Do traders get paid this much?
From Hard Times On Wall Street - A wonderful juxtaposition:
The 27-year-old trader made $500,000 last year. Is this typical?
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Absolutely
Definitely
Further proof that the best part of Krugman ran down the crack of his mother's ass and ended up as a brown stain on the mattress.
And that's a compliment compared to what I'd say about the commenters over there.
Isn't 400k the form for 27 year olds in IB? If it is, than 500k can definitely be done in Trading.
The grammar issues in this sentence are remarkable.
I love how you continue to attack me ever since you realized I was younger than you. Anyways, I'm more of a math guy. Last year, I made it to the red group in the Mathematical Olympiad Program. Look it up; you may be a better writer than me, but I'm probably better than you at math.
If you are 27, you must be either 2nd or 3rd-year associate? I thought it wouldn't even add up to 350K all in for an IB associate. Alas, why did I choose IB over trading... can I move to Trading after my first two years in IB? Is it also true for FX or commodity trading?
Not uncommon at all. I have a friend who made roughly $700K at the age of 26, trading exotic derivatives at a bulge bracket bank.
I heard rumors about a trader at citadel who made around $5 million at the age of 28 or so.
So glad we bailed these guys out.
What kind of backgrounds do these cats have?
sorry for sounding like an idiot, but its hit and miss with the background of a trader
I started making 500K from my 3rd year
lol
you're an idiot. Please don't listen to garbage like this
Best not to discuss comp. And my hunch is that Wall Street will probably make less in five years than it makes today.
Agree with IlliniProgrammer. We will never see guys/girls making as much as the guys on the list below. At least not at banks with all the regulations coming in.
http://boringest.blogasian.com/motivation/
Like I mentioned on the last NSFW, I worked under a 28-year old VP at my second firm. He got a 12% override on the group's production, and we averaged between $850,000-$1,000,000 gross per month. That's right kids, he was banking $100k-$120k a month like clockwork at 28.
As for background, he was a former line cook at a T.G.I.Fridays and had some bullshit degree from a school even you non-targets would point and laugh at.
Of course, this was 1993 and it was a whole other game back then.
You REALLY need to write a book.
I think he is.
-Groupie
I was born in the wrong damn decade....
Plus, I absolutely love 80's music. Would have loved to be in my late teens/twenty's in the 80's.
1+ SB! Where would you work if you started your career today, @"Edmundo Braverman"?
huge survivorship bias - you don't hear about unprofitable traders cuz they're prob not traders anymore
Exactly. Also they're looking at the average of a distribution with significant skew.
I suppose moment analysis is out of the question if you're pandering to the lowest common denominator.
I am a (trainee) trader in Amsterdam and I make decent money, but nowhere near this kind of money.
Quess I need to move to the UK/US..
let me guess your employer...Optiver?
Look at Q3 earnings this year, they will be ugly. I think you will see dudes making that kind of money still, but the pyramid will get a lot less skinner and the game a lot tougher and it should.
2006-2008, with all the MBS shit stuff was way too easy. 2008-2010, with the fed basically giving away money for banks to take small bets of huge size, and front run the fed. Again too easy.
2011 earnings will show when the going gets tough, the divide between the good traders and bad will get much wider. You cannot have rates at 0% forever and expect traders to make money, at some point it catches up and the margins are too razor thin.
There were plenty of sales-traders at my old firm who cleared 7 figures in their late 20's early 30's...largest producer was probably mid 30's (so now early 40's) pulling 10-15mm and we're talking about working 40 hours a week in flip flops. The real work began at night...gotta entertain those clients.
Dying business if there ever was one but if you've got the relationships it is a nice living...until it's not.
City: New York Firm: Bear Stearns Age: 42
Bear Stearns had a phenomenal year in mortgage-backed securities, and few did better than Nierenberg, the firm’s co-head of MBS trading. In 2004, Bear dominated the global MBS market, with $93 billion in issuance for a 10 percent market share, some $6 billion more than its closest rival. Nierenberg is reportedly so superstitious that he refuses to write in red ink; we suspect he used quite a bit of black throughout 2004. Estimated income: $15–$20 million
haha. not gonna be making that anymore
Prop shops you could do far better than this. I think that at BBs with the Volcker Rule and other regulations, this type of compensation is gonna dwindle- along with trading revenues.
Wasn't there a thread not too long ago where people were saying that you top out at mid-6 figures or barely in the 7s at places like GETCO and Jane Street if you're not a partner/founder?
Top traders become partners tho. I know some traders who are partners in their late 20s at places like FNYS that have made 7-8 figs in the past. And yea I realize that I am comparing the past with expectations of the future, but none of the new regulations really affect prop shops and may even help them because more talent is gonna be going there.
^I think there will be a transfer of trading talent from BBs to prop firms and hedge funds. Regardless, I will still keep at it.
Maybe I'm crazy but I could have sworn that I had heard that new regulations are basically making prop trading illegal, i.e. banks can no longer trade unless they are doing so on behalf of clients or are hedging/trading for actual business purposes. Is this correct or did I dream this up at night (which is possible)?
^^ That's gotta be sarcasm right?
Wish I could tell you, wish the lawyers of my firm or somewhere could tell you. Dodd-Frank is such a eff up and confused. Basically what is clear it will depend on what the products are and what kind of limits there is. Depending on the classification of product and firm you have to put capital and have limits to amount speculation you will be able to take on. Again it's all really confusing still.
