Very quant background, (Math+CS at MIT/Princeton/similar). Working at large HF macro arm in a quant/trading hybrid role this summer. Been reached out to interview for trading roles at prop shops for FT and was wondering How career at prop compares (work and comp, assuming top shops for both)If people make the switch between HF and market making later in career (seen some prop -> HF, not really the other way)

Work is a bit different. Generally bread and butter for Prop shops will be MM, but many do take directional risk(especially the larger shops like SIG or JSC). WLB is more prioritized at prop shops just because they're more tech-esk in a lot of ways, while hedge funds are still more traditional in culture. Comp is harder to measure. I'd say expected value is the same, variance is higher at a hedge fund, but you'll make great money if you perform at either.Depends a lot on your DtoD.

Prop vs HF

Very quant background, (Math+CS at MIT/Princeton/similar). Working at large HF macro arm in a quant/trading hybrid role this summer. Been reached out to interview for trading roles at prop shops for FT and was wondering

How career at prop compares (work and comp, assuming top shops for both)
If people make the switch between HF and market making later in career (seen some prop -> HF, not really the other way)

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Based on the most helpful WSO content, here's what you need to know:

Career Comparison: Prop Trading vs. Hedge Funds (HF):
- Work: Prop trading, especially at top-tier firms, often involves a highly quantitative and fast-paced environment. It leans heavily on math, programming, and real-time decision-making, particularly in market-making or high-frequency trading (HFT). Hedge funds, on the other hand, can vary widely depending on the strategy (e.g., macro, long/short equity, quant). Your current hybrid quant/trading role at a macro HF likely involves more strategic, longer-term decision-making compared to the rapid execution focus in prop trading.
- Compensation: Prop trading firms generally offer higher starting compensation compared to hedge funds, especially for junior roles. First-year pay at top prop shops can range from $200k to $400k+, while hedge funds might start lower but have a higher upside over time, especially if you move into portfolio management roles. However, reaching seven figures in prop trading can take a decade or more, depending on performance and firm structure.
Switching Between HF and Prop:
- Prop to HF: This is a more common transition. Many prop traders move to hedge funds, especially if they want to manage larger pools of capital or transition to a more strategic, less execution-focused role. Hedge funds value the quantitative and trading expertise developed in prop trading.
- HF to Prop: This is less common but not impossible. The transition might be easier if your HF role involves significant quantitative or trading elements, as in your case. However, prop shops often prioritize candidates with a strong focus on execution and real-time decision-making, which might differ from the skill set emphasized in a macro HF.
Key Considerations:
- Quant Background: Your strong quantitative background (Math + CS at a top school) makes you a highly attractive candidate for both paths. Prop shops, especially in HFT or market-making, will value your technical skills and ability to handle complex algorithms and data-driven strategies.
- Long-Term Goals: If you enjoy the fast-paced, execution-heavy nature of trading, prop trading might be a better fit. If you're more interested in strategic decision-making and managing larger capital pools, staying in the hedge fund space could be more rewarding.

Ultimately, the decision depends on your career aspirations, risk tolerance, and preferred work style. Both paths offer lucrative opportunities, but the nature of the work and long-term growth trajectories differ significantly.

Sources: Prop Trading (MM) v.s. BB Sales and Trading, RE: Prop/Quant Trading - Why is it not as big a target as Investment Banking?, Difference between Hedge Fund and Prop Shop, BAML Front-office quant vs Prop Shop Trading, I'm Trying to get into Prop-Trading From a Non-Target School

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Work is a bit different. Generally bread and butter for Prop shops will be MM, but many do take directional risk(especially the larger shops like SIG or JSC). WLB is more prioritized at prop shops just because they're more tech-esk in a lot of ways, while hedge funds are still more traditional in culture. Comp is harder to measure. I'd say expected value is the same, variance is higher at a hedge fund, but you'll make great money if you perform at either.
Depends a lot on your DtoD. A lot of people don't want to switch from hedge funds over to prop shops because they take a pay hit(if they're good) going from a top fund to a prop shop. Also, work is just a bit different. Prop shops are mostly trader run, while hedge funds are mostly researcher run, so the culture that fits one doesn't necessarily fit the other. Reason a lot of people might go to hedge funds after a while in prop shops is because they want that chance at one big payday before they retire. Going from a hedge fund to a prop shop might not make much sense because you won't make partner off the bat and your chances at a big retirement level payday are small. Most people just stay in their lane and make it to retirement/move to a chill position/go into management of some sort taking a small pay cut but less stress as a whole.

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