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May 31, 2024
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Prop trading is getting crushed. Most of these shops are bleeding money and will be forced to drastically cut staff. Even the big boys like Getco are taking a hit. The industry will consolidate over the next few years. Terrible business to be in right now.
What firms do you know of that are having trouble? Is it mainly the HFT-centric firms?
Pretty much every prop shop in Chicago is having a tough time right now, including places like Getco/jump/drw/spot. I know people at all those places and have interviewed at quite a few firms, and they are struggling. It has nothing to do with regulation since dodd-frank doesn't affect prop shops, and the transaction tax will most likely go nowhere. Rather, it's a combination of lower volume and volatility throughout the asset classes, especially in equities, and the oversaturation of certain strategies, most notably HFT market-making as well as various forms of statistical arbitrage. In my opinion, unless you're a hardcore programmer, working at a prop shop is not an ideal career path. This is why so many top prop traders in their 20's are leaving for b-schools.
If you want to stay in trading, what do you recommend if you can't program? And any specific asset class?
It will be tough. The only discretionary traders who are getting hired now are those with a very good track record and make money right away by plugging in their models. I honestly think prop trading is not a good place to be in. If possible, try to do equity research, banking, or consulting. You develop MUCH better skillsets that are more fungible and can be applied to a number of different areas.
How about flow trading at a bank? I suppose you keep moving up in this path and make lateral moves to other banks.
brady4mvp, can you elaborate on why business is so bad right now? arent these prop shops unregulated?
Thanks for the insight, Brady.
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