One thing though is clear in the new world, what you say is correct but does not just go to banks. Firms like Citadel/SAC capital/D.E Shaw that are not exactly banks will be considered "quasi-banks" cannot remember the term. Which in that case their limits on each product depend but also their overall limits. So they will not be able to trade prop in size in fixed income, energy, FX all at once sort of thing.
Again its all so not clear yet...
Yeah, Dodd-Frank has to be the most counter-productive piece of legislation of our young century. My guess is that neither Dodd nor Frank know what the f*ck their legislation even says or its implications.
It is rather unclear, but generally where there is a will there is a way. And there is definitely a will.
http://www.volckerrule.com/proprietary/prop_files/gif_1.htm
With reports that Morgan Stanley and Goldman Sachs are reverting back to Investment Banks rather than Holding Banks, I'd say the opportunity to make this kind of money will remain long term. I think you'll see a build up in capital reserves over the next 5-7 years at independent houses to reinforce the high risks they take trading.
FYI, at private trading houses, hedge funds, etc, this type of pay isn't just normal, but its almost expected to get the high returns investors demand.
There was a guy at my firm who made over $100 million in profit for his desk in 2008 at 27 years old, over $100 million the next year despite his budget being more than halved, and got snapped up by Brevan Howard with $35 million guaranteed comp his first year.
Ahsim Kahn was his name. He ran cmbs trading at Morgan Stanley. However his guaranteed comp of $25 MM was not true.
Here is the article talking about his comp. Look under the grapevine section on the 1st page http://www.lexdencapital.com/docs/cma030510.pdf
times have changed. some time back a phd from my grad physics program got 500K starting at a prop and we all thought he was golden.
I know a bunch of guys in Chicago that were clearing 700k, 800k in their mid -> late twenties. It seemed pretty common from my vantage point as a guy on the outside looking in.
how do these guys become good traders?
can everything be learned and trained if you just break in to a desk?
I'm really curious too.....
no; most people wash out. and imo, it's something that can't be taught. also, pedigree generally isn't a predictor of success. plenty of those guys went to bullshit universities and partied their asses off the whole time. The fundamentals can be taught, but there is something intangible that distinguishes the one guy that does a $3M p&l every year, from the 100 others that lose $50k a week and get bounced out after 3 months. I explored it early on because I knew so many prop traders, but quickly realized I didn't have whatever it was that made them successful.
But how do those guys who "went to bullshit universities and partied their asses off the whole time" actually made it to become a trader in the first place? I'm also curious to what methods you used to determine that you didn't have whatever it takes to become that successful? Do you first have to secure a BB role in trading?
I'm going to guess prop trading, like sales, has a survivorship bias in reporting income. Take mortgage bankers, for example. I'd guess the average mortgage banker in Washington, D.C. EASILY clears $100,000 per year, but 95% of people will drop out within 24 months. So the surviving 5% earns $100k+ and 95% earn nothing, but the only valid report on average income is for those actually working in the business.
That's my guess for prop trading and these ridiculously high incomes.
That's the same with prop traders, at least the ones I know. There isn't a good middle ground, i.e. "generally" you're either good enough to be making the kind of numbers talked about here, or you aren't making anything at all. It's a niche field that you don't prepare for by studying a particular field in undergrad. It's very "kill or be killed", a lot of trades are zero-sum so for every guy that you hear about making the dollars talked about here, he took those from a bunch of other guys that were well on their way to being out of a job as a trader.
500k isn't much in New York. Especially if you have a family. Take away approximately 50% for taxes and $20,000 per month doesn't go very far, unless you live in some crappy apartment.
Focus on the big picture, unless your picture is somehow bereft of a life of comfort, security and a nice family.
I think that the insurance salesman making 150 in Missouri is probably living more comfortably.
You married the wrong woman if you can't run a family together on 20k/month after tax.
$500K for a 1st year VP in trading will be unlikely this year, if he trades flow credit or equities.
Where did it say he was a VP? In trading this dude could potentially be an MD- where it shows $500k is low.
Do ranks really mean much in trading? Sorry for my ignorance but I thought it was pointless and had nothing to do with pay, unlike IB. pls enlighten me.
It's about PnL. But generally, the more senior you are, the more risk you can take, the greater your PnL (if you're good), and so the greater your bonus. With that said, I've heard of VPs making more than Directors in some years.
I made more in a night playing Monopoly.
Better yet, where did it say any of these guys were VP's or MD's? At most small prop shops, those titles don't exist.
He's not a proprietary trader (at least not one at a prop shop). It says he works at one of the 6 largest U.S. banks..so probably at whatever the 6th largest U.S. bank is. lol I'm not saying that he is an MD, but it's possible.
One of the partners at my current firm is in his early thirties, and at his previous prop shop, he was killing it. Think 8 figure years as a senior trader, especially during the height of the crisis.
Anybody who expects to get $700K by 28 years old is kidding themselves in this economy.
You'll be lucky to even get a bonus. Look at third quarter earnings, they are terrible. Hundreds of thousands of people are losing their jobs. Look how bad Goldman's IBD did vs. expectations for q3.
I think college students come in with one set of expectations and the survivors learn to work with another. Also, you age twice as fast on the trading floor. That 28-year-old probably looks and feels 40.
If you think you're at that level you could always get a job at an F500 firm, have a wife and kids and make baseball games, earn $1 M as a C-level exec at 35, and still have some hair left.
Couldn't agree more... even when you choose the correct market, joining the right desk is also pretty important
EDMUNDO PLEASE WRITE A BOOK!
Interested in the above questions too.
