Transitioning from Prop Trading to Hedge Fund?

I've seen a few threads about exit opportunities for prop trading, but I feel like I should be a bit more specific with this question. I'm interested in algorithmic and quantitative trading, and was curious about working at a prop trading firm specializing in this. I have heard that a prop trading firm offers higher pay (low to mid 6 figures) earlier on in one's career, but it basically caps out there, unless you're a partner or something, except they won't make you partner unless you're one of the firm's founders or something. I have also heard that a hedge fund would offer a much higher pay ceiling, so I wanted to know how difficult it would be to move from an algorithmic prop trading firm to an algorithmic hedge fund.

 
Best Response
ArcherVice:

You wouldn't be satisfied making low to mid six figures living in Chicago?

That's true. I forgot to consider cost of living difference between Chicago and NYC. But the question still remains, as there are still Prop Firms in NYC, such as Jane Street Capital
Bondarb:

if you can convince someone at a hedge fund that your strategy is profitable and legitimately portable without a massive investment on their part in new systems/technology then it shouldnt be a problem at all.

Okay, that seems to make sense. On that note, in general, how useful is working in an algorithmic prop trading firm relative to an algorithmic hedge fund, in terms of developing ones own trading ability for a personal account? Also, I'm assuming that means that exit opportunities would be few and far between for working in Market Making, and to a lesser degree HFT?
 

Disclosure: I do not work for a hedge fund, my left arm is noticeably longer to the left.

My "mentor" of sorts growing up (the man who introduced me to finance and the markets in general) has a similar background, less the quantitative experience. He actually didn't start trading until multiple years out of college, and has been partner at a WC hedge fund for the past 20 years. So, yes, it's definitely possible, depending on your skill set and who you know (but you already knew that).

Regarding the second question: networking and headhunting, from what I've heard, comprise upwards of 95% of all recruitment activity. HFs are notorious for unaccessable and rarely have websites. Just learn your way around and I bet you'll find a way into alternative investment in one fashion or another.

I was taught that the human brain was the crowning glory of evolution so far, but I think it's a very poor scheme for survival.
 

From what I've seen, it's not that common. Part of this is self-selection and a part of it is the lack of transferable skill sets. The top traders at elite prop shops like getco/jane street/drw/jump/sig, etc., are making enough money and have great hours and freedom, so going to a big hedge fund does not appeal to them. And regarding the latter point it really depends on the products and strategies you trade as well. So someone who just traded cash equities at a mediocre prop shop has virtually no shot of going to a top fund while someone who successfully did relative value fixed income trading or currency options might be able to sell themselves to macro oriented funds. But if you look at linkedin profiles of traders at top hedge funds, there just aren't that many ex-prop traders (i'm talking about pure prop shops, NOT prop desks at banks).

I think trading at a BB opens more doors, you learn a lot, and you establish a better network.

 

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