Hey guys,
I searched a while and couldn't find any good threads so I just made the post. Why choose S&T over prop trading? It seems pay and general work is much more competitive at prop trading roles yet I see a lot of people shift over from prop trading roles into bank trading roles. What are the main reasons?
I think there's a few reasons, each of which comes down to the personality (and, to some extent, the innate competence) of the person themselves:
Banks (especially the core BBs) tend to have a larger reputational profile than even the very best prop trading firms (e.g. Optiver, Jane Street, DRW). You'd honestly be surprised how many people in the industry don't know, say, DRW simply because it's not within their market's immediate sphere of concern. Working for one of these top IBs gives your CV sheen that is difficult to cultivate elsewhere.
A lot of these prop shops also don't "trade" in the same way that banks do. By this, I don't mean the distinction between being a market-maker or a market-taker, but rather the fact that a lot of these prop shops (e.g. Jane Street, Jump) rely heavily on the application of technology and, as a result, that the role of a "trader" is less hands-on that it would be on a bank's trading floor.
There's also the matter of job security. Working for an institutional firm like Goldman Sachs, no matter how aggressive or meritocratic the environment, will always have better job security than working as a P&L only trader at a prop shop. Sure, at the prop fund you may make an absolute killing in your early 20s and retire early, but this is unlikely: a bank gives you a ladder and a management structure to climb an, to some extent, protect you.
Finally, there's the matter of education. While getting into one of these shops out of uni is extremely competitive, and very often only the best and brightest do, there's often a lack of formalised learning when on the inside that, sadly, leads to a lot of people floundering. Conversely, a bank provides a very clear structure and, more often than not, places an emphasis on collegiate development. It may well be the case that you get into a top prop shop, have no support, and so try to lateral to a bank in order to gain some degree of mentorship and help (regardless of how intellectually brilliant you may hypothetically be).