How is the bonus within oil companies themselves. Like Exxon, Shell etc.? Do you earn a higer/lower percentage of profits, or is it capped?
Oil companies just market production at index and aren't in the business to maximize profit. Earnings potential isn't as high as, say a bank or commodities trading company, but they are very cushy 9-5 type jobs and have lots of stability
I have full confidence that the vast majority of these amazing comp stories are completely true. It makes no difference what your chronological age is. The important thing is how much money can you put in your boss' pocket, and that is where the numbers get absolutely astronomical. While is sounds amazing that a sub 30yr old can make 5, 10, 20, 30 million bucks per year, just think about the multiples of that number that he or she is lining his boss' pockets with.
We often get lost in the absolute dollar figures with these cases and it all sounds like monopoly money after a certain point (different points for each individual). When Boaz Weinstein was handed a $40MM bonus check from Deutsche Bank, the bank probably thought they were getting him "cheap" because he more likely than not put that number plus at least a couple more zeros in the coffers of Deutsche Bank. And when he blew up, he was the one laughing all the way to the bank (or his new hedge fund).
The moral of the story is this.... When you are young and single and in your 20s with little overhead and no children to take care of, swing for the fences as hard and fast as your firm will let you swing. And kick and scream for the right to swing more and take on more risk and potentially make more money "for your firm" because that is how you really get paid. If you blow up, you get fired, and we all eventually get fired and hunt for another job. It's much tougher to take these big chances after your all growns up with family-esq responsibilities, but it's quite nice when you're pushing 40 with $20MM in the bank, no overhead or debt, 2 homes, college for the kids paid for and you know you don't have to work another day in your life.
Wow, this is exactly what the OWS people are bitching about. A bunch of dumbass kids swinging for the fences with other people's money because they they don't give a shit if they lose someone else's money.
You could not be more correct. But as long as this system is in place you can't blame people for swinging those big bats. It's human nature, animal instinct, survival of the fittest, etc (insert cliche here). The human being's opportunistic mentality is why we are the top of the food chain, and 99% of the people who claim to be too noble to take these jobs and try to hit it rich are either crying sour grapes because the washed out early or never kissed the right asses to get in, they area already financially set for life, or they have some other political agenda in mind.
If a man or woman walks up to you and says you can have a crack at earning millions of dollars with zero downside to your current net worth, and you turn them down, then just send them my way so I can jump ALL OVER THAT OPPORTUNITY!
^ this is the problem with a central bank legally empowered to run a monetary monopoly.
president jackson called out the 2nd central bank for pulling the same shit: gamble with deposits and leverage, and you know, privatize gains, socialize losses and all that pithiness
"I KILLED THE BANK"
I'm all for traders' compensation being tied nearly 100% to performance. If you can't perform, you're not worth shit as a trader. No company should pay you anything.
There are plenty of smaller proprietary firms in Chicago and New York that provide new traders a tiny draw to live off of, but beyond that nothing is guaranteed. As a trader, if you know that you'll have a $150k-$200k base salary, and a performance related bonus on top of that - well, that provides a pretty skewed risk/reward situation if you decide to swing for the fences. If a guy knows his trade will mean he has to eat TV dinners instead of steak for the next year, I'm guessing he might tap the brakes.
Wow, reading the comments around here really makes me wonder about the risk management going on at your companies. While yes it is true that there is a skewed risk/reward payout for traders a new guy walking in "shouldn't" be given that type of freedom. Most firms know that payout relative to profits poses a risk to the company and thus put strict limits in place and ensure that the young naive trader. I am just as likely to fire a new trader for making too much money as I am for him (or her) losing it. I want to see steady profits that are commensurate with the level of risk/positions they should be taking. A trader that can average $10k/day with a solid sharpe ratio will get paid far more than the guy who puts up a few big days through luck.
If my starting base is 90k-130k with an expected 50%-100% first year bonus at one of the better known prop shops, does anyone know how that will scale in 2-5 years given average/above average performance?
Hard to find these numbers anywhere and the prop shops don't tell you :(.
If my starting base is 90k-130k with an expected 50%-100% first year bonus at one of the better known prop shops, does anyone know how that will scale in 2-5 years given average/above average performance?
Hard to find these numbers anywhere and the prop shops don't tell you :(.
It depends on many factors including: your own skill, your given risk limits, what kind of strategy the shop is using, etc. No number we give you would mean anything unless you take those factors into account.
It would be the same as asking: I want to start my own business, how much can I make in 5 years?
Can i have the past 10 minutes of my life back? Threads like these are why i stopped posting.
Glad you're back, t4s.
Saw this good old thread and the comments about how important it is to pick the correct desk/market (lifestyle and money considerations). Glad to see some on this thread agree, because I have met some fuckers in the business who insisted it doesn't matter what product you trade. It really does matter, guys. Choose wisely.
"The 27-year-old trader made $500,000 last year. Is this typical?" Is that really a question? No, that is not typical. 200k? That's more believable.
Given that AT MOST 116 Goldman employees in London made 500k pounds last year, no 500k USD is not in any sense a number hit by the average 27 year old trader.
http://mobile.nytimes.com/blogs/dealbook/2014/01/16/at-goldman-in-europ…
Based on my experience on trading desks at top tier banks (up to VP level as a quant) traders at 27 were making about 200-250k (this is post crisis). There were some golden boys who were raking it in, of course - but my numbers are for average performers among the survivors of years of cutbacks and layoffs.
One clarification: 200-250k is in USD - 500k is in pounds only because this is the best source I've seen for hard numbers above 2nd year associate.
