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I've been seeing increasingly frequent discussion on the various boards over the similarities and differences between careers in banking and in trading. A lot of us can speak with authority about one of the two, but not many people can say they've had first-hand experiences in both. I think it's important for us to be clear about the pros and cons of each of the two career paths and I'd like to consolidate some of the opinions that have been floating around about this topic on this thread.

Here's one impression I've gotten from speaking with people on both sides of the isle: Banking is for the typical ivy-league pencil-pushing over-achieving workaholic, while trading requires a somewhat less quantifiable "it factor" that typically manifests itself in the form of uber-competitiveness and the ability to withstand tremendous pressure. A Chicago-based prop-trading friend of mine - we'll refer to him by the initials "A.P." ('A' as in Adam, 'P' as in Ponzi scheme) - once told me that ex-athletes tend to make good traders for that reason, and are therefore actively recruited by many top-tier prop-shops in the Chicago area. I found that tidbit a bit startling, considering quants are supposed to be taking over the world of trading and to this day I still haven't met an athletic quant...

So in an effort to stimulate a healthy flow of information, I'd like to ask anyone with any input on this topic to contribute their $.02. Some of the questions I'd personally like to see answered here are:
-What do recruiters look for when hiring bankers vs. traders? What skills, talents, likes & dislikes are a good fit for what job?
-Who typically makes more money between the two over the long run?
-Which career path typically offers better work/life balance, satisfaction and flexibility?
-What are some of the top locations for each of the two?
-Who gets more tush?

Also, when answering, please make an effort to distinguish between the various kinds of trading, i.e. prop, S&T, etc. and different banking departments.

Protects your selves at all times and come out swinging at the sound of the bell.

P.S. How do you like the "Pick A Side" bumper sticker idea?

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Comments (22)

  • Barboone's picture

    Wondering the same thing, I'm torn between persuing OTC derivatives trading or IB.

    "The higher up the mountain, the more treacherous the path"
    -Frank Underwood

  • Midas Mulligan Magoo's picture

    Your boy must have been talking about sales. Most of the top prop shops (especially in the Chi) have no interest in non-quant background people. As a matter of fact, many won't even talk to the soft-skilled business major crowd. You'll see some target kids get a shop based on rep and connections, but the general preference is towards heavily technical people and there are more PhDs in the game every day. The general train of thought as of late is "give me a comp sci, stat, engineering automaton" (though I'm seeing chemistry and physics frogs pop up on the radar) and I will teach him what he needs to know. The entrepreneurial types are too likely to bolt for their own shop once you teach them a system. For the record, by faaaaaar the most handy skill for trading today...pro-gram-ming.

    A trader with real game can knock out in a year what an MB in IBD can over a career. The typical banker, however, will clock hundreds of thousands a year after a while, no matter what. No such guarantees in trading.

    The tush goes Alpha every time. Like everything else, it's a matter of what your risk profile is, the situation then adapts to you. Keep'em swinging.

  • dorsia reservations's picture

    Money may be the common denominator, but traders aren't bankers, and bankers aren't traders. The line may be blurred as you get higher up (HFs, etc.), but from what I have seen, very few people would do one or the other if given the chance. All I've ever wanted to do save for professional sports was to have been a trader. I have never had the desire to do DCF spreadsheets late into the night. This is not to knock IBD, I know quite a few that do IBD and it works for them, but it has never appealed to me.

    I work at one of the top tier BBs (albeit in the BO, I'll get to the trading floor eventually or leave the street all together), and salary wise, most market makers (not even the hot shots that are prop guys) seem to have more fun with their job than bankers do, but again my views have shades of selection bias, as I'm only going off of a handful of bankers I know vs. many more traders.

    I played a fairly pressure packed sport in college, and the fact that (yes, I know plenty of people are gonna come here and say "well market making isnt prop and therefore isnt really trading blah blah blah) there's risk, but rewards in intelligent decisions (most of the time) is something that draws me and most into it that go into the career. I also believe it was bondarb or revsly or one of the traders on here that said the job may be 24/7 but since you're actively using your brain, (as opposed to cranking out pitchbooks-sorry for the bias), its more enjoyable.

    The mansion in Greenwich on Round Hill Road, the porsches and the blonde trophy wife which my banker friends aspire to, to be like other bankers, have never appealed to me (except for the wife of course).

    Just my 2 cents

  • The Phantom's picture

    If banker presses B instead of M, in worse case scenario he'll get raped by MD at most.

    Trader on the other hand will make the entire market go bananas for 40 minutes.

