Prop Trading vs BB Trading

I don't have any factors to specify. Unfortunately I am not in the position of having both such offers. The intent of the thread was to get a feel of which side of the industry is more in favor at the present time. I was asking everyone from a person perspective, which they would choose and how they weigh different factors in this choice including maybe specific firms eg. 'f it was with firm X, Y or Z, I would take prop, if not I'd take the BB because. . . '

TerpStreeter:

I know some prop trader firms (albeit probably not the "top") require some capital contribution of your own so I'd avoid that if possible (just so you aren't putting your own money at risk to start, before you really know anything).

That being said, if you have an opportunity at a BB, I'd personally take it just for the solid experience and presumably good pay that comes with it, but either way you're looking good.

People on this site call places that require capital contributions arcades. Everyone says to avoid them at all costs.

Most prop shops don't increase your salary much, if at all, unless you are at a partner sort-of level. Even then, the majority of your comp is coming from PnL bonus, not salary, whether that is from your own account, your desk, or you're a partner and it is from the whole firm. Example--a friend of mine graduated in '07 and worked in S&T for a BB, but quit after a few months. My friend later joined a prop shop with a salary about ~$15k lower, albeit in a cheaper city. First year bonus wasn't anything outrageous (all in comp was $200k. Still, friend's salary is

Also, I know of a number of prop places that pay below $40k for your first year 'salary', but you are expected to earn more than that in your first year bonus anyway.

If you're expecting guaranteed income, most of the prop places probably are not the place for you because even the better ones aren't going to keep you around if you aren't making them a good amount of $$ to justify what they are giving you. It is more clear cut than being at a very large bank with extensive hierarchy and bureaucracy.

I'm making a similar decision...have the opportunity to get on a desk that trades more "exotic" products at a BB or go to a top NYC prop firm.

I'm honestly leaning BB for the resume building aspect, and because I feel like I might have a better shot at trading for a global macro fund from a BB desk than even with a track record from a top prop firm. On the other hand, the ability to really control my comp is appealing.

I also figure that I could potentially make the switch from bank -> prop considerably easier than the other way around.

if you're worried about the exit opps then go for the BB. if you're sure about trading as a career, then go to the prop shop. def less hierarchy, don't have to deal with management, just focus on trading

most people from prop shops do not look for exit opps because if they can make it then the pay is much better (why switch jobs for a lower pay). and the ones who do leave voluntarily usually start trading with their own capital or are sponsored by people to trade for a higher % of PnL

A couple of good friends have been in this situation this year and last year. They all choose the prop trading firms. I think they saw it as a means of cutting to the chase--people probably go the BB route so they can get a job at a prop trading type firm so why not skip a step. The downside from my perspective is just that its easier to get fired if you aren't good.

Found these articles on Wilmott re. algo trading. Thoughts?

http://advancedtrading.com/algorithms/showArticle.jhtml?articleID=22030…http://arstechnica.com/business/news/2009/04/why-processors-need-high-f…

Also, where do you guys see the future of algo trading 4-5 years down the road?

Haven't read the second one, but everyone should look at the advanced trading article above. Its a pretty good look at how everyone at the BBs felt about decimilzation - funny they think their clients were upset....

Anyway, its useful to look at because we'll see how the other markets go through the same process

I'm leaning more and more towards prop now. i don't see the business going away anytime soon; there is so much commitment to technology at jump and Getco, and so at best the BBs get equal technology and equally smart/determined people. But even that seems like a stretch.

I read that Getco is responsible for 10-15% of the trading volume on a number of US stocks. A couple of interesting articles:http://www.forbes.com/forbes/2009/0921/revolutionaries-stocks-Getco-new…http://online.wsj.com/article/SB125133123046162191.html

http://seekingalpha.com/article/158984-with-Getco-and-company-why-do-th…

As for the pros of going to a BB and doing a more traditional trading role? I mean, they are still there, but they are things that are more important for when you're in that system. Networking ops are more important on wall street because you are expected to move around a lot more. Exit ops are sort of limited in S&T anyway; less options to move to PE like in investment banking. And I hear that banks are trying to poach prop traders from the top shops too...they're just failing.

And as for traditional being more "fast-paced"... I mean, click trading is literally louder, more shouting, etc. Not necessarily more fast-paced though in terms of learning. I think I would learn faster at a top prop shop.

Other reactions? Other guys who are making this decision, what are you thinking?

Noob question I know, but could someone explain how these algo trading shops are structured? It seems to me that if you're an "algo trader", what you do is develop software and algorithms to trade for you. So are you basically like a type of quant developer?

Thanks.

The problem with a prop shop is that if you don't cut it there, you're SOL. Having FNYS or Trillium or even Jane Street on your resume won't mean a thing to anyone outside of trading, and to those in trading, why would they want someone who was bad at their job?

