Compensation at Prop Shops

bankwanna's picture
Rank: Senior Chimp | 24

Hi guys,

Can you guys shed some light on the pay progression at prop shops? I got an offer at an options market maker (think Optiver, Tibra, IMC, etc), 60K+ starting (I'm in Asia, so this is pretty decent).

How much bonus can I expect the first year, given that its pure training for the first 6 months?

How much money can I expect to make in total comp if I'm an average trader after 5 years? 10 years? I realize the pay varies a lot for traders, so some ball park figure (i.e. 25%-75% precentile, or similar) would be very much appreciated.

Thanks.

Comments (18)

Apr 26, 2011

same question - but in the US

IVY for Life

Apr 26, 2011
bankwanna:

average trader

Don't use these words. People will rail you on these forums for doing so.

Apr 26, 2011

This is an easy question to answer how good are you? <------ That will determine how much you will make.

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

Apr 26, 2011

If you're good you'll easily make six-figures including bonus. A friend of mine made $300K all-in at Optiver in his first year out of college because he came up with a strategy that did pretty well.

I can't speak for Asia, but in the U.S. Optiver pays a base of $80K, and I'm pretty sure IMC and Tibra pay at least $70K.

Apr 27, 2011

So if you make Partner/Director at one of the aforementioned market makers (IMC, Tibra, Optiver, etc), I'm assuming most/all can clear $1M USD total comp easily? How about $5M USD? I'm just trying to benchmark against other professions (i.e. IBD MD comp is probably around $1M - $3M USD from what I can gather).

Learn More

Boost your resume and land a finance job by passing the FINRA SIE. 264 pages & 1981 smart flashcards written by a former 8X top Fidelity instructor. Try it for 0 bananas here.

Apr 27, 2011

You can make way more in prop trading than you can in IBD, but it's way less stable and entirely based on how great your PnL is. If you bring in 20MM in one year, I wouldn't be surprised if you pocketed over 5MM personally. I'm just not sure how many guys out there have this type of year. At least a handful I would think.

Apr 27, 2011

I know guys that have pulled down 300k+ in a month.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Apr 27, 2011
happypantsmcgee:

I know guys that have pulled down 300k+ in a month.

me too. Maybe we know the same people

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

Aug 30, 2011
happypantsmcgee:

I know guys that have pulled down 300k+ in a month.

I know a guy who made more than that in one day and he's just two or three years out of college. I also know guys who were fired within one year of joining the desk and are thoroughly convinced the game is rigged. That's the beauty of prop trading.

Apr 27, 2011

Me too, but they also lose 300k the next month. Its funny no one reports their losses. Annually some of these guys break even and then its OFF TO THE STREETS.

Apr 27, 2011
megafundguy:

Me too, but they also lose 300k the next month. Its funny no one reports their losses. Annually some of these guys break even and then its OFF TO THE STREETS.

Not this guy bro, shouldn't you be doing something more important at your megafund.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Apr 27, 2011

nah I dont start yet, got 2 months.

U JELLY?

Apr 27, 2011
megafundguy:

nah I dont start yet, got 2 months.

U JELLY?

hey boutiquebank4life/dukeofduke/ekudekud, go.fuck.yourself.

Aug 30, 2011

Expect your bonus to be entirely dependent on firm performance. As all of these prop shop / MMs have grown, they have gotten increasingly more corporate so that even "good" traders are not necessarily paid until several years down the line. Especially with the advent of HFT, it is harder and harder to distinguish oneself as "good" if the firm already has strategies/technology/successful platforms. FWIW, I would say typical pay would be something like this:
Year 1 - X Salary + .3X Bonus (everyone)
Year 2 - X Salary + .7X - 2X Bonus, but likely X Bonus
Year 3 - X Salary + 1.5X - 3X Bonus
Year 4 - X Salary + 2X - 4X Bonus

etc. etc.

Yes, MDs get comped absurd amounts. But there are only a handful of guys at these places (think 1 MD for 40 people) who are both young and getting paid. And often, it is undeserved because the comp is "discretionary" meaning no link to PnL. So kissing the right butts matters. Also, retention is quite poor, with maybe 40% of a recruiting class still there after 2 years.

Aug 30, 2011

If you've joined trading to be happy with average trading salary, get out fast. The average grade in an exam is a C, happy with that? Never aim for average, or base yourself on it, you'll always be unhappy.

Aug 30, 2011

So many people hate when people ask what does an average trader make, etc. Why?

Averages are still very telling.

It would be great to know what the 25th, 50th, and 75th percentile make at various prop shops versus BB IBD versus BB S&T versus BB prop.

It is fine to have the mentality that you want to be the best, but only one person is the best so you need to be concerned what everyone else does.

Say the average GPA is a 2.5 with Teacher A, but one student gets a 4.0.
Meanwhile the average GPA is a 3.7 with Teacher B, but no student got a 4.0.
What teacher would you rather pick?

Stop the hate... or at least have a logical reason for hating.

Aug 30, 2011
lbreitst:

So many people hate when people ask what does an average trader make, etc. Why?

Averages are still very telling.

It would be great to know what the 25th, 50th, and 75th percentile make at various prop shops versus BB IBD versus BB S&T versus BB prop.

It is fine to have the mentality that you want to be the best, but only one person is the best so you need to be concerned what everyone else does.

Say the average GPA is a 2.5 with Teacher A, but one student gets a 4.0.
Meanwhile the average GPA is a 3.7 with Teacher B, but no student got a 4.0.
What teacher would you rather pick?

Stop the hate... or at least have a logical reason for hating.

I hate because it displays a naivety about the world of trading. It's like saying what does the average gambler make. Do you include survivorship bias? What about the averages losses of people that get fired? The net average? Probably zero. Is that a helpful answer? No. Hence the hate. Ask a stupid question, get a stupid answer.

Aug 30, 2011
Comment