DRW vs BBs
Hi,
I recently have finished recruiting. It was a pretty stressful process, but I'm glad that it's finally over. Looking forward to my GPA falling off a cliff come winter break.
I have an offer from DRW Trading and Deutsche S&T, and JPM S&T. I have an upcoming superday at belvedere; not sure if I should cancel...I already reserved plane tickets and they're keeping me at the Palmer House hotel, which is dope. I think i'll go to have some fun and eat the free food.
A little background: ivy undergrad. Most of my classes were math and stat classes, with a couple comp sci.
ATM, I'm leaning more towards DRW. From what I have heard, their fixed income is great. I also liked the academic/open environment...casual dress and catered breakfast/lunch is nice. Pretty laid back
Obviously, those considerations are just ancillary benefits, and the crux of the decision is going to lie in which firm will give the best edge for my career (in terms of upwards potential, compensation and enjoyment).
Any informed inputs would be highly valued. Thanks.
The chopper acquisition likely didn't improve DRW's fixed income capabilities. After starting at a bank in NYC and then moving to prop trading in Chicago, I would lean toward JPM or DB. DRW is a top tier shop but you mentioned upwards potential and compensation in your post. Prop trading offers far less flexibility for career progression and only really offers higher compensation potential early in your career (VP+ at banks offers similar or greater upside but carries different career risk).
As a general rule, I've found that recent college graduates highly overestimate prop trading compensation and underestimate career risk so you may want to dig further into these points before you make a decision.
If I were you, I would base my decision off of which city I preferred and if I had a strong network of classmates / alumni / industry contacts in either city. Also, determine your career risk tolerance. Hours are worse at banks but you have much better opportunities if trading doesn't work out or if you don't enjoy the career as much as you had hoped.
GammaMonkey absolutely nailed it here. I also did ivy undergrad and worked in trading before working on a startup and then business school.
First of all, congrats on the offers. Those are all great jobs, and you should pat yourself on the back for a successful recruiting season. Belvedere is no longer in consideration given the offers you have. Solid shop, and the guys there PARTY hard (their traders had the annual company holiday party in Miami a few years back after having a kickass year) but just not on par with DRW or the BBs.
Now, let's turn to DRW vs JPM/DB. In terms of quality of life and cost of living at the early stages, DRW wins out since Chicago is super cheap compared to NYC. So you'll definitely live better if you take the DRW offer. And hours and culture at prop shops are pretty laid-back, so I think you'll be less stressed at DRW.
In my opinion though, that's where the pros of DRW ends. When choosing your first post-college job you have to consider the long-term benefits of the job, mainly skillset, network, prestige, and exit opportunities. Although BB fixed income S&T desks are struggling, they have several advantages over a prop shop such as DRW. First, you are trading client flow, so you will have close interaction with major hedge funds, asset management firms, corporations. Such exposure will give you a deeper insight into the markets than at a prop firm. Second, you will gain a far more extensive network at a BB. This goes without saying given their size, being in NYC, etc. Third, a BB will give you far more exit opps and career flexibility than a prop shop. With a BB on your resume, you could move to buyside, top b-school, Asset Management, a move that is far more difficult coming from DRW. Given that you are still a kid, you ultimately don't know what your career will look like and whether or not you want to stay in trading indefinitely. Thus, you should hedge by choosing a role that you will enjoy and will provide the most amount of flexibility.
As to JPM vs DB I would go with JPM. DB's fixed income s&t is solid, but European banks are going through hard times right now, and Anshu Jain is restructuring DB. I would be a bit nervous about joining DB when I have an JPM offer. I think JPM is the best run investment bank in the world.
When choosing your first post-college job you have to consider the long-term benefits of the job, mainly skillset, network, prestige, and exit opportunities.
I am pretty set on trading. It's what I have wanted to do since I got to college. Given this, do you still think it would be wise going with DRW? I get a very strong feeling that DRW is more invested in bringing up its analysts and that they give all the support you can ask to be successful. I looked at the respective training programs, and DRW's 6 month training system seems so much more comprehensive.
I was pretty set on trading as well when I was your age. If I had your options, I would choose JPM, and quite frankly it's not really a close call.