  • monty09's picture

    -Who typically makes more money between the two over the long run?
    Traders can be done by 35 with a few billion, yet to meet one banker in same boat
    -Which career path typically offers better work/life balance, satisfaction and flexibility?
    depends on your goals..
    -What are some of the top locations for each of the two?
    NYC & London for both
    -Who gets more tush?
    does not matter on job, if you got game you got game

  • In reply to The Phantom
    MissingNo.'s picture

    PussInBoots:
    If banker presses B instead of M, in worse case scenario he'll get raped by MD at most.

    Trader on the other hand will make the entire market go bananas for 40 minutes.

    This.

    Still not sure if I want to spend the next 30+ years grinding away in corporate finance and the WSO dream chase or look to have enough passive income to live simply and work minimally.

  • prospie's picture

    Let me add a couple minor but possibly important points, although these are secondhand info that i've heard/heard:

    - a trader is not a trader. Even within BB S&T there are vast differences in terms of income/exit opps/hours/ lifestyle for a trader. Just because you're a trader doesn't mean you can some day move to a hedge fund and cash in on the bonanza. Some traders can never move to a hedge fund and will never make seven figures, simply because of where they started. It depends on what kind of trading, what your product is, etc.

    - Of course you can make a lot, but the median is probably pretty similar to the ibanking track. Shit, remember a couple years ago when Blackstone (or kkr?) was offering $1m over the course of 2 years for PRE-MBA associates. So you're 24, here's a million dollars. I doubt that happens much in trading.

    - for those who are arguing that a computer can never really replace a human trader, I have seen threads recently where guys on here were concerned about automated trading taking over a particular product or market.

    Moral of the story, don't do it for the money. If you're on the fence about whether you should pursue a job in S&T, you're already not cut out for it.

  • In reply to prospie
    monty09's picture

    prospie:
    Let me add a couple minor but possibly important points, although these are secondhand info that i've heard/heard:

    - a trader is not a trader. Even within BB S&T there are vast differences in terms of income/exit opps/hours/ lifestyle for a trader. Just because you're a trader doesn't mean you can some day move to a hedge fund and cash in on the bonanza. Some traders can never move to a hedge fund and will never make seven figures, simply because of where they started. It depends on what kind of trading, what your product is, etc.

    - Of course you can make a lot, but the median is probably pretty similar to the ibanking track. Shit, remember a couple years ago when Blackstone (or kkr?) was offering $1m over the course of 2 years for PRE-MBA associates. So you're 24, here's a million dollars. I doubt that happens much in trading.

    - for those who are arguing that a computer can never really replace a human trader, I have seen threads recently where guys on here were concerned about automated trading taking over a particular product or market.

    Moral of the story, don't do it for the money. If you're on the fence about whether you should pursue a job in S&T, you're already not cut out for it.

    agree to moral and yes 24 year old traders can be offered $$$$

  • CMOtrader's picture

    look, the whole athletes make good traders thing is way overblown. yes, traders like to hire other guys that have athletics background, but it is not nearly a big deal as it has been made out to be. To be a good trader, you need to be smart, most of the products today are very complicated and have a lot of different risks and other characteristics. Even for simpler products like government bonds, there is still a lot going on and you will see very smart people on all those desks. when i was interning at a BB on the agency desk, all the younger traders that had been around for a couple years were all engineering majors at school. so even on the sell side brains > brawn. but being a former athlete definitely does help, its just not a make a break type thing that some people make it out to be

  • In reply to dorsia reservations
    Zweihander's picture

    dorsia reservations:
    I also believe it was bondarb or revsly or one of the traders on here that said the job may be 24/7 but since you're actively using your brain, (as opposed to cranking out pitchbooks-sorry for the bias), its more enjoyable.

    That's exactly why I chose M&A, you dont need to use your brain. Sure the work is boring and the hours are long, but it's easy, and if some bank is going to pay me $100k a year to make powerpoint presentations then I'm not gonna stop them.

    You know you've been working too hard when you stop dreaming about bottles of champagne and hordes of naked women, and start dreaming about conditonal formatting and circular references.

  • someotherguy's picture

    I am more on the electronic side of trading, and I can't really comment on numbers for either side- trading is a lot more driven by personal performance, and if you can establish a track record of making real money for a firm, you can get someone to offer you a percentage of your earnings.

    I can tell you this though- bankers tend to be more of the wannabe old money crowd, and are the types of guys that will look at your shoes and watch when they meet you before they look you in the eye, which I personally detest. Traders on the other hand tend to be from more diverse backgrounds, or really I should say have far more diverse personalities.

    Each has their own misery, hours in trading are generally better, though as markets are becoming more 24x7, that is not necessarily true in all cases.

    Someone should really start a database where we can all input our numbers. Sometimes I wonder if that 26 year old sales chick is raking it in or not.

  • BillyRay05's picture

    Jr. Trader @ a bank with a lot of banker bud's. So my answers will not apply to you Chicago Prop guys (although I did intern at a reputable prop shop)

    -What do recruiters look for when hiring bankers vs. traders? What skills, talents, likes & dislikes are a good fit for what job?

