with their own funds. "Sometimes people are a bit more careful when trading with other people's money, because they feel more responsible," he says. And CTC's Gideon Brown says that he actually prefers putting his own savings on the line. "I find it easier because the only person you're answerable to is yourself. You're not going to tell yourself off for losing money, are you?"

You'd hope not. To survive as an independent trader, you've got to stay psychologically robust. And it doesn't take long for the doubts to start creeping in. "I had a bad day yesterday, actually," says Brown. "It was just one of those days when everything you do is wrong. I lost about £500. It's part and parcel, I suppose, and that's a small amount of money in this game. But if you lost that much every day, it wouldn't take long, would it?"

But he says he's not losing sleep yet. "At the end of the day, if you don't sleep well, you're not going to do well the next day. Personally, what I want to do after I've had a bad day is to come back in early and get on with it."

This is not the first time that people have staked their savings and mental health on the idiosyncrasies of the money markets. In the boom days of the late Nineties and early Noughties, "day trading" took off in America and spread to the UK. This involved punters - be they bankers, dentists or students - playing the markets from home. In 2000, Britain's two largest gambling charities, Gamblers Anonymous and GamCare, revealed that distressed day traders were calling their helplines, unable to quit despite mounting losses. "Gambling on the stock market is no different from any other form of betting," said a spokesperson for Gamblers Anonymous at the time.

Most worryingly for the new breed of independent dealers, studies in the US showed that 70 per cent of day traders were losing money. The mental health of some suffered as a result. However, the chances of washed-up independent dealers losing the plot and rampaging through the Square Mile are slim. This is because the type of trading practised at CTC and STA is far less risky than that toyed with by day traders.

It wasn't always like that. Lee Antoniou is STA's longest-serving independent dealer, joining the company when it started in 1998. Back then, he was taking huge risks. "When I first started trading with my own money, it was extremely emotional," he says. "At the time, I was basically just buying shares and hoping that they went up - fingers crossed."

This form of trading was, Jeremy Brown concedes, little more than "calculated gambling". But they've come a long way since then. He describes their current practices as "sophisticated trading", which involves much lower risks. But no trading is ever risk-free. "You could still lose it all," he says. "And a lot more besides."