Hi All,
I'm looking to join the buy side, probably doing execution trading. I know, it's not very sexy. I've worked at several sell side trading desk and got recently laid off and now I'm stuck at a major bulge bracket in NYC, as a TA, on their cash equities desk, support their program, electronic, single stock and convertible desk. I want out... I was wondering if someone can recommend me some books to read up on execution trading... I bought "Optional Trading Strategies" by Robert Kissell and it's talk mostly about TCA and not so much on strategies. Any insight would help?
Hi mswoonc, the silence is deafening, sorry about that.... Any of the threads below helpful?
No promises, but sometimes if we mention a user, they will share their wisdom: oSnap sheffieldisa aceon
You're welcome.
Turney Duff's book about his time at Galleon and Argus gives a pretty good view into life as a HF equities execution trader. The roles are reasonably different day-in/out depending on asset class - since you are not seeing flow/pricing it daily, it can be significantly harder to identify a good price even on a liquid asset. In many firms, you (or the larger trading team) has soft dollar responsibility and will have to balance out who you trade with/meeting quotas for research and other expenses.
If you are looking to join equities execution; a few of my friends have been let go in that space. Algorithms are getting better at filling flow and most cash equity desks are dead except for the occasional block trade. Two of my friends who made the switch came from single-name equity derivatives.
In less-liquid products e.g. distressed, the PM-trader relationship tends to be much stronger (this is my personal experience) as the PM is more reliant on the trader for market color and flow (dark market); which in turn gives the trading role higher importance instead of being a execution monkey.
I mean, cash equities execution traders still provide color, no? And I'm sure there is still usage of DMA instead of relying solely on algos all the time? I work literally next to the head of program desk at a bulge bracket and we favor trades 50K+ shares but the biggest flow we want are the risk off trades. I think there are still a lot of usage in that. I don't work directly on the program desk, maybe it's best ask him...
The reason you can't find much literature on this is because most of the value-add for a cash equities execution guy is relationship-driven, or focused on ECM-style activities. As has been echoed here, it's not a great seat unless you're coming in with shared economics at a sizeable new launch, and even then is equivalent to short career gamma. The number of credible, experienced execution guys without jobs far outstrips the number of guys in seats, and there is little/no rhyme or reason as to who trades for which fund because most PM's in the equity space are not well versed in objective metrics to evaluate execution traders, nor do they particularly value their insights as acting on short term technicals can elicit pretty difficult conversations with LPs who view them as superfluous to the core strategy.
Take it with a grain of salt, but my advice is if trading is not working for you, then you should switch out of trading. There are tons of other business lines that the skill set is applicable to if you're willing to hustle. Equity execution has an awful outlook, and the color that execution guys can provide is laughably limited unless they have extremely strong factor/risk premia and ETF flow views (and, a PM willing to act on said insights).
If you're not happy in your current role, think about tertiary careers in the industry in which you can leverage your skills.
What would be some exit opps?
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