I agree, 90s are over and nowadays with the tons of regulations, increase of support functions in IBs, layoffs it's a tough market out there and you should be happy just to get a job without bonus.
As it's been said the product/desk you chose is highly decisive. Please correct me if I'm wrong here but I think HFs and prop shops are the way to go now. Commodities are also very lucrative.
Hurting here too (commodities)
http://blogs.wsj.com/moneybeat/2014/04/09/och-ziffs-levin-scores-a-119-…
In 2012, James Levin, a then 30-year old trader at Och-Ziff Capital Management LLC, turned heads with a bet of more than $7.5 billion on “structured credit” debt investments, or about a quarter of the money the firm managed when the investments were made.
The wager was an enormous winner. Mr. Levin’s group scored gains of nearly $2 billion, according to people close to the matter. The trade was detailed in an earlier Wall Street Journal story.
Now we’re learning just how much Och-Ziff, which managed nearly $43 billion as of the end of the first quarter, rewarded Mr. Levin for his prescient trading.
Earlier this month, the firm said Mr. Levin received nearly $119 million in stock awards, based on the fair value of these shares at the time they were granted, according to a filing with the Securities and Exchange Commission. The payout was earlier reported by Forbes.
"with a bet of more than $7.5 billion on “structured credit” debt investments, or about a quarter of the money the firm managed when the investments were made."
They wouldn't have just thrown a quarter of the account into something as a regular trade. There was something going on there. This wasn't something done up by feelings from charts and a few analyst reports.
Cool article, though. Of course you'll find stuff like this here and there, but you can also find stuff here and there about some tech startups that made millions. Nobody's writing books about all the failures. ;-)
Bet 7.5bn. Head you make an absurd fortune. Tail you are fired and retire with your already very confortable situation.
Goldman Sachs underpays top traders (Originally Posted: 12/17/2007)
According to wall street journal, a group of six trader at Goldman Sachs' mortgage group shorted the subprime index and made the firm $4 billion, which erased losses in other areas. Partners were opposed to the trade, but the traders convinced them otherwise and made a killing. What was disturbing was that the traders' bonuses were only between 5 and 15 million, even though they made the firm $4 billion! No wonder goldman is losing its top traders, who start up their own hedge funds.
please provide a link.
while goldman was making a killing, goldman's customers were left in the dark and got shat on. nice work i'd say.
if GS is fucking its clients over and everyone knows it why do people still give gs their business
Goldman is a great place to work, but I realize it's great only if you're very very good. Not when you are OK, and not when you're a rainmaker. If your very good, but could never be a superstar hedgie, or PE mogul, then Goldman is great because you can become really rich as a PMD. But if you're really a prodigy, it's not that great because they refuse to pay you past a certain point. McGoldrick left the SSG, those traders are probably going to leave and start HFs, everyone who is really that great is intent on leaving because their compensation is not in line with what they produce. And if you are not good and you work at Goldman, then you won't be there for long and the culture is cutthroat. Or so I hear.
"while goldman was making a killing, goldman's customers were left in the dark and got shat on. nice work i'd say."
GS always front runs its clients, that's well known
Why is it disturbing that their bonuses are only 5-15... were they on their own accounts? As an employee, you have limited liability and thus restricted access to the fruits of your financial success. This should not be disturbing at all.
I agree with the above post. The following analysis applies what is essentially basic microeconomic theory to show analytically that no one at Goldman is necessarily being "cheap" or "unfair" by paying $15m to a guy who brings in $4b in revenue. One could approach this analysis from a number of directions but this is going to take long enough as it is.
As you will see, I am NOT trying to refute that these guys would have taken home a bigger check at their own hedge fund. The most you can ask of anyone is for them to make rational decisions. In this case, the rational bonus setter has to make strategic considerations in the face of potentially asymmetrical information and assumptions about moral hazard.
Please consider the following while you read this post: 1. Had these guys put forth a merely average performance, they still would have received large-ish compensation packages. 2. These guys make bets with the firm's money while sitting on the firm's desk. I believe that these guys made a brilliant and calculated bet, but dangling massive potential bonuses in front of such guys from the start would be out of line with their PERSONAL risk framework.
Here's my logic. As we all know, these guys are on a mortgage desk. When their subprime opportunity showed up, they were already sitting on a mortgage desk with a mandate to trade mortgage-related instruments -- their decision to sit at this poker table when the potential mega-hand showed up was a passive decision (ie. "I will not quit mortgage trading today").
This is totally different from quitting your day job and raising tons of capital to start a high yield or global macro hedge fund with the ability to make enormous bets on things like subprime. The latter is an active decision (ie. "Pursue mortgage trading INSTEAD of ANY other activity). Passive agents will be compensated like workers. Active agents will be compensated as capitalists. Doubtful? Consider the following:
Say these traders knew from the start that they stood to reap a $100 million cash bonus if they could bring in $4 billion of revenue. At some point, these guys will be incentivized to make wilder bets than is prudent. It's axiomatic that $100m will be closer to this point than $15m. Add to this that the firm probably presumes that these guys are the foremost experts in subprime at the firm (and evidently the only two guys in the BB trading universe who Really got this one right). Further add the fact that these $4 billion in "revenue" are probably based on mark-to-model calculations and unrealizeable (in cash) for quite some time.
