Flow Traders vs GS Trading

Decision should be easy if you know what you want. You take way more risk/var and higher chance of being cut at a prop shop like Flow/IMC/Optiver, but your comp starts higher but caps out earlier. If you want to go back to bschool or consulting/PE then obviously GS.

I'm early into the prop route (1-2 years in) but I'd say it really depends on your skillset/what kind of exits you are really thinking about.  At GS from my experience interning and having friends at there, you are probably going to have to deal with a lot more bullshit than you would at Flow.  5 years in at a top prop shop, you could be making high 6 to 7 figures.  While 5 years in at GS, you would be an associate making around 220k? slightly more? idk.  I would disagree in saying it caps out earlier.  You can make SVP to MD level comp way quicker.  If you are concerned about exit ops, I'm sure you wouldn't be staying till MD.  If you want more traditional finance exit ops, you should go to GS depending on when you want to exit.  If you want to go to tech, I would go to Flow (if you have that kind of skillset).  

Aside from the standard prop vs bank stuff, do you know which desk(s) at GS?  I know this forum swoons over their brand name, but some of their desks are tier 2/3- on the street.  I would definitely want to know specifically what GS desk before trying to make this decision.

I had a similar dilemma before I accepted a s&t SA offer at a GS/JPM/MS.

A lot of the advice I’ve received from mentors were already stated in above comments.

In terms of comp, a good way to think about it; taking the prop offer is basically taking a call option on yourself, you could either make more money early on or not perform and get cut in less than 2 yrs like. At GS, you’d get a 2yrs to learn before even trading a book and if you are on a good desk it’s harder to get fired.

You should also think about what product you would want to trade. Not sure about flow traders but a lot of prop has a focus on equity as opposed to traditional bank products such as fixed income. If your top choice at a bank would have been say equity derivs, then go for prop. If it’s not, then going to the bank gives you more optionality to explore what product you would thrive in. Skillset between credit, rates, energy is very different so you can pick what fits you best.

Flow is a great firm, but Flow is not in my opinion in the same league as the t1 shops (Citadel Securities, Jane Street, Optiver, Five Rings, etc) in regards to compensation. I would say a T1 prop firm is an obvious choice over any bank, but this decision is a bit more nuanced. Flow publishes yearly results and the number of employees who made over a million each year, so take a look at those numbers if you want a rough idea of their profits and number of traders clearing the 7 figure mark each year.

That said, I think if you have confidence in yourself and your own abilities, you should take Flow. At the end of the day, you will certainly make more there (assuming you are successful at both GS and Flow) but will have worse exit opportunities, as that is the nature of prop trading. If you are risk-averse, GS is definitely a safer option. Also, Flow focuses on ETPs, while you might get the chance to work with a more diverse array of products at GS if you value that.

An earlier commenter said something about prop trading pay capping out below S&T pay. I firmly disagree, barring people who make MD on the sellside. A successful prop trader at a solid shop will be clearing in the high 6 figures to low 7 after 5 years. I agree that at the truly high ranks (MD+) sellside pay begins to outpace prop pay, but the probability isn’t that high that 1) you make it to MD and 2) if you were good enough to make MD+, you probably could’ve made a ton in prop and just retired early.

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Depends on what you want.

I would choose GS over Flow Traders any time of the day. A good trader at a bank has a couple of big advantages. First, base and first year bonus is higher. Secondly, stability of pay, do well and you get paid decently (less volatile then flow but not much worse). Thirdly, you have a lot more outs, no non-compete, better connections to the sell-side. Also as a good trader at a bank you can make 1mm a year after 6-7 years and make that consistently. At Flow you can make a killing but if the firm doesn’t perform you won’t get paid. So choice is simple. Citadel/Jane is a different story altogether. Those I would choose over Goldman any day of the week.

Obviously not many people have worked in prop shops like Flow, and some answers above are simply not correct. These trading firms are Market makers, that is the business logic is market neutral and tries to profit from bid/ask spread instead of directional bets. Maybe more directional bets in options space, but with Flow and its core business ETFs, almost every trade is hedged perfectly, and it is entirely riskless. Correspondingly, the pnl can be small. The company's performance depends entirely on client flow, no flow, no pnl, it is really not up to a trader to make a big difference. 

So it is not true that at Flow Traders you will take more risk and could potentially lose money and get cut. Your main responsibility would be to run an established desk, and learn the (very simple) pricing models (at least for ETFs). A lot of time everyday is spent on daily operational stuff, chasing mid office, reporting trades etc. I would say if you trade something very illiquid at a bank you potentially take a lot more risk than at Flow (hence better chance to prove your trading capablities). 

That said, Flow has been moving into some other areas, their crypto business has seen some good periods when btc is high, but most traditional desks are finding it harder and harder to make money. 

Had to make a similar decision a long time ago.

After meeting the people, I just didn't want to become like the prop traders I met. I remember asking a trader who he talks to every day and he mentioned 1 quant, 1 MO person, (both sitting in the same row) and an anonymous chat. I also didn't see anyone older than 28 and found the churn a bit concerning (people who were let go seemed to face a big drop-off in their career). This made me a bit worried about longevity.

The experience I had at a bank was way more social (talking to 20+ different people inside and outside the firm daily), team-based, and gave me a broader sense of markets / investing than I think a single ETF arbitrage strategy could have.

I unquestionably left money on the table, but don't have any regrets given what I was able to learn. I'd recommend you go with your gut as you can't go wrong on something like this. Congrats on having a rich man's dilemma.