Traders at bbs - why not just trade your own acct?
If traders are worth their salt, there's enough research out there for anyone and you could do it in your underwear.
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Do some research into what most traders at banks actually do. Hint: market making. Even the prop positions flow traders take are usually guided by not just their views, but the positions their clients are taking.
As for the prop traders, plenty reasons including 1. Lack of capital to make it worth while 2. No edge; unless they can afford the equipment, BB terminal, sell side research reports etc which just adds to #1 3. I believe some prop desks also have dedicated research teams 4. Cheaper funding at a bank 5. Daily P&L swings are mitigated by the performance of other desks around you/the bank as a whole i.e. a trader would not be able to afford his daily VAR trading at home
Plenty more reasons I'm sure I didn't mention.
Great Analysis
sell-side research still has plenty of upside bias, anyone who gets incorporated can get a BB terminal, it doesn't even have to be a financial services co. You could diversify risk by having some of your buddy traders come on board with you. Your funding might be more expensive but not more than the money a trader hands over to a BB. Just playing devil's advocate here
On a sell-side desk, information does not only come from the researchers. Remember that your desk is talking to clients, and can get a feel for how the market players are positioning themselves. Particularly when big buyers/sellers are stepping in, it can be very important to know what side of the trade you are on, and perhaps adjust. There are cases when not being privy to this information can cause you to be run over, particularly in the more illiquid markets. Not to mention you have many very intelligent people watching the same things with you, hearing different opinions (or even listening to their analysis) can help you have a more full picture.
Sure, you could get a BB terminal, but they aren't exactly cheap.
If you are bringing "your buddy traders" along, doesn't that really defeat the whole point? If you are sharing profits, what is the difference between that and a firm except that you are personally covering overhead and likely have expensive cost of capital?
As Brown mentioned, perhaps you need to understand what market-making is more fully. Working on a sell-side desk, you not only make money by being directionally right (whether that be in the underlying, vol, gamma, etc), but also by making good spreads.
Money....money.....money......money..... CAPITAL!
It costs a shitload of capital.....
Agree with Revsly...
No matter what year it is, the market is psychological... There is nothing better than knowing what people (institutions, investors) outlook or feel for the market at all times...
The market isn't just about analyzing data, and researching new trends, the markets are EXTREMELY psychological and there tends to be countless amounts of moves in the market based on feel, speculation, and a shitload of other factors.
Basically it is more efficient and collavorative to be working for an investment bank (Trading).............................................................................Unless you are Steven A. Cohen.
a trader's seat at BB is extremely expensive...
if you have a lot of capital, just set up a hedge fund. but im talking about a lot of capital here, enough to be an institutional client of a BB so you have sell side guys to provide you with market color...
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