Transitioning from Prop Trading to Hedge Fund?
I've seen a few threads about exit opportunities for prop trading, but I feel like I should be a bit more specific with this question. I'm interested in algorithmic and quantitative trading, and was curious about working at a prop trading firm specializing in this. I have heard that a prop trading firm offers higher pay (low to mid 6 figures) earlier on in one's career, but it basically caps out there, unless you're a partner or something, except they won't make you partner unless you're one of the firm's founders or something. I have also heard that a hedge fund would offer a much higher pay ceiling, so I wanted to know how difficult it would be to move from an algorithmic prop trading firm to an algorithmic hedge fund.
You wouldn't be satisfied making low to mid six figures living in Chicago?
if you can convince someone at a hedge fund that your strategy is profitable and legitimately portable without a massive investment on their part in new systems/technology then it shouldnt be a problem at all.
Prop trading to macro hedge funds? (Originally Posted: 06/14/2013)
Is such a move possible? A good friend of mine was recently offered a job at a top prop trading firm, overseeing and managing the overnight desk. The group trades pretty much everything except options. If he does well there, is a move to macro funds possible, or will his exit opps be limited just to other prop shops?
I've seen it happen. Unfortunately, the person I know who did this did not last long and went back to a prop shop. The turnover of the place he went to is incredibly high though.
I have a similar overnight desk interview coming up at a small fund. Do you mind asking your friend what kind of interview questions he got in each round?
Prop Trading to Discretionary Hedge Fund (Originally Posted: 06/06/2012)
Hey,
Long time member, first time poster. I am currently pursuing a Masters in Financial Maths/Financial Engineering.
I am really interested in starting a career at a discretionary hedge fund - I think global macro would be a good fit, though i wouldn't discount other strategies too.
Q. If someone starts a career at a prop trading firm (specifically an options market making firm), can he make a switch to a hedge fund later? What are the odds? Is it better than when he started or worse off?
Q. How do you connect with the funds which don't even have a website?
Any tips/advice is always helpful.
Disclosure: I do not work for a hedge fund, my left arm is noticeably longer to the left.
My "mentor" of sorts growing up (the man who introduced me to finance and the markets in general) has a similar background, less the quantitative experience. He actually didn't start trading until multiple years out of college, and has been partner at a WC hedge fund for the past 20 years. So, yes, it's definitely possible, depending on your skill set and who you know (but you already knew that).
Regarding the second question: networking and headhunting, from what I've heard, comprise upwards of 95% of all recruitment activity. HFs are notorious for unaccessable and rarely have websites. Just learn your way around and I bet you'll find a way into alternative investment in one fashion or another.
Thanks, but I would imagine that there will always be the one-off case. A better gauge would be how do people in the HF industry see someone with such experience.
Also, can you explain what a WC hedge fund is?
Prop trading to HF (Originally Posted: 09/15/2011)
Is it common to transition from a prop firm to trading at a hedge fund, or perhaps even raise capital to start your own fund, or would one be far better off doing grunt work at a BB?
From what I've seen, it's not that common. Part of this is self-selection and a part of it is the lack of transferable skill sets. The top traders at elite prop shops like getco/jane street/drw/jump/sig, etc., are making enough money and have great hours and freedom, so going to a big hedge fund does not appeal to them. And regarding the latter point it really depends on the products and strategies you trade as well. So someone who just traded cash equities at a mediocre prop shop has virtually no shot of going to a top fund while someone who successfully did relative value fixed income trading or currency options might be able to sell themselves to macro oriented funds. But if you look at linkedin profiles of traders at top hedge funds, there just aren't that many ex-prop traders (i'm talking about pure prop shops, NOT prop desks at banks).
I think trading at a BB opens more doors, you learn a lot, and you establish a better network.
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