How is % of PnL determined?
So I’m kind of confused about how traders get paid out of PnL. Is everyone’s profit and loss on a certain desk/product added together and you might (if you’re good enough/senior enough) get paid a set percentage? Or is it just from how much you as an individual (would this be “your” book?) bring in and a set percentage is paid out?
Also have a question for physical traders specifically. If I’m not a used car salesman type of person would that hurt me in one day getting a trading seat? Everyone mentions how important relationships and cultural fit are for the physical space so I’m just wondering. I’m an affable/extroverted person but I’m not a super salesman if that makes sense.
A more important question: how is p and l determined?
You’re right, I didn’t even consider that.
every trader has their own book for prop trading (sometimes called a "back book" or "side book")...your prop book P&L is YOUR P&L.
some desks also have a single common book (most rate swaps desks put all customer trades into one common book for hedging)...P&L attribution from that book is allocated by the head of the desk, and is usually discretionairy (there is no formula here...its the whim of your desk head)...but your prop book is separate, and you own that.
However, there is no precise formula for bonus at the banks...your bonus is always discretionairy...your boss just decides on a number (even if you make 100mm in your prop book)...vs at a hedge fund, where you get an actual hard %
Thanks for explaining.
So if the desk head hates you then you are just screwed?
yes
I read that pre 2008 crisis, banks would set aside 50% of their revenue in their investment bank to paying their employees while now they set aside 25-35%. At each big bank still, I read that there are close to 600 material risk takers in S&T who make on average between $1-2 million. At what level are these material risk takers?
Also wtf is with the ECB saying that eurozone banks need to place "extreme moderation" on the amount of discretionary bonuses they give to material risk takers in 2020? What a self-righteous load of garbage lol. https://www.efinancialcareers.co.uk/news/2020/07/ecb-bonuses-european-b…
https://www.bankingsupervision.europa.eu/press/letterstobanks/shared/pd…
"I'm an affable/extroverted person but I'm not a super salesman if that makes sense."
Sales is a skill - you can learn it if you need. Very few are born with it or find it comfortable.
Mm I disagree to an extent, that’s a personality thing. Very hard to turn an extrovert into an introvert. If they’re not comfortable speaking with clients or people in general, most people can tell. Burning out back to the mean will be swifter. Soft skills are something that can be taught, but the likelihood that that person is able to deliver while in that mode is much slimmer.
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