Anyone here in ‘Electronic Trading’?
starting my S&T internship soon, have access to some Electronic Trading personnel and am wondering if that’s a good niche to explore.
If anyone here works in an Electronic Trading group, what’s your day to day look like? how’s comp compared to more traditional desks? regrets? Is your background in CS or do you support the product with your more traditional knowledge?
thanks for asking. this is something I'm very curious about as well.
My guy everyone uses electricity for sales and trading.. Not sure what more info do you need
Bump
do you perhaps mean electronic trading as low touch execution?
interested in it as well. if most of the research on execution algorithm is done be the model team, what kind of new inputs can be made by the e-Trading team under S&T? I didn’t think through this because it just feels like you are just using the model which would run by itself and monitor how it goes?
usually the e-trading team at a bank handles the algo trading part of the desk client flows (the smaller size flows) to free up the human traders to deal with the larger block trades.
for example, on the US Treasury desk, the e-trading book might auto-quote all electronic client trades from TradeWeb and Bloomberg BBT and all the other electronic client trading inquiries under ~20k dv01 (100mm 2yr notes, 40mm 5yr notes, 20mm 10y notes...10mm 30 yr bonds, etc..)...and then auto hedge all those trades. This e-trading book will acquire a large portfolio of positions over time (because off-the-runs have no liquid market)...and so then the desk needs to decide how to flatten this book. Either hand it over to the human traders as positions get bigger...or let the quants try to build an algo to prop trade out of those client positions.
the e-trading book gets all the small to mid size flows...hedges those flows, and does a little algo prop trading to try to flatten the book when it can. The algo prop trading aspect of e-trading can be very profitable if the quants find a pattern to prop trade that works (and usually when this happens, those quants then goto a hedge fund like Citadel so that they can get paid for this new found profitable knowledge)
Is there still decent money to be made as a salestrader?
only if you have good relationships with the client base...this takes years to develop, usually takes a certain type of personality...and also takes a degree of luck...you need social opportunity to become friends with the client base combined with market smarts...its harder than it used to be.
Sell side e trading make money from flow, banks really don’t care your individual contribution as ur improvement gonna be marginal anyway. MD in my bank kept telling all traders that our achievement is a consequence of our platform not our individual risk taking. So sadly, etrading became a glorified IT with goal of automation. But to be fair, trader at other desk are at risk of being automated. So, if you want to do trading, don’t work for a bank. Bank etrading or trading doesn’t pay well and your work is not recognized by trading management as they are on their way to replace you with either computer or cheaper juniors.
As a STEM graduate, I felt bad I chose trading at a bulge bracket instead of a tech companies 7 years ago. Now my classmate make $500k in Netflix while I only make half of that amount as a VP trader in well known bulge bracket.
I worked in trading as an intern. And yes, we used electricity.
I can speak for both FICC and Equities electronic trading.
To start with equities, I would suggest to AVOID electronic trading desk. eTrading in equities execution is highly commoditized means no big difference across brokers. The fact or different each other is platform flow and tech infrastructure, so your individual merit is not so important. This is a highly competitive markets as your competitor is not just other banks but also leading buy side companies like Virtu or Citadel.
Equities market making, not many algo market making desks in sell side anymore. What left is not doing well, go buy side.
Fixed income e trading, credit is good. Stay away from commodities. Mortgage and rates are going to be commotized soon, if you are not in top 3 FX banks, stay away from efx desk too.
still lots of money to be made in rates trading...and traders take actual risk. the electronic screens provide less liquidity than clients ask for.....so the bank traders must take actual risk.
example: a client ask you to bid on 300mm 30yr treasury bonds...but the screens only show 5mm on the bid and 8mm on the offer. If you add 30yr bond futures, maybe you can get another 10-20mm of liquidity at the best bid/offer. This means the majority of the client flow cannot be easily hedged (without taking a loss)....and so the trader who quotes a tight spread will be sitting on a large position. you want to see this flow...so you quote a tight spread....but now you just sold something the client wanted to buy, at the time and price the client wanted...the client thinks you are about to get fucked, and you volunteered for this.
The only way to make money from this business is to be a risk taking prop trader. So, rates trading is still real prop trading
Hey can I DM you about eFX? Just started a rotation and eFX is one of them.
Hi there, may I ask why you said stay away from commodity for e-trading?
Kinda off topic maybe, but your thoughts about cryptocurrency in trading? I'm a newbie in this field and I wonder what is the attitude. Also, did someone work with this exchanger https://changehero.io/?
Using Electronic Tools to partially replace voice trader's job.
low touch execution is the future of sell side trading, generates maximum revenue on a floor
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