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Let me play devil's advocate for a moment. DRW is one of the best prop shops in the space, and FICC is one of the best desks in DRW. The founder Don Wilson started trading at the Euro$ pit, I bet their book is at least as big as from that of BBs. Of course you wouldn't have the same client network that you will get from a BB, but if you want to stick with trading or move to a hedge fund, DRW gives the almost same opportunity. Not to mention you can always do a part time MBA in Booth or Kellogg if you want to switch your career inside finance.
Also BB FICC compensation has dropped dramatically after 2008 (Look at this quarter's FICC revenue from any banks). I see not a lot but decent amount of people making >$1m after 4~5 years in top prop shops. You will make mostly half of that as a BB VP (not sure about this part. Hear from my friend, but correct me if I am wrong).
To be honest, you can't go wrong with either. Of course BB wins a top prop shop on some aspects (I agree with most of the comments above). As a guy working at a prop shop and absolutely loving it, this is just my 2 cents.
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Outside of partners at most trading firms, there are very few people who consistently bring in >$1m. I only bring attention to this because I think this type of suggestion ends up being especially injurious to guys trying to decide which career path to take. Regardless of what WSO suggests, the $1M annual mark is still far from the normal in any part of finance, especially for traders with only a few years of experience. My estimate is 5% of traders sit in the >$1M club and this is overwhelming comprised of desk heads at the top tier shops.
For what it's worth, I think 300-500k is a much more reasonable estimate for successful traders at top tier firms with 4-5 years of experience. Notably, this is likely similar to the range you'd expect in trading at a bank near the VP level but likely in a much higher cost basis city (NYC).
Thank you for giving that reality check. SB+
I don't know how other firms are doing, but for this year 'average' bonus for traders with 4~5 years experience in my firm is 1M bid. Of course you have to be above average to last 4~5 years in a prop shop, but you don't have to be super good like top 5%.
Finally somebody giving some realtalk.
I would agree with the previous post. I work at one of the better prop shops and am making low 7 figures this year after working for a little under 5 years now. You may or may not be a little skeptical of this figure, but it is really is not out of the ordinary for those that have found some success in this industry. For what it's worth, here is what I think:
Since leaving school and entering the real world, I increasingly feel that the emphasis on "long-term benefits of the job, mainly skillset, network, prestige, and exit opportunities" is sub-optimal, in that it is too risk averse and not deliberate enough. You can certainly do an analyst stint for 2 years, go to 2 years of B-school, spend another couple of years paying off your student loans, then begin to start putting away 100k a year somewhere by the time you're over 30. This is a generalist path. This is a hedged path. This is a path for you if you want to move forward largely using your prestigious affiliations.
The opposite path to take would be that of a pure entrepreneur. Have no affiliations and succeed purely on your ideas, decisions and the impact you can produce in the world. Directly attack a particular real world problem (or market) and become a master of it. This is obviously very daunting to most students. My experience has shown me that prop trading lies somewhere in between. The career path is much more meritocratic, and this is crucial. You have the resources of a reasonably sized company to help you, the flexibility to move up and command more responsibility faster, and the payout structure to reap the benefits of this structure. Something that most students don't do a good job of is choosing a career path that has a level of meritocracy appropriate for their ambitiousness and risk tolerance. If you are ready to work your ass off and are willing to take a bet on yourself, this decision needs to be highly prioritized. Otherwise you may find that your outperformance leads to unsatisfactory rewards, because you traded your upside for the insurance of a brand name. You also have to consider whether or not you plan to continue working forever. I plan to retire in a few years, at which point I would derive close to zero value from my skillset/network/prestige/exitopps. I certainly wouldn't want to invest 6-7 years building out this fancy insurance network.
And really, most of the top prop shops still leave you with reasonable exit opps as well. Many of my former colleagues have entered tech or joined other firms in the financial industry. DRW is an excellent shop. Read up on their Glassdoor reviews though. One slight issue I have heard about that goes against what I have said above is that desk heads tend to stay in their positions for a long time, resulting in long wait times before you can move up.
Obviously I am biased coming from a prop shop background. Go ahead and balance out my argument with those from the BB side. If you are ambitious though, I would choose prop shop over BB in a heartbeat.