So, now imagine you are a top Goldman manager charged with compensating employees well while still operating under the assumption that individual employees will only look out for their rational self interest. What are you going to do? You can't pay out $50 million bonuses for people who can make big bets, the winnings for which cannot be collected until years in the future. Why not? Because then the rational thing for your senior prop traders to do is to make inappropriately risky bets (they understand the risk better than you because they are the experts whereas you are just a senior executive whose real specialty -- ten years ago -- was commodities trading). Say the huge bet pays off on a mark-to-model basis and you pay these guys $100m a piece in bonuses. They MAY know that the bet will look great for 6-12 months on a mark-to-model basis. In this case, these guys pack up their bags and and their $100m and ditch the firm after bonus season. You have just been screwed by moral hazard and information asymmetry -- and it was your fault for making $100m bonuses available for this kind of thing.
So, what should you do instead? You should do what Goldman is probably doing. That is, culturally ingrain the notion that this kind of trading success will get one fast tracked to the Partner MD level. Make the reward a carefully considered shot at ~$7m partner distributions paid ad infinitum (on top of other MD compensation).
The original poster thinks that $15m is a meager bonus. I counter that the NPV of the PMD promotion is enormous even if our star trader assigns it a probability of
it's disturbing because they brought in 4 bil for the firm...and as a trader at a hedge fund, for example, you'd make significantly more than that for that kind of profit generation (note--these traders are also just employees of the hf with the same limited liability). hell, harvard's endowment managers made more than that (remember the press when their top bond managers made 25-40 mil tyo years running--they generated about 2 bil each for that)...and they were being paid under market rate.
it sounds like closer121 knows what he's talking about--but if you're really a star though, goldman's a good place to go because they'll open up all kinds of doors for you and help you get the fund launched no prob (ex mindich, singh), which more than makes up for the foregone pay while you're still producing for them.
Damn $5m-$15m? They must be barely scraping by with that kind of pay. How unjust.
that they did not want to quote actual numbers?
GS needs a good talking to, I mean where do they get off treating people like that, $5-$15M? That's sweat shop wages, at that rate those poor guys won't even be able to buy Ramen! Give me a break
Wall Street is a meritocracy. So assuming That Wall Street operates that way they did not earn based on there merit. He isn't saying they are underpaid versus the real world, just based on their performance.
you cant look at pay as an absolute but rather as relative to others in the same field. these same traders at GS getting pai between $5M-$15M could have gotten over prob well north of 100mm at a HF based on the $4B profit they generated.
I dont see why people are disgusted by the fact that they are complaining about being paid only 5-15 million.
If you are producing a great deal of revenue (hell 4 Billion), you should be compensated accordingly. 5-15 Million is peanuts for such an accomplishment, but yeah Goldman is notorious for this, so I'm sure they will leave to start an HF.
Good post that gets at the heart of the issue...... goldman probably did underpay a little given that the rewards for their business are not just monetary but also increase their reputation immensely..... Again though there is a huge difference between these guys starting their own hedge fund and these guys working at goldman..... i wont go over the same points since they were well elaborated above, but the added job security and fact that the capital provided is goldman's means that the rewards will accrue to the capital. If you think this is unfair look at the pharmaceutical industry where even more of the returns accrue to capital and theres even more economic reasoning that the scientist should be paid a much higher and comparable wage for their research.
Id just like to add that theres the inherent problem that every major trading firm has had to deal with (and hedge funds as well) that they create an implied option value for the workers. That is.... you get a set salary in down years, and a huge bonus if your paid on a system which gives you a percentage of profits. If you look to the research, stock picking has yet to become a science and often involves artistry and LUCK which means that the actual genius or ability of the trader is always in question. Unfortunately, theres no really adequate way to test the abilities of the trader, only subjective judgments and evaluations of their abilities. I actually applaud goldman not paying out huge bonuses because this just encourages traders to take VERY risky positions in the hope of possibly gaining large returns. Now I do think given the uniqueness of the situation these traders do deserve exceptional payouts.... but in general more places should be rethinking the way in which hedge funds and traders are compensated... you will start to see a lot of these fruitless hedge funds in the future go under as a large amount of money was thrown at bad managers......
Goldman historically has tried to get rid of the superstar mentality as a firm, promoting to fortunes of one as the fortunes as all and helping individuals realize their role within a larger organization. Whether you agree or disagree it is a unique was to run a trading operation.........
for the money you made unless you have a specific formula-based payout. You get paid for the money that you're going to make. Big difference.
Bingo. This is exactly why GS paid McGoldrick (another prop trader) $70MM for $4B in profit, and paid these guys $5-15MM for the same profit. These guys got lucky, and they won't do it again, so they don't get paid the big scratch, but GS also needs to convince their prop traders that they will be rewarded fairly well for winning bets. McGoldrick on the other hand is a fucking machine, and GS should have paid $100+MM to keep him. Their loss.
I'm not seeing the link. Perhaps it's because I'm on a phone? Can someone post it please?
vastly underpaid. but you make $4 billion, you're not gonna stick around and work for peanuts. these guys were going to HF land either way. goldman might have well said "thanks and go fuck yourselves." lol @ the ppl in this post who think 5-15 is a lot
I would take a lighter bonus for the security to be made a partner at GS in a heartbeat.
But did you not read JustAnotherBanker's post? Besides the additional facts that this likely can't be repeated (see a new credit crunch coming up?) And the likely scenario that info (and of course balance sheet) provided by the company helped achieve their good fortune (where many external hf managers with similar educ/history/pedigree blew up)
I don't think we can comment on goldman's payment strategy without knowing alot more. But knowing GS we might assume that they know what they're doing!
