S&T at BB vs. Prop Shop
Is the following is correct and an accurate outline of the industry:
- First year analyst doing S&T at BB is more stable, lower chance of getting fired (typically), but comes with lower overall comp + salary. Also requires practically no technical skills or prior knowledge with regards to CS/Math/Statistics beyond being able to crunch numbers quickly
- Going straight from undergrad to Prop Shop is a lot harder, comes with a greater risk of getting fired, yet there is chance to make a lot of comp + salary. Also requires way more technical skills and you absolutely have to be proficient in CS at bare minimum
With regards to career progression...... do best S&T at BB ppl typically progress with bank or leave to trade at some other firm/prop shop eventually? As for guys who start at prop shop, I assume they stay within prop shop or move to somewhere like Citadel/HF where they can earn even more $. Depending on what type of securities a person is proficient in trading or used to trading, I assume there is also niche firms in oil/commodities/energy that aren't standard Prop Shops/HFs that cater to more niche specialties/backgrounds
Can mostly speak to bank trading. In terms of fixed income, some products have a lot of corresponding buyside roles while others not so much. But basically most products have a buyside counterpart. Bank traders are more likely to go to a platform hedge fund while prop traders tend to stay in prop if they can as it is a buyside seat. Not that many prop traders in fixed income make the move to a Millennium/Balyasny for example. I don't know about the standards of moving to a fund as a pm from the sell side directly but at the very junior level (~2yrs experience), I don't think it is too hard to move to a hf as an analyst/trader. Have seen this move a lot even from non-BB trading/research and people actually get multiple offers even. Bar is probably much higher at the VP/D level as that would be a move directly to sub-pm/pm with some risk allocation. Another aspect of sell side trading is you are exposed to all market participants in your asset class so it's not an unnatural transition to the other side. With prop you can be very isolated. I know of prop traders at T1 prop that does not even go to the office and basically does everything solo and doesn't talk to anyone but some quant support. Some people like this level of extreme independence while some people don't.
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Dunno. Most traders just stay in the markets if they can because it pays more than any other job, basically. Sounds harsh, but, if you are going in with a mindset of "exit ops" and preserving optionality, then this job is probably not for you. There aren't many true exit opps and you have to love it. People basically just do the same job at different places like from a bank to a fund or prop and back and so on. For those who leave, I have seen some with a trading background go into fintech startups, especially in crypto and securitization/lending. Some also get a MBA to pivot. But if you did structuring/financing, then you can go to private credit and infra PE and so on.
1. is false. technical skills are valued on most desks, esp derivs ones.
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If you are joining an options desk they want some decent technicals for sure. Agree with this poster. There's a reason there are certain banks that just pull MS/MFE students from uni and bring them in as associates on options desks.
The technicals would be very math heavy/oriented. I know some of these desks who will ask black scholes/stochastic calculus questions. Actually now that I think of it, most options desks at banks will expect juniors to know how to code + math these days.
Word of advice I have from a PM is make sure you know how to code because your seniors will all expect you to know it now and if you can't do it you're at a disadvantage. I mean just think, what value are you adding to the desk if you can't even code/automate some of this stuff. The seniors who can't code know how to trade, but the juniors who can't code can't do much I feel like.
as the other user said, stats (distributions, EV, etc.) and CS are both very helpful. options are inherently more on the quantitative side as well.
1. It is not obvious to me which one has better job security. Yes there is a higher chance that you get let go by citadel (citadel is also a prop firm btw). However getting hired again at a good buy side shop after citadel is very easy. If u work for a BB in bad market when banks are firing whole desk at a time, getting hired by even another BB takes luck.
2. Traders in bank has no idea how take position, at least most of them. People in prop shops have a good idea where the edge is. Which is why they make more money jumping around different buyside firms.
3. Prop do not hire outside, almost. My firm has 100+ trader and non of them every worked at a bank. There is almost zero reason for us to hire a bank trader because he doesn't help us make money. HFs do hire from bank tho.
4. No prob shop needs you to be professional in CS. just be able to code python and import pandas is enough
I don't know anyone has turned down JS/Citadel/HRT/Optiver/Jump/SIG for GS/MS/JP.
how is prop trading different from being a pm at like baly/cit/m ...
this one is hard to answer. Prop shops can be very different, and even different traders in the same shop could have completely different role. Some traders make money by taking long term position, and that is directly transferable to HFs. Some traders focus on low latency arbs, and that is not useful to HFs.
2 is bs you have no clue how s&t actually works
OMFG I have traded 5+ years am getting into an argument with an intern using large font size
Why do hedge funds hire bank traders if they suck so much? Why don't they predominately hire from prop firms where they are more skilled?
HF do sometimes hire from prop traders, and when that happens it's usually low to mid several figure total comp, to be either a PM or a sub-pm on pm track. Cost of hiring prop traders is a lot higher and less people look to leave. Being successful in prop firm can make 3mil+ per year after 10+ years. Some PMs in HF make more but most of them make much less and has no job securities.
On the other hand, BB haven't had a good run in more than a decade. Traders leave because they are sick of risk/compliance/no mentorship. They don't get paid as much as before because banks claims that their desk makes pnl because of the franchise/relationship/huge balance not because of traders. Most junior quants/trader leaves for millenium/citadel/Squarepoint/BAM etc to be a quant developer or research analyst working under a pm.
BB traders leave for hf because it's an step up. I don't know anyone at JS/Citadel/HRT/Optiver/Jump etc is looking to move to hedge fund
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