Do You Regret Going Into Prop trading?
Saw a very good post in the HF forum about this but more generally public markets. Had a lot of responses all the way from a tier 3 LO shop to a partner in a MM HF so was pretty nuanced, with the LO guy making 300k at 33 and feeling regret and the MM HF partner having made tens of millions in his career. So I pose the same question to you guys (especially those in OMM's). Copy and pasting this from the original thread because I think its also largely similar to the issues we face:
I hear many people complain about the following:
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Little to no transferable skills, tough to switch careers
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Little upward progression and your role stays the same for your entire career
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Your whole career is extremely stressful on a day to day basis as you need to constantly beat your index
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Research vs execution
Looking back, would you do it again? What would you do instead
Original thread: https://www.wallstreetoasis.com/forum/hedge-fund/…
Little to no transferable skills? You don’t think those programming chops are worth several hundred grand in Silicon Valley?
You can build some killer code for a jim simons esque strategy but that doesn’t mean you possess the creativity and experience needed to build an app or website that millions would want to use. Otherwise, I’m sure Jim Simon’s himself would’ve dabbled in some Silicon Valley projects
Are you a troll? Life isn’t over if trading doesn’t work out. There are a ton of skills you learn that are directly applicable to other careers. Plus traders are smarter than your average college grad, they know how to take calculated risks, and they in general know how to solve problems.
I’ve seen ex-prop traders move into BizDev at a corporation/hedge fund, get a job at BigTech firms (yes plural) like Meta, Amazon, and Netflix, work in Treasury at a corporation, build a real estate empire, run a marijuana dispensary, run a startup, run for political office, work in data science, work in trading at a bank (which is lower tier than many prop shops), become a research quant at a hedge fund, work for a passive investment manager like Vanguard/Blackrock, go into sales for an exchange, etc..
There are literally endless possibilities. If you’re smart enough to break into trading then you’re smart enough to find meaningful employment that pays you decently.
Jesus Christ I literally just copy and pasted that entire section from another similar thread anyways. The main question was just posed to anyone who is senior enough to have a nuanced view of whether or not going into prop trading was a mistake. Example answer is the quant below this, stay on topic.
Yeh well this inherent intelligence clearly just fucking skipped you if you can't just stay on the topic 'Do You Regret Going Into Prop Trading?' Instead of going on some insecure tangential rant about a single bullet point in something that I clearly said was copy and pasted from another forum.
Interesting and thought provoking topic. Overall I am definitely glad I went into prop trading although over the years the importance of firm size/quality has grown a lot so I'm not sure I would feel the same if I hadn't joined a tier 1 firm. I find the work reasonably interesting and comp has been very good especially since 2020.
I agree it's not impossible to switch but assuming you are reasonably successful at trading I think switching would require a pretty painful short term pay cut unless you are particularly specialized in programming/machine learning.
Some truth to this although I think most people who survive 10+ years will have some career progression even if slower and less clear cut than other industries. At many firms you can also have excellent comp progression even as an individual contributor which is a plus for some although I do think it gets somewhat repetitive unless you really love markets.
Obviously this depends tremendously on the particular seat and firm culture but personally and I would think for many trading strategiess that have very high Sharpes this is not too bad.
Personally I mostly enjoy and work on research so not a concern for me but I can understand this would be a big frustaration if your interests and role weren't well aligned.
Hey @Damian-Lewis take note. This is how you engage with a topic like a mature adult, and not some fucking college kid debating exit ops or whatever bs.
Thank you quant, very helpful.
No regrets at all so far, tho I'm still fairly early (3rd year in the industry by this Sept) so lets see how things pan out.
I view comp and transferable skills as being inversely related across the 3 classically defined roles.
- Comp: QT > QR > QD
- Optionality: QD (any SWE role anywhere) > QR (most datasci / ml stuff - esp anything timeseries related) > QT (less obvious outside of trading)
Little upward progression, yeah plausibly. Depends on how shark like you are tho and how much risk you want to take on. If you stay at your tier 1 shop in a comfy comp band forever sure it might be on the slower side, but the industry is very dynamic and there is plenty of opps for people to take on risk if they are interested.
Your career is extremely stressful mostly if you trade a higher variance fairly fast paced strat. Not everything in this space is some 20 sharpe OMM deal. There are a good number of shops which ensemble uncorrelated sharpe 1 desks together to have a sharpe ~5 biz, so I can imagine being a QT on one of those desks gets the blood pumping. Research can also be a bit stressful if you get a string of bad projects which don't end up adding much value, but probably not much more than any job. I think most other FO roles in banking are probably a good bit more stressful than QR, and especially QD positions.
1. Move to product/sales if you have strong EQ and get paid a decent chunk there.
2. There is little upward progression by title, sure; compensation is definitely always moving higher as seniority progresses. Role stays the same, but I love it so I'm happy. I don't need change for the sake of change, the day-to-day market activity is already my change.
3. Not really beating our index but beating our desk budget, I like the competitive aspect of it and I also perform better under pressure.
4. Not sure what this means, I tick vols, think about our market positioning, think about market making into prop positions to take a view. I barely do research and most of my day-to-day is generating P/L through market making and thinking about how to position our book better. I like this discretionary aspect.
5. I would do it again every single time.
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