P.S.- Come down to EARTH kid- 5-15M is ALOT. I'm sure even a billionaire would consider it worthy of some respect. :)
Various Derivative Trader Pay/Hours (Originally Posted: 03/02/2008)
I'll be doing a S&T internship this summer - looking at derivative and structured products (more quantitative) desks. What are the difference in pay and hours for equity derivatives, interest rate derivatives, credit derivatives, any other derivative i'm missing?
This was posted a while back, though im not sure of the accuracy, and I would be interested in the answer as well especially for analysts, which this link leaves out. http://wallstreetoasis.com/forums/the-complete-2007-trading-salary-and-bonus-database
Trader pay, London - £200k+ age 24 (Originally Posted: 05/02/2008)
This was on the eFinancialNews site, London trader (graduated from Cambridge 2004), lives with his lawyer gf, has paid off most of a £1.2m mortgage.
£1 = $2 roughly, clearly those $2 in NYC stretch further than £1 in London, but the pay (particularly base) seems astronomical compared to NYC (although being a solicitor in London pays hugely less than a corporate attorney in NYC) -
"2004 - £37k base, £12k bonus (winter stub), gf studying law. 2005 - £45k base, £54k bonus, gf £33k 2006 - £57k base (promoted to Associate), £114k bonus, gf £38k 2007 - £63k base, £164k bonus, gf £57k (qualified solicitor) 2008 - £82k base (promoted to VP), bonus to be paid at Xmas, gf £65k"
These numbers are said to be accurate / realistic by other traders commenting.
how did he get to VP at 24? Did he start trading at 18?
It shows above he was Analyst for 2yrs, Associate for 2yrs, then VP, which can happen quite a lot in Sales & Trading. Actually he might be 25 (he says he's currently 25), either way would have started as an analyst after a 3yr Bachelors, which is normal in London.
The total income is about 640k gross, or 380 post tax, not including any expenses whatsoever, so it doesn't mathematically work out that he has paid off a lot of his mortgage, unless daddy gave him a serious down payment.
Re Zuckerberg, this is real money, not paper money. Zuck doesn't have billions sitting in his bank account, and won't until Facebook gets sold. Maybe he should've sold it a few months ago, since then Facebook traffic has peaked and individual userviews have declined.
Ratul,
There are obviously a variety of other confounding variables, which could have contributed to his being able to pay down his mortgage (i.e. his gf's income, investment returns, robbed a bank, etc.)
I never really understood the purpose of these types of posts. Great, this guy makes a lot of money...
Mark Zuckerberg is worth billions. He is 24.
John Arnold is still way ahead of this guy.
What does he trade?
Options Trader's Pay (Originally Posted: 05/05/2008)
How much does a typical first year options trader make at a top equity derivatives prop shop (Think DRW, SIG, Wolverine....)? Assume this is just a trader fresh out of undergrad on an electronic desk heavily monitored, as it takes years to make it down to the actual trading floor. I understand that the answer relies heavily on performance, but what is a feasible pay range for such a position?
Bump...Anyone?
It's all performance-based so you can be making 0, or you could be making tons. There's no way to give an "average" salary that's useful
Entry level compensation for trader at small Commodity Trading Advisor? (Originally Posted: 03/19/2009)
Hi,
I wanted to know what one could expect in terms of compensation at a small, 5-10 person Commodity Trading Advisor managing around $50 million in assets. It would be trading the European and Asian markets.
Thanks!
I'd also be interested in that topic. Did you get any reply? Did you get hired? Feel free to reply here or PM me.
Thanks, PBJ
50k ish
Thanks for your reply.
Where does this estimation come from please?
Also, what could be expected for a position as a trading systems analyst (monitoring/handling execution, also development, etc...) at a brand new CTA being launched? What kind of deal would you be looking for?
EDIT: story develops there //www.wallstreetoasis.com/forums/offer-on-the-table-need-advice-asap
Trader compensation lies? (Originally Posted: 03/22/2009)
So one of my friends at an Ivy interned at Barclays S&T NYC, got a full time offer, and has been talking non-stop about how much he's going to get paid. He claims $100k or $120k base (I feel like the number gets bigger every time we speak).
Do first year traders really make that much? Or is he spinning a web of BS? If so, this wouldn't be the first time.
Since I have no knowledge of trader compensation, I cannot really question his claims...however, I would really really really LOVE to call his bluff.
Anyone got any real data?
I'm just a freshman and I can confirm that base salaries are NOWHERE close to 100-120k. Base is generally about 60-70. Maybe after bonuses he can make 100k ++ but most certainly not base
unless associate after masters.
Base does not reach 70 k if anything for "ALL" first year analysts will be 55-60k the disparity arises in bonuses. Your friends a tool which makes you a fool for being friends with him.
I have a few friends that are mba's at BB and they got 95k base. Most undergrad's got 60k but I only know two.....
I think your friend is full of shit and I would call him out on it. Lay him some crazy odds to prove it. Give him 10.1 on a 100 to prove it... If he is so telling the truth he will bring out his paper work and collect that $1,000 real quick, right... if he is full of shit he will not take bet.
As monty said, his offer letter will have the amount, so call him out and ask to see the letter. He will definitely bs and tell you he doesn't have it, because if he's an undergrad, there is no way he is making that much.
I am getting 70k base at a BB S+T, and that is the highest i know of. He's probably getting that figure using his base + sign on bonus + what he thinks year-end bonuses were during 2007, where it was very realistic for a first year trader to get 100-120k all in. At Barclays, he'll be lucky to get 80k all in comp, so dont let him bullshit you. better yet, dont be friends with a douche who brags and lies about his salary.
