I don't know much about this, but sell-side traders are not exactly known for their deep analysis skills, so what do they do when they make the move to HFs?
My guess is that HFs need execution traders as well, and that is where the airhead sell-side traders would come in, right?
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Depends on the fund...you shouldn't paint with such a broad brush...
ZJs
Definitely depends on the fund. A lot of HF traders have come from the SS.
@Shark-monkey -- Since the Volker Rule had banned prop trading at Investment Banks (sell side), are you saying that "execution traders" from the sell side have gone on to Hedge Funds as traders ?
Prop trading still exists at every bank; they've found ways to skirt it
Lots of credit and global macro funds are "trading" shops where the traders - ex-sell-side guys - are the stars. They're not just execution traders, they are also generating ideas/alpha
Both. But I don't think you even have a good grip on what traders do at an investment bank.
I'm a college student asking questions. Don't know how this got front-paged. Excuse my ignorance.
So ask questions like you are a college kid; don't call sell-side traders "airheads" when you'd probably S a D to be one at this point.
Sell side trading isnt execution only, that is what sales trading is. A trading seat on the sell side in many instances can prepare you for a more prop oriented position. On the sell side you manage a book, and by that I mean a lot of the positions you have are given to you by clients. However, at every step a part of your job is to try and make money, and this will come from forming your own views and putting trades on. For example, a client lifts you in some ATM 1Y options of XYZ stock in 50k vega, Now from this point on it becomes a prop position for you, you have to determine whether you like the position, and the spread you took is worth it, which might be the case, you think the vol is high and and its not realizing, so you are happy to be short and receive the decay, wait for the vol to come off a bit and then try to buy some back. Or you think the skew is very cheap, and the name isnt realizing, so you buy some downside, keep it short gamma, or you are afraid of a takeover that the market isnbt pricing in so you buy upside, or you think the vol in the 1Y is really high but the name is realizing, or you are afraid they might profit warn in the next month, so you buy some shorter dated options against it to get some gamma etc etc, can go on but you get my point.
Sellside traders do a very similar job to prop traders, except that its in a different framework, a lot of the times its defensive prop trading, and sometimes you dont really have a choice of what you put on the book, but you have choices on how you want to deal with it. The benefits of this is that you get exposed to a lot of different uncomfortable situations and risks, ie) in single stocks a huge thing is uncertainty over the dividend date, and a movement of a couple days can make a div move into or out of expiry, and if you are not on the ball you can get taken for a ride.
Which hedge funds are poaching the top sell-side traders? (Originally Posted: 09/03/2010)
A lot of prop traders at bulge bracket banks are either being assigned to Asset Management divisions or leaving sell-side altogether to work at hedge funds. Which firms are aggressively hiring sell-side traders? I heard that Moore capital poached some bigshots from BAML; don't know about SAC Capital or Soros.
Moore also poached a few EM FX traders from Goldman recently. The entire desk is ex-GS now I believe.
It looks like Moore is aggressively recruiting. They also recruit MBA students at Harvard and Wharton, if I'm not mistaken.
Prop traders are not being reassigned to AM from what I've heard - they're getting fired. Goldman PS is being dismantled (most of the 65-70 employees are being fired) and JPM just got rid of some commodity prop traders in europe. not sure where you heard they're being assigned to AM...
This is what I read. Even if they do get fired, they'll have no problem finding jobs.
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