On the other hand, if you work at a BB, you get a great name on your resume that can carry you a lot further in a lot of different paths. I don't see what you gain by going straight to a prop shop, aside from having to put up with less BS for a couple years.

I'm not worried about not cutting it, although I guess I could see myself getting tired of it after a while in which case exit ops would be kind of important. However, my understanding is that trading in general doesn't provide a whole lot of exit ops though (aside from other trading jobs) so your argument is strictly based on prestige/name recognition of the firm...? I feel like I can always go back to b-school if absolutely necessary, and prestige is going to only open doors, not get me hired.

How hard is it to transition from BB to prop? I have an offer from a good BB GS/MS/Citi/JPM/BoA for their trading program, but I think it would be fulfilling (and more monetarily rewarding) to work at a top prop shop like Getco/drw/Jane Street/jump/SIG.

Could anyone comment about making such a transition 2-3 years after working at the BB? It seems as if most prop shops don't hire new traders, just fresh grads.

Thanks!

Jesus Fucking Christ OP

1. Do a search
2. Learn what the fuck you even do at the shops listed
3. For algo trading, people most definitely can move between banks/props/HFs/etc.

I think you are best off with GS if you get it; next is BofA with UBS in a close 3rd. I know a few people who went to SIG and I don't really have a strong opinion of it. PM me if you want to discuss.

My friend is having the same dilemma. Do you think he should take SIG or BofA S&T, considering he wants to be in NY full time and SIG is in philly?

I would take BofA over SIG. You can trade at BofA for a few years and then move around the street if you're good. You can also switch to a different desk within BofA after a few years. Its keeps options open.

SIG I feel doesn't really allow too much room to move to other BB firms. Also, from what I hear, SIG has a tough non-compete in their contract, which makes it even harder to move. Not sure if it's a non-compete or just that they make you sign a 3-year contract and you can't work for a competitor until that 3 years is up.

Not 100% sure on everything I've said, but that is what I have picked up speaking with others.

OK thanks. Does any of what you say change considering this is for summer not full-time? More specifically, can he just take SIG for the summer then do full-time recruiting at BofA or another BB?

How do the BBs look upon SIG vs. BofA for full time?

SIG is a great firm, but the nature of prop trading firms doesn't seem conducive to a first job (unless you are just amazing at trading). Most firms (idk about SIG in particular) have low assistant --> trader conversion rates as well as the fact that if you fail after becoming a trader you have a name that is famous in trading (but not everywhere like the BBs). While I woud doubt you would have a hard time finding a job in finance after a job at SIG, it would be exponentially harder than if you were at GS. Especially if you find out trading "is not for you", it would be easier to move internally or laterally from a BB than Susquehanna. If you like trading you can always move to SIG later if you want to prop trade.

I think BofA looks better on resume than SIG. I would without question take BofA over SIG. BofA will expose you to more products/securities, and will also allow you to start building a network. I think it would definitely look better for other BB's during full-time recruiting.

I think people who go to SIG aren't worried about "keeping options open". Prop trading is more of an end goal rather than a stepping stone like all of the BB analyst programs. If you know you really want to trade, going to a place like SIG is a great choice. SIG also has reasonably high conversion rates--if you get an assistant trader offer there and really want to become a trader, I'm sure you'd be successful. Most of the people who don't make it probably decided trading wasn't for them.

SIG does have a 3 year non-compete. Definitely something to think about. Also, as always thinking about things like company culture and such will be important.

At the end of the day, as an AT at a top prop trading firm you will focus a lot more on the actual trading early on, and as a result, learn a lot more about it faster than your BB analyst counterparts. SIG specifically has a pretty drawn out training program, so you will definitely get a strong baseline education there if you go. If you are good, you also have significantly more upside (money) potential much much sooner than your BB counterparts. At the same time, you should consider the possibility that 1. you don't like trading or 2. you are not good at it.

So, if you are "worried" about "exit opportunities", prop trading as a first job probably isn't the best choice. But if you know trading is it, and really want to dive into it right after college, then maybe prop trading is.

To put it bluntly, if you think there's a good chance you might suck at trading, you should absolutely 100% do BB. If you are pretty confident about your ability to become a good trader or you're feeling frisky, then you should seriously consider SIG.

Definitely agree

Definitely agree

Everyone I know who has started at SIG left due to various issues with rev shares and advancement (think 5yrs in). That being said, they are employed elsewhere on sell side and buy side, so the name is worth something if you have the ability to back it up. I know many people that weren't happy and left. Kind of like the exodus from Getco recently.

Their training though is quite good from what I hear, its more the long term career progression at SIG that is lacking.

dont u mean BSD?

BB prop, only for superstars. HF is for very good traders who want a chance to make more money and have the same lifestyle, unless they are leaving to start their own HF in which case there is going to be MUCH more work.