2nd Jay Buhner...
he is talking total comp of what he has read or thinks he is getting. Tell him is sign on is for him to move not salary.
could add up to 100k, maybe not. year-end bonuses are going to be shitty for a few years.
Buyside Trader Compensation (Originally Posted: 07/07/2011)
Used a search function and didnt find too much info. Anyone have any idea what an execution trader at a long short equity HF would make at an average size hedgefund, say 1 bil AUM? I'm sure this depends on the year the fund has, but any guesses for these positions: Jr. Trader Trader Head of trading
Thanks
Where do you want to work ?
RenTech,SAC Capital or better Paulson & Co
No disrespect or anything, but that didnt answer my question at all. Also, those are all really big hedge funds, certainly more than 1 or 2 billion.
No disrespect or anything, but that didnt answer my question at all. Also, those are all really big hedge funds, certainly more than 1 or 2 billion.
Junior trader
[quote=trade4size]Junior trader BB, prop shops, etc.) are similar?
[quote=trade4size]Junior trader
[quote=trade4size]Junior trader
Thanks for the input guys
How about execution trader salaries at mutual funds, such as those run by large asset managers (PIMCO, T. Rowe, Fidelity) and Asset Management arms of BBs (GSAM, JPMAM, CSAM)?
Trader Pay No Longer Based on P&L? (Originally Posted: 09/27/2011)
More changes are in the offing for prop traders who specialize in making markets, and these changes are going to effect the pocketbook. In a nutshell, market makers will only be allowed to be compensated on the spread of the securities in which they make a market, and no longer on the appreciation of said securities.
These new regulations are a part of Dodd-Frank generally lumped under the Volcker Rule. While many of the bulge bracket banks have spun off (or are in the process of spinning off) their prop trading arms, these new rules will effect hundreds of Wall Street operations. If everything plays out the way it's going now, trader compensation will be based solely upon fees and commissions, and any profits on a trade will be ineligible for compensation consideration.
To be fair, this policy is more in line with the way we used to get paid back in the early 90's. Our compensation was almost entirely commission-based (though we did participate in the spread a bit) and the idea was to make your client money and the firm would prosper in kind. Somewhere along the way the client focus was lost, and we found ourselves with firms like Goldman actively recommending positions to clients which the firm was hugely net short.I'm of two minds on this new (or rather, return to the old) regulation. While I think it's a good idea to limit the amount of risk a bank can take, I also see regulation like this widening spreads across the board. Let's face it: the banks aren't going to take the hit. If this happens, they'll just spread shit out so they can make the money on the inside. Not exactly a good deal for investors.
What do you guys think? Has anyone sat for the new Prop Traders exam yet? Are these positive developments, or is this regulation going to ruin the trading business?
So would this include option market-makers like SIG and the like? If so, this could be a massive game-changer.
I would assume SIG would not be on the list. I would think that it includes only BB, especially those banks who received TARP money. But I am not sure.
Why should traders get paid on PnL when they are using their firms' capital? It doesn't make sense from a owner's perspective - the owner provides the capital and has to bear the risks while the trader gets to walk away scott free if he makes losing bets. Time to change the compensation scheme for the better. The markets are too efficient most of the time anyway.
he also doesn't get 100% of the profits, not even close
Pardon the noob question I'm about to ask: What about market making prop firms who trade off the company's own capital with no outside investors?
But if the traders aren't paid on a percentage of P&L, what incentive is there for them to do their jobs? I don't see how this is going to help anybody.
How are they going to separate what is spread and what is appreciation...........?
Junior Trader Pay at Long Only Commodities Fund? (Originally Posted: 09/19/2012)
Can anyone give me an idea of the typical incentive comp structures at a long-only commodities fund as a junior trader?
The junior trader reports to a PM. Book size is $500 MM-$1 B.
I'm currently a PM but I have a small book and I currently get paid around 0.2% of all the books (on the order of $20 MM PnL) plus 2% of my book ($2-$4 MM PnL), but the the book is miniscule compared to the book for the PM I'd report to.
Plus this would be multi-commodity job which would be interesting.
Trying to weigh the pros and cons, and comp would be big factor (obviously).
Interested in what the Glocap survey says or other comparable surveys.
Anecdotal numbers are always welcome too.
I'm currently levered 1:1 on bonus:base, seems like junior trading positions at these types of funds would be similar?
Compensation for Oil Traders at a Supermajor Oil Company (Originally Posted: 11/08/2012)
I work for a major oil company and was wondering how much oil traders make in salary and what their bonuses are like. I actually do FP&A for a trade group at this company but I am fairly new and don't want to ask the traders straight up how much they make.
Does anyone have more detail on what their compensation structure is like and how it compares to traders at a Financial Services firm?
Thanks,
tree fiddy.
tradin some north sea nessie
HF: Trader Compensation (Originally Posted: 12/28/2012)
Curious to see if there is anyone here who can relay compensation for trader position at HF or private prop etc. What are you getting as far as base and bonus. Percent P/L? If so what percent. Managing what amount of money etc. Asking because I am curious to an offer I received and want to compare. I know diff. managers run their own models of compensation but I am curious.
SenorAlpha
300k total 50% base 50% bonus
Cool that's pretty close to the offer.
Trader Pay (Originally Posted: 04/16/2013)
Hi, I was wondering if anyone could give me an insight into how trader's pay is decided? What measures of how well they did is it specifically based on? e.g. percentage of profit they made etc. I'm sure there are better ones that are more risk adjusted etc. Also is the bonus purely cash at lower level traders or does it usually include shares and share options?