    Recruiters want bankers generally more polished (eloquent) and their traders with raw mental ability (that's why engineers do well). The trading/athlete phenomenon is due to the pressures on the job- pressures that athletes are familiar with. Nevertheless, both groups like pedigree and intelligence, and my desk is filled with Ivy Leaguer's

    -Who typically makes more money between the two over the long run?

    Interesting question. The median salary (and the correct answer) is probably the same for both professions in the long run. Too many people on this board think that 20mm+ traders are found everywhere. In the short run, bankers make more.

    -Which career path typically offers better work/life balance, satisfaction and flexibility?

    This depends on your personality. One forces you to work 100 hours a week on BS models while making your life pretty miserable. The other forces you to be at work at 6:30, forces you to work 70 hours a week and stress out the remainder of your free time, making your life pretty difficult. One isn't easier than the other. They are just really different.

    -What are some of the top locations for each of the two?

    I say NY, but to each his own.

    -Who gets more tush?

    The operation guy, the artist, and the barista probably get more azz than most of the monkey's on this board. The fact that you used the word 'tush' suggests that you seldom lay the pipe yourself...

    "Sounds to me like you guys a couple of bookies."

  • ambition56's picture

    ahh this is some great stuff goldmansack... this is a major crossroads I am at right now

  • In reply to BillyRay05
    abcasdf's picture

    I work as a prop trader on the International desk of a prop trading firm in NYC and I went to a target school so a lot of my friends are bankers...only a select few became traders. Personally I only work 40-45 hours a week usually from 8 am to 4:30 pm and sometimes I'll stay late if I want to look into new ideas and build some things out. However, when I was a trading assistant/junior trader, I did work more hours just because I wanted to be the first one in the office and the last one out (as a rule of thumb, you should always be there when your superiors are there to support them and more importantly, learn) Also, I do find myself watching CNBC and reading bank research when i get home just for my own personal knowledge and I like to hear other people's opinions. When I am working though, I am sprinting the whole time unlike bankers which are pretty much running a marathon.

    In terms of compensation, a good trader makes a LOT more than a good banker for the simple reason that we are getting a % of our PnL and banker pay is pretty much a fixed bureaucratic ladder system. Being a trader is a TRUE meritocracy and you eat what you kill and if you can't kill, well then you go become a banker or flow trader. In my firm, we get paid 40% of our PnL once you make a trader once you make it out of the trading assistant program. We also do hire a few flow traders or prop traders from the banks if we feel they have an "edge" that we currently do not have. Every trader on my desk is up at least 1.5 million this year on my desk or more and we of course have 1 guy who is up 7mm+ this year (not me =( ) However, the options desk is down this year because the volatility of volatility has been so high but that isn't their fault but yes their compensation will take a hit this year although I don't think any of them will be let go.

    Since banking is more bureaucratic, it's probably easier for people to keep their jobs as a banker b/c as a trader, nobody cares if you did great work analyzing and building out spreadsheets if you can't translate that into PnL. I enjoy picking off traders who don't have a clue what they are doing and I'm sure other traders do too so you see why bad and mediocre traders must be let go (so you can pick them off when you go to another shop) Also, bankers may make more at the junior trader/analyst level right out of school but that's because 1), we are letting you see our proprietary strategies in exchange for you just doing our PnL and bitch work so there's no reason for us to pay you a salary but since we know you have to pay rent, we do 2) the amount you will learn just by being around successful prop traders should be enough compensation; you are learning to make money, not make stupid powerpoint presentations and kiss ass although we do appreciate it very much. After a while, you can go anywhere and make that money (usually after a junior trader program is done) so firms have to start paying you what you are worth or you will go somewhere else.

    Just my 2 cents but I'm biased but I will tell you that I'm mid 20s and I make more than all my banking friends by a good margin and I have no ladder to climb - the market and margin calls is who I report to.

  • In reply to abcasdf
    accountspayable's picture

    ngtrader:
    the market and margin calls is who I report to.

    While this may be enjoyable to some, personally I would find that to be a reason not to do trading, and hence a huge factor for deciding between banking vs trading. Trading is much more of a niche career path than banking. Yes it is more meritocratic, but you will only be doing one thing your entire career. I can't imagine being on my deathbed 50 years from now and realizing that my entire career accomplishments can be written in a single line preceded by a $ sign. Yes, banking has more grunt work for a longer period of time, but you do learn more tangible skills that can be applied to other fields. For me, job satisfaction is worth much more than the amount of money I could make.
  • Irresistible's picture

    One of my friends who worked as a Trader at a BB lost 1.5 million. After that, he can never find a second job relating to trading. :(.

  • In reply to BillyRay05
    Gold Man Sack's picture

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  • ericafor's picture