What types of trading are there?
I know there is prop trading, and S&T in BBs. Are there any other kinds of trading open to undergrads right out of college, and what would you say the main differences/exit opps for each are?
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First off, basically there is no prop at banks since '09. If it were like 90% prop and 10% flow back then it's now reversed. It's a quite general question you asked but in a nutshell
straight out of college you could go into: the sellside aka - BB S&T, which is the most viable option probably (as the entry level job); exit opps as it has been mentioned several times on the forum (search bar right corner) is trading only, no wonder because of the narrow skillset you gain here (but the options you could choose from if you decide to leave the sellside depends on your product as well). Pay is "relatively shitty", bonus is discretionary so they will just come up with a number and say that's your bonus, also obviously office politics is present. Gives you a great training, you get a much wider network, and obviously you got the "prestige".
the buyside aka - Hedgefunds and the brand-name prop trading firms (not the arcade ones obviously, I mean the quant heavy firms), and these are the ones which would be the exit opps for you; pay is obviously much better, especially at the above mentioned prop firms (but you got to be enough smart to land a position there after your S&T gig, even so straight out of college..). Meritocratic environment and there's a LOT of money to make if you are good.
Learn programming. VBA will definitely come in handy, Python will be a big plus if you are looking more into quantitative trading.
pokemon and yu-gi-oh
Would the brand name prop firms include firms like Jane Street, DRW, SIG, Optiver, and a few others? I thought you didn't need S&T experience to join these firms and could join out of college, or is it much harder? Can you exit to buy side easily from the top prop trading firms, or is it much easier after you do IB?
Also, what kind of salary is expected for a trader at a top prop trading firm, and what career path do the top traders at these firms follow? MBA is not an option right, as you will be making too much money to need one if you are successful and you don't get leadership training anyways?
Yes, those are the ones. In fact, you don't need S&T experience at all they just want to know you got the brainpower. Even with sell-side experience breaking in would take hard work, I'm just saying that some of these shops do take experienced hires, for instance one of them were hiring FX options trader some time ago.
Can you exit to buy side easily from the top prop trading firms, or is it much easier after you do IB? Props are buyside themselves; why would you want to exit from those firms? If you want a career change or something new sure, otherwise you really wouldn't want to leave trust me on that. Buy side is still probably just as competitive (I'm no expert though), but at least you'll have no problem landing interviews since you got the brand name and some experience under your belt.
Again, top right corner, use it. In short you could retire before 30 if you are (really) good, then do something else or found your own firm.
You're going to be in for a rough ride if you want to leverage prop trading for some kind of exit opp.
Quite a few prop shops tend to only hire fresh college grads to cultivate solely within their own system. Optiver is a good example of this.
So you mean prop trading firms tend to keep their talent and promote them?
It's more of a preference towards hiring new graduates than a rule.
And per smashzR's suggestion as well, use the search bar. Prop trading/S&T exit opps have been mentioned numerous times.
Jobs in Trading? What Kind Are There? Confused (Originally Posted: 06/29/2013)
I just recently talked to my advisor and he said prop trading is dying because of the regulations on trading against clients (Goldman S). I feel like thats not true?
What other jobs are there that allow you to earn money by making trades as a job. I heard that Sales and Trading is more of a sales job rather than swing trading or day trading
This is for equity trading.
Correct me if I'm wrong about any of these notions
Your advisor is an idiot
There are three threes of trading 1) Prop- trade your own positions with no regard for anything else but profit 2) Flow- when you have market exposure but your ultimate goal is to buy and sell to realised the bid/offer between clients 3) Dealer- that is a trader that does no have a book to hold overnight exposure and simply tried to sell what some else offers and visa versa (i.e. institutional broker, that can be long or short intraday). Prop trading at an IB level is dead, flow trading is still present in less liquid markers e.g. HY bonds but is slowly being moved out and dealing has become the norm. Historically, banks provided a large part of the short term liquidity to markets by holding trading books, since capital requirements have changed, this is no longer the case.
Most IB's are simply trying to leverage their larger client base without providing much liquidity (front-running), but mid market firms such as jefferies etc are actually starting to do alot better in intermidiation. If I was to guess, the future of IB in markets is going to be more focused on collaterized lending, which implies a grow in CVA and treasury activities.
Agency trading (your third type of trading) is NOT the norm. Nearly all IBs make markets with decent overnight exposure. So flow trading is the norm.
If agency trading isn't the norm, it will be soon. The good market making traders are IBs are getting poached by the buy side, and with all the regulations cracking down on their business, it's much safer (and less capital-intensive) for banks to engage in agency trading. This is especially true for equities; fixed income is still very market maker-heavy.
That is true for cash eq, which represents about 1% of an investment banks trading floor.
Try telling any sellside equity derivs trader that its an agency model. Flow trading, or market making is most of the trading activity.
Sorry meant cash equities
i agree...that advisor sounds like an idiot...want advice about wall street /trading...ask a trader...anybody else has no idea what they are talking about
Different types of trading (Originally Posted: 01/27/2009)
sorry if this is sort of ridiculous but how many different types of trading are there? any information about them would be appreciated, too.
the reason i ask is i have interviewed/will interview at 2 firms, one focuses its traders on directional trading for equities, the other does option betting.
from my research, the former is largely something you learn by doing and you either have it or you dont. also the learning curve is typically one to two years.
what about trading options? is that basically the same deal?
are their other types of trading that proprietary firms specialize?
(im not a complete newb when it comes to trading, but feel free to respond as such. just trying to get a feel for what would be the best match for me based on whatever info i can get)
Options = more quantitative, math heavy.
What kind of Trading? (Originally Posted: 10/06/2012)
Hi,
I would like to now which kind of trading is the best for me. I am coming from an engineering background and had a lot of exposure to option pricing theory, probability theory, etc.
I have real problems deciding which trading role to apply for.
My goal would be to join the trading desk of a BB but keep the possibility to move on to some quant prop shop or hedge funds later. What do you think which desk / role is best for achieving this goal?
Given my background I thought about exotic / OTC contracts, but since prop shops don't do this, I think this could be a deadend.
At the moment, I find it very hard to get an overview over all the different roles and desks. I know the products but I realize that this is of little advantage when thinking about which division to join.
There are too many different options: Equities / Rates / FX / Credit / Commodities, derivaitves / Exotic derivatives / plain vanilla, flow / prop, then all the products within these certain groups...
I would be nice if someone could shed some light on that!
(and yes: I have used the search function and read about it for 2 hours, but most questions here are more like "should I join swaptions or fx options?")
Many thanks, guys!!!
the real question is what interests you most? you should consider structuring if you have a technical background
The fact is that I can not say what interests me most at the moment. I like complex products but for me it doesn't matter at the moment whether if it's a lookback option on a stock or a swap.
I just want to stay as flexible as possible, so that I would have an opportunity to move on to other companys, if I am really good, later... especially prop shops and hedge funds.
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