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Daughter of a Trader Eschews Trading

Well, on second thought, check that

Sometimes a person takes a circuitous route to a career in trading.

Take Federated Investors' Jennifer Setzenfand, who came from a trading bloodline but initially was not interested in the her uncle's and father's profession. She is the daughter of retired trader Dennis Green, who had a 38-year trading career that included a stint with Prescott Ball & Turben. Green retired in May 2002, having held the position of senior vice president, manager of Nasdaq equity trading, for Legg Mason.

Jennifer Setzenfand

"When she was growing up, I had no idea she was going to get into trading," said Green, now retired in Fort Myers, Fla.

Yet today, Setzenfand is following in her father's footsteps in more ways than one. She is about to become the head of the Security Traders Association. He occupied that post in 1990. And now Setzenfand says she is very happy with her career choice of trading.

"I love the excitement of trading. There are so many different challenges," she said. Yet Setzenfand's success is the result of some remarkable accidents. Maybe it was talent mixed with kismet that has made her career.

These accidents-what some call la fuerza del destino-included the benefit of having several trading mentors besides her father, along with the unexpected pregnancy of a deskmate. The deskmate's desire to have children helped advance Setzenfand's career.

Her career path has given her myriad opportunities. Setzenfand has not only had the chance to trade, but also to trade many different things. That's something that delights her. "Coming to work is always interesting," she said.

Indeed, in her 17-year career she has traded almost every kind of asset from her desks, both in Chicago and, now, Pittsburgh. For example, besides equities, she now specializes in structured notes, convertibles, options and futures trading.

And yet as a young person, she had no thoughts about the family trading business.

"My father didn't discuss trading with me. It was difficult for a father to discuss something like trading with his child," she said. And besides, the daughter seemed interested in other things.

So Setzenfand went to college in the early 1990s with no thought of trading. She initially majored in photography, but that would change.

"After the first semester, I found that I was intrigued by economics and found I was getting better grades in economics than almost anyone else," she said. She was now interested in business.

So in the middle of her higher education, she asked her father if he could help her get jobs in the financial sector during her summer vacations. She worked as a bank teller.

By the time she graduated from Ohio University in 1995 with a major in finance, she was no longer on the photography career track. Her father suggested investment banking might be the place to start.

But that wasn't where the action was, Setzenfand thought. During the summer of 1994, between her junior and senior year of college, she worked as a runner handling trade tickets at the Chicago Stock Exchange.

"It was an awesome experience. I told my dad that now I wanted to try trading," she said.

Just out of college, she sent her resume to every trading firm she could find. More luck came her way. The legendary Tommy De Carlo of Mayer & Schweitzer, who was a chapter chairman of the STA in Chicago, hired her in 1995 as a Nasdaq desk assistant. She would learn trading from the ground up.

"I had to learn what bids and offers and spreads were," she said. She was again fortunate. She found a mentor on the desk, Allison Stifel, who showed her how to trade stocks.

Stifel, another Chicago STA chapter president, would eventually move on to Merrill Lynch. But before that, she played a pivotal role in Setzenfand's success in an unexpected way.

When Stifel became pregnant and went on maternity leave, it became Setzenfand's turn to do the trading. "I traded all her stocks, although it was a narrow list. I learned a lot," said Setzenfand, who now knew all about bids and offers and spreads.

Setzenfand had earned her stripes as an assistant market maker at Mayer & Schweitzer.

Then she moved to Federated for personal and professional reasons. Setzenfand married someone from Pittsburgh, a cheaper place than Chicago and one where she and her new family could buy a house. She moved to Federated Investors in Pittsburgh in 1997. She now lives in Economy, Pa., a Pittsburgh suburb, with her husband and two daughters.

She has been trading for its mutual funds-some 134 funds with about $340 billion in assets. They are split among equity, bond and money market funds. Setzenfand reports to Diane Startari, vice president and head of the global equity desk.

The professional reason for the change was that Setzenfand wanted to trade things besides equities.

"My dad told me that to do well in trading, I should go to the buyside," she said. She continues to rely on her father when she is faced with difficult trades.

"It's nice to be able to call someone who understands the language of trading. I can call him up and we can go over something that went wrong," she said.

What can go wrong?

Setzenfand says making the right call on when to use a new electronic tool or when to use the human touch can be difficult. She says this is biggest mistake she sees today.

"Every stock is its own personality, and there are some stocks that you just can't trade electronically," she said. The best thing to do, in such a circumstance, is to rely on the expertise of another person, she says.

"Sometimes you just have to pick up that phone and learn more about the person, because the relationship can make the difference in a successful trade. You need to know your partners," she said.

And sometimes one needs to get the perspective of another trader-possibly a retired one-to ensure a trade is going to work. "Sometimes that extra set of eyes is critical," she said.

An example of when you turn away from the electronic tool and call on human expertise?

Let's say she has just gotten a big order for a stock that she only trades three or four times a year. Now, the stock is in the news. The trader shouldn't just use an electronic tool and move on, Setzenfand cautions.

Can she provide an example of this situation?

"I would say a situation where there is an earnings report, some news on the stock, such as a merger report," she said. That is the time, Setzenfand says, when someone who trades the stock every day will have "a really good feel for it. That is a situation where you want that extra set of eyes."

Setzenfand says the electronic tool remains useful. However, she adds that the problem is that because something works some of the time, a trader can become addicted to it.

"I think that anytime you favor one algorithm too much, you can become too reliant on it. And it can be any electronic tool," she said.

Every trader, she adds, must understand that every situation can be different-and, by implication, can require you to change how you view a trade and situation.

Learning to cope with the unique situation, Setzenfand knows, is the stuff of a successful career and life.