where are the traders gone?
Just a silly question for my understanding: Since banks massively reduced prop trading (and are still reducing), there has been tons of layoffs etc. But I cant really imagine that the prop trading volume in the world has reduced that much too (have they?) --> so all these speculative prop traders must have gone somewhere:
- hedge funds?
- prop trading firms?
- moved to emgerging markets like Asia?
- out of work and spent their time on a beach in Thailand?
A friend of mine who interned at a financial advisory firm told me gloomy stories about empty trading floors within many banks since crisis, so where are the traders gone, and more importantly, where is the party gone?
It depends what market you're talking about, but yes volumes in many markets are down over the past several years. There are many reasons for this, but none of this means that trading is dead. Use the search function as this has been covered ad nauseum.
PS I mean this is the most constructive way possible; you need to revisit subject-verb agreement and verb tenses.
Yes you're right my english leaves much to be desired...
As I've read frequently that many hedge funds had hired a big chunk of sell side traders post crisis, I thought the trading volume was just getting transferred from sellside to buyside, without being significantly lower overall.
ok I'll do further searches on the board but thank you anyway.
It's definitely possible to go sell-side -> buy-side, but they are quite different business models from each other (and also vary greatly individually).
As a sell-side trader, generally speaking, your revenue = commissions + pnl on inventory. The former is not transferable to the buy side, and the latter may be partially due to favorable flow in an illiquid product rather than raw alpha. (For instance, you may know the other side of your trade and even may know what their position and loss limits are.)
A buy-side trader can be anything from a portfolio manager with billions of AUM to an execution desk trader to some guy trading $25k of his own money on 10 to 1 leverage at a arcade. A "lateral transfer" like sell-side trader moving to an execution desk at a HF is definitely possible, but not necessarily a step up.
Thanks justin88.
I understand that the role of a buyside trader can vary a lot, as you said, from a pure execution guy to a sub-portfolio manager at places like SAC. But I think pretty much all of them started out at the bottom of the ladder, and from there it depends on oneself to move up the ladder. Hardly anybody will get a large PnL to manage soon after starting out, except one is a genius like Cohen himself.
In terms of trading commissions from market making, I think that it is gonna be the major revenue source for BB desks in the foreseeable future. Although everyone seems to want to trade prop, I think market making is still a good place to start when it comes to getting familiar with a certain product/market. Besides market making, structuring seems attractive too since one gets the hands dirty in the quant/math stuff of a product which can be valuable to understand the products profoundly.
This is maybe a bit off topic but, what I dont't understand yet (and haven't found on this board so far) is what exactly does a research guy? Could you or anyone else shed light on it and maybe give a typical example of a research project? What I can imagine atm is a quant team researching, coding and implementing a new trading strategy for a specific desk. But no idea...
Yeah trading is dead, espeacialy FX with 5 trill. daily volume... :))
Yeah but the spreads on FX trading are being squeezed hard. It's a volume game now. Efx is getting much bigger and when you have instant prices it is much harder for traders to make money in FX now.
You know what, traders are here to stay. trading is still on and stands as one of the lucrative ways of making money. However i guess now the market is for online traders. What say?
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