Difference between trading roles?

I'm a STEM student at a target who will be applying for summer internships in London. Currently I'm learning how to trade/invest, use technical analysis tools on a broker and have made some good starting money for a student these past months. I also have an interest in crypto trading and can see myself building algos to trade for me. I have an interest for markets and like the high risk high reward opportunities that trading offers. But I don't really understand the difference between trading roles at various firms.Could somebody explain to me the difference of a trader at a BB, at a prop shop like JS and at a quant HF like Citadel? Is there a different skill set for each? Also, what's the difference in compensation, job security and career progression for each?

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Comments (5)

  • Intern in PropTrad
Aug 15, 2021 - 7:40pm

Traders at a bank don't really trade in the same way someone at a hedge fund or prop shop does. There's no proprietary trading of assets and it's a lot more selling an idea/product to a client and executing trades on their behalf. The most creative, and offensive, allegory for it I've heard is that bank trading is akin to being a ball-boy in tennis. The comparison is very crude and somewhat inaccurate but I hope it conveys that traders at other places are much more directly involved with the markets whereas the banks are more into market making. They're called the sellside for a reason.

Strategies for trading differs a lot throughout the buyside, some fundamental hedge funds deal with distressed debt, long/short opportunities etc. You can Google different type of fundamental hedge funds. Quant funds are similar but use quantitate methods + some algo trading.  

FYI: no one in the industry uses that type of TA. 

  • Intern in PropTrad
Aug 16, 2021 - 9:28am

I see, thanks for the insight. I am aware that *some* desks aren't agency focused but neglected to mention that. Thanks for the correction.

  • Intern in S&T - Other
Aug 17, 2021 - 1:12am

This is just downright inaccurate; you are still fully able to express a view/take prop positions while trading in the sellside, with the only 2 main caveats being that you have to conform to certain risk limits, and you must be ready to make markets/quote prices to clients. 

Take FX for example, let's say a client trades a large sum of GBPUSD through your platform, you can choose to express a view through a large variety of ways. You can hedge the risk out immediately through the market; you can simply choose to carry that risk on your book if you have a view on GBPUSD; you can also choose to do proxy hedging such as by trading the highly correlated EURUSD, etc.

Especially given the use of proxy hedging, you have a vast number of ways to express a view and take (essentially) prop positions, and this is just spot FX; derivs will add even more dimensions to this, and other products like rates/credit also give you more liberty to do creative things.

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  • Intern in PropTrad
Aug 15, 2021 - 7:45pm

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