Also I was wondering how the board would decide how much to pay the boss in charge of the trading room. What measures would they use? And how they would pay him? again mix of shares and cash?
Thanks for your help!
Comp is definitely all cash. The rest depends on the type of firm you work at. A first year trader at a bb will get the same base salary as everyone else, and then their bonus will be based on their team's performance.
My impression is that you have your base salary + your bonus which is 10% of the profit you made for the firm. I heard that from a family member that works at JPM S&T.
It depends...
Totally dependent upon shop, asset class etc. All I directly know about is Equity S&T where a market maker typically makes 3-6% of overall PnL on their pad. This will include net commissions generated (facilitation) as well as prop. A Sales Trader typically makes around 10% of net revenues produced. Both of these numbers are rough guidelines as variances amongst shops can be large and I'm sure there are outliers (high and low). Noteworthy is the number of shops that have gone from direct payout (i.e. percentages) to subjective models where the firm doles out an amount for the gruop and it's basically up to the manager to distribute...
Lastly, these days deferrals are common as well as non-cash/equity components - so don't be too hasty to extrapolate these numbers to what you would be putting into your bank account...
Physical Traders compensation for soft commodities (Originally Posted: 10/08/2014)
Was just wondering if trading softs at a Cargill/Dreyfus/Bunge is as lucrative as trading energy.
@"BOTT1702" Would you like to weigh in? Curious as to your thoughts and whether comp should be the primary focus of the "picking a product" decision.
Your star crude trader is probably going to be making more than a star softs trader all things being equal. Of course that doesn't mean that will be the case for every energy trader.
The overall pot for energy traders is orders of magnitude larger than for softs traders but the margins are much lower.
Your career in physical trading is as lucrative as you make it. There are some guys in softs who make more than some guys in energies, and some guys in energies who make more than some guys in softs. By the same token, there are some guys at ABCD companies who make more than guys at smaller shops, and there are guys at smaller shops that make more than some guys at the ABCDs. There isn't a set path to wealth in this business--you don't just get a job as an oil trader and wake up in 10 years making seven figures. You earn your way up the comp ladder wherever you are and whatever you're trading.
In my opinion, more important than evaluating if a field is "lucrative" or not is evaluating the culture of the company, the nature of the market and the counterparties you deal with, the amount of training and education you will receive, and the opportunities you will have to work alongside successful people who will invest their time in helping you become a good trader.
Buy-side Trader Compensation (Originally Posted: 10/27/2014)
Does anyone have familiarity with how much buy-side traders working at a big mutual fund, or even a hedge fund, makes in base + bonus per year?
I'm of the understanding that buy-side traders are basically execution traders simply carrying out the trades directed by PM's, so I'm guessing that they don't make as much as the sell-side traders. Someone please fill me in.
Is it fixed income or equity? Equity buy-side trading can be pure execution, for a lot of types of fixed income buy side trading you're sourcing bonds and thus part of the PM team.
Read below with a caution as I can't be too specific due to lack of info and experience in the industry. But since nobody is responding (probably cuz this question has been asked a 100 times) I'll give it a try.
In general, if you are in for at least 5 years, pay at HF better than mutual funds for traders.
A lot of mutual funds and similar larger firms (not HF's) have to maintain compensation ratios (for instance pay per employee) so kind of capped on the upper side. This also helps them not fire staff when things don't do so well unlike in aggressive HF's that will fire even the best of traders (who run own risk) if they cross P/L limits which can be ridiculously difficult.
It is fair to say that a lot of buy-side traders are execution.
On the fundamental side, within HF's most traders will be execution and will benefit if the team does well. PM's and top analysts will make more than the trader. But an execution trader is extremely important if you are running a good size book and managing a team of analysts. So I won't be surprised if some traders make more than analysts. Some people assume an execution trader will only obey to PM's orders but in fact a lot of them have decent freedom to cut down or up positions without asking the PM as split second decisions are key. So whilst execution traders get belted if they try to quantify the profits they generated on their own will, the PM's are aware they are important to the team. This I know from personal experience and speaking with a quant fund that has cash equity business as well.
Firms such as Millennium, Brevan and Capula (all HF's) tend to have the pot of money split in PM's who are essentially trading their own books. These guys have massive upside during good years. I was told that at a firm like Brevan or Millennium if you last for 2-4 years you're set. I still don't know what he meant by 'set' but sounds like a lot of money.
With regards to comparison with the sell-side, I will actually agree that on an average sell-side traders make more than buy-side execution traders; but this is more like a conclusion after reading and speaking with people from the industry. A lot of sell-side guys still do prop (I'm aware of the whole prop is dead) on the side and whilst it is limited it does help them sharpen their skills, prove their worth and ask for a better bonus - however many banks made it clear that although traders may be able to do some prop they can't use the profits to negotiate a better pay etc.
Equity Trader/prop Trader pay package (Originally Posted: 11/16/2015)
Oy old sports,
Does anyone know how trader's pay package looks like. I mean after salary + bonus + commission Salary - is basically what will you get no matter what (until you get fired) Bonus - ? What do they refer as bonus? Commission - I guess it's from the profits you make for the company from trading. How much % of profits do they give you? Does anyone have an idea?
Basically average trader jobs pay $50-60k. If you do well it means you can make 6 figure on the first year. But seriously can someone explain me how bonus or commissions work, or is it called profit sharing or whatever.
Any new information will be appreciated Here's a banana for you
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