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great perspective
ArcherVice would probably have good input on this. He's a Chicago prop guy if I'm not wrong.
I heard DRW is paying 85k not 80k.
By the way is this for a Chopper-acquired desk or one of DRW's original options desks?
It seems like the Chopper-acquisition isn't going to affect the desks much, the Chopper desks are operating largely independently and they said they will continue to. The same thing happened when they acquired Vigilant. This is what I heard from the employees.
That sounds extremely high, can anyone else who works at an options prop trading firm comment?The key words are "this year."
Must have been long vol going into August. If this poster works at a firm that has a lot of Europeans who appreciate flavored seltzer water like his history seems to suggest, that's really impressive, because of the mechanics of that firm's comp (ie the firm had a really good year).
But 2008 was a similarly good year for props, you can see news articles about Jane Street MD's like Pat Nichols buying million dollar houses in that time period (he's at OMC now.)
I read the offer letter again, It's 80k.
So the person I would be working for on a day to day basis started working for DRW a few years ago before the acquisition and trades fixed income futures. But I do recall that some of the people I interviewed with were former Chopper employees. Not sure what this means about which employees I would be sitting next to
In general (and if it would be great if you have knowledge specifically about DRW), is it difficult to trade more than one product?
Only read the first couple of responses, but I'd somewhat disagree with some of the points raised with regards to the benefits of a BB. I think these benefits sound intuitive in theory, but in practice its a bit of a different story
-Job Security: a BB might have more job security if you are shit because you can hide for a couple years, but in general I wouldnt consider a BB the hallmark of job security given banks shut down entire desks all the time. At least on the buyside/prop shops you get the upside potential, working at a BB these days is more akin to selling a put then being a long a call
-Access to clients: someone above mentioned this and id strongly disagree with this as a huge positive. In sales you will have access but you are in sales, and in trading you will have very little dialogue with clients in general.
-Network: granted I am talking more from an HF viewpoint and not 100% sure how much you talk to sell side from a prop shop, but in general, my network improved 100x goin from sell side to buyside
-Compensation: as i mentioned above, upside call vs downside put
At the end of the day its about risk aversion. Personally, I would always advise young people not to be risk averse, you have so many working years ahead of you, you need to take the shots while you have bullets
This.
DRW is best of breed in my opinion, i would go to DRW over JPM over DB any day. The vast majority of the senior talent at bulge brackets have gone to the buyside at large asset managers or hedge funds.,. so you will most likely be learning for someone who has never seen rates go up and was in college during 2008-2009.
And i would actually argue that their futures/options book is similar in size to most banks (remember these guys bid on and won Lehmans int rate/fx/ag positions and wound them down for a massive profit). Their overall book will be much smaller than banks but in the deriv space they are massive players. When i was in the pit the DRW trader would take down thousand lots without blinking all day every day, and back then there were still bank traders in the pit.
DO NOT GO TO DEUTSCHE!!!!
Congrats on the offers and good luck.
I don't think they're trolls, these bonuses are quite plausible this year because of August (having worked at a vol shop), but they are certainly a far cry from typical.
That's what I'm talking about
Also, re: deutsche http://www.wallstreetoasis.com/forums/deutsche-bank-to-shed-35000-jobs-…
DRW is a great opportunity. It all really boils down to the risk you’re willing to take with your long term career prospects in the event you fail at trading (at either the banks or prop firm). What does that look like in either scenario? Don’t take that risk lightly, keep in mind these places hire people like you, so the attrition (and successes) are all people cut from similar cloth… so don’t think you’re immune to failing.
It’s typical that a simple thread has devolved into a discussion about sky high compensation and 7 figure bonuses. Ignore all that bullshit. Whichever you choose, the best thing you can learn is what successful traders do when shit goes sideways. Mitigating the downside as best as possible and knowing what to do if it goes south. Everyone talks about the gains and no one talks about getting punched in the face. Keep a journal for your notes, lessons learned and personal performance… having another good feedback tool will pay handsome dividends in the long run.
Where did you end up accepting?
in terms of compensation its really a moving target. no one from these firms are going to tell you what they make.
that being said, just choose whatever fits your personality the best. life isn't just about money guys.
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