Prop firms is a good job for undergrads, but ONLY if you get into somewhere that isn't a chop shop and is reputable. Susquehanna, Trillium and First New York come to mind.

yes.

Are some people at places like First New York making a lot of money (>5m), or do they just leave for HFs once they are good enough?

Does Trillium or First New York pay a salary? In terms of prestige, how do they compare to SIG, DRW or Jane Street? Thanks.

I know Trillium pays $26k to all first year hires, then I think the salary drops in the second year. I also know FNY pays a salary, though I'm not sure how much.

FNY only pays a salary for the analysts in the two-year training program out of undergrad. After that, until partner level it's 40% P&L (with some deviations depending on negotiations, your trading method , etc. Someone who never does overnight trades receives 50% P&L for example)

At partner-level you get paid a percentage of firm profits that's subject to revision each year in addition to your personal P&L.

after you learn to trade at trillium there is no salary, just 400k to trade and 25% P&L to start. In terms of prestige, I'm not sure, but who cares as long as you get rich. Do you need to work at a BB to make 2mm+ per year? nope, so who cares.

FNY pays $55k to undergrads then you get no salary, just P&L.

Im having trouble understanding why anyone would want to work at Trillium or FNY starting out when there are prop firms that actually pay a salary as well as a generous bonus. I dont get it.

What's pay like at DRW, SIG, or Jane St.?

brisbane:

What's pay like at DRW, SIG, or Jane St.?

100K base for undergrad + signing (15K) + year end (usually 30K guaranteed)

trillium pays a salary at first, so does FNY. i dont know any places that allow you to trade your own book, while training you, give you a salary AND let you share in profits. doesnt seem like a fair trade.

x13, where exactly are you getting your information from.

i have a friend that received an offer from DRW but didnt take it and another who took his SIG offer. they both offer in the 60's for base for an undergrad.

not that it has direct relevance, but i interviewed with both companies

I guess I should clarify, those are the numbers my friend is getting (as a trader) from one of the 3 firms mentioned straight out of undergrad (you can now probably deduce which). Those numbers are also in line (6 figure base) with what some of my other friends are getting from HFs in Chi and also quant HFs in Greenwich, again all out of undergrad. To clarify, this is not just something I "heard" about, this is what my friends are getting.

DRW (for undergrad): 65k base, bonuses comparable with those of BB's for first year. Subsequent years you tend to rise up must faster salary-wise.

Jane Street and SIG should be similar.

JSC pays notoriously well, don't assume.

Is FNY significantles worse than JSC, SIG, DRW?

.

There must be more than 4 prop shops (FNY, SIG, JSC, Trillium), surely?

Trillium and FNY don't fall in the same quant/options trading bucket as most other reputable prop shops. That makes them quite interesting to people who aren't as quant-oriented. FNY has been hiring a ton of former BB traders as well.

anyone have any advice on trillium regarding interview process?

which prop shops are you talking about?

The likes of Gunvor and such.

the better ones all would like to see math.

a lot of bb desks dont stress math at all...like the spot, forward, cash bonds, cds desks, all dont really care about quant skill all that much. banks have quants and you are hired to take a view.

I think that this is the one where you have to go with your gut, and you'll get a different answer from everyone you talked to. I'm in a similar situation, and I know I have gotten a mix of opinions. If you are more confident in your love for trading and ability to "make it" do that. If you want to have the security of the BB do that, you'll make HF connections and it would also be better for bschool.

It was tough for me to decide, but in the end a trading floor was the only place I could truly see myself happy

I think you are best positioned at your current position. With exprience you should be able to get closer and closer to the PM position on you desk, or lateral into a PM position at another bank. Working at a bank, you could get the start up capital as well as systems when you do decide to start your own HF. While in the short term you might make more at a prop firm, if you want to be autonomous, id stay at the bank.

If you dont mind me asking, which prop desk?

What desk are you on? Some desks can be very limited (market making financial equities), versus a bit broader (cross-product EM).

Most trading shops you will find will be very specialized. Prop shops might even be more specialized than a BB but it heavily depends on the specific strategy. And most prop shops are geared towards market making. Your best bet as said above is an EM desk, as there it is usually the case that a trader covers a specific region and then trades the debt and currency of that region. If you want to be able to trade multiple products your best bet is a hedge fund that allows you to do that.

However Id say that focusing on a product is not a bad thing, I wouldnt want to start as a junior trading multiple prodcuts, I think that you just wouldnt learn as much.

1.- I think you actually become more specialized, and pigeonholed, because many prop shops only do one kind of asset, whereas in banks it´s not that uncommon to change product.

2.- Many prop shops let you/require you to put some of your money in the trades you do for the shops. Otherwise I don´t know, but I guess you would´t be allowed.

3.- Many of the major shops actually do market making, and many of the small ones do too.

at my shop: yes, no, yes but not 'required to make mkts every day'