How dead is trading?

My dream job is in trading. I would kill to work at a prop shop. Will there be jobs in 5 years? I'm going to college at a non target liberal arts. Right now I'm thinking I want to double major in Accounting and Economics. Any advice on the jobs or college majors would be much appreciated!

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Comments (74)

Nov 24, 2019 - 5:51pm

How much math do you need. I'm a senior in high school right now taking Calc 2. I need 5 more credit hours at my college to pick up a math minor. Would it be beneficial to keep accounting if I wanted to fall back on IB?

Jonah Graham
  • Analyst 1 in S&T - Other
Nov 24, 2019 - 6:51pm

Realistically, I'd say discretionary trading has 10-15 years left before it's completely gone, and no one is going to get hired without a programming background

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Feb 24, 2021 - 6:40pm

Not true, if they are a programming thing, why these funds are not filled up with Asian foreign workers that can program well and cheap?

Trading and investing nowadays still very fundamentally driven.

Most Helpful
Nov 25, 2019 - 4:10am

Trading is not dead at all. It's just that less people are taking all the inefficiencies. I'm still in the process with some prop shops but if you dont have a quant background or you're a 0.1% finance/economics student, you won't even get past their CV screening.

If you are really crazy about this stuff, I'd recommend following CS/math in college, playing tons of poker, keep your math sharp, be a socially chill dude, and play competitive video games.

Or... if you're lucky and you don't want to do all this crap... If you're a woman and you show some slight interest in trading in your final year at uni you'll probably get a place at a BB (sadly not even exaggerating).

Dec 8, 2019 - 12:18pm

Agree. And I felt like the algo/machine takes over human trader rhetoric is so overrated. Some media/people prob just feel cool to say oh that move gotta be some algo. True that today's market is very different from it of the 90s or early 2000s but I don't see machine taking over anytime soon. Algo is great with execution. Quant fund hasn't done so well because imho quant strategy is not as adaptive/flexible, or say that it would take big effort to alter quant strategy.

Anyways follow your passion and what pulls you out of bed. Nothing will just die overnight and even if it does, the substitute won't be black-or-white different. And eventually working in any industry need to be adaptive to changes and keep learning given the current world we live in and the amount of information flowing around everyday.

Feb 24, 2021 - 6:46pm

Trading is NOT about programming and math! If that's the case, why don't Wall Street outsource trading industries to India and China? They have a lot of well educated smart people there for a very low cost.

Nov 26, 2019 - 9:35am

Wood drastically underestimates the impact of social distinctions predicated upon wealth, especially inherited wealth. You got that from Vickers, Work in Essex County, page 98, right? Yeah, I read that too. Were you gonna plagiarize the whole thing for us? Do you have any thoughts of your own on this matter?

Few players recall big pots they have won, strange as it seems, but every player can remember with remarkable accuracy the outstanding tough beats of his career.
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  • Associate 2 in CorpDev
Nov 26, 2019 - 2:28pm

Hate to break it to you hardo-boi, but I hadn't come across said material.

The odds of a 3-word expression "dead as wood" occuring in more than one place / instance might be beyond your comprehension, but that's ok son - get back to your books

Nov 25, 2019 - 6:31pm

Less seats but I've been some record years for some desk these last few years. Less trades to be had but they tend to blow out more. So meh take that with a grain, products are cyclical in nature so I wouldn't be one to say "trading is dead".

Nov 26, 2019 - 8:57am

Almost embarrassed to quote this, but it always stuck in my head...I would encourage you to read it if you have not already:

"After the markets closed Vinny would get into his Cadillac and drive out to his big house in Long Island. Now there is the guy called Vladimir who gets into his jet and flies to his estate in Aspen for the weekend. I used to worry a little about Vinny. Now I worry a lot about Vladimir."
― Michael Lewis, Flash Boys

Moral of the story is focus on programming, math, probability. Accounting won't help at all. There are HFT guys who had zero finance background, solely programming, who are making more money than any trader at a BB.

For what it's worth, I work on a trading desk and the senior guys are on the phone almost everyday giving guys they came up with their condolences after they were let go.

Nov 26, 2019 - 11:13am
Lester Diamond:

Almost embarrassed to quote this, but it always stuck in my head...I would encourage you to read it if you have not already:

"After the markets closed Vinny would get into his Cadillac and drive out to his big house in Long Island. Now there is the guy called Vladimir who gets into his jet and flies to his estate in Aspen for the weekend. I used to worry a little about Vinny. Now I worry a lot about Vladimir."
― Michael Lewis, Flash Boys

Moral of the story is focus on programming, math, probability. Accounting won't help at all. There are HFT guys who had zero finance background, solely programming, who are making more money than any trader at a BB.

For what it's worth, I work on a trading desk and the senior guys are on the phone almost everyday giving guys they came up with their condolences after they were let go.

good book...

Nov 26, 2019 - 10:08am

Before anyone starts telling about HFT fortunes please look at Virtu or Flow traders quarterly reports.

You killed the Greece spread goes up, spread goes down, from Wall Street they all play like a freak, Goldman Sachs 'o beat.
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  • Prospect in Other
Nov 26, 2019 - 12:16pm

Sorry to partially hijack the discussion, but is the drive for heavy quantitative majors (math, comp sci) also included in physical trading shops (i.e. glencore, traf, vitol).

I'd seem to think that physical commodities trading still requires a heavy reliance on building relationships with suppliers/customers.

Nov 26, 2019 - 2:44pm

trading is not dead...its just hard. There is less vibration in the markets vs 10 years ago....so being a market maker and trying to make the spread is no longer a profitable career.

Now, to be a trader, you have to take directional risk...you must synthesize all the information from the news feeds, combine that with the price action and "reading the tape" and then use your intuition, created from YEARS of studying the markets...to initiate a trade.

This is not easy, and the path is not short. Can you do it? Are you willing to put in the work and take the risk?

There is no more free money in trading....you must take risk..or don't bother.

just google it...you're welcome
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  • Analyst 1 in S&T - Other
Nov 26, 2019 - 5:05pm

disagree with this.

Is it possible to consistently make money as a discretionary trader? Yes of course it is, and I've done it for several years now. It'll probably still be possible to make money 10 years from now, but that's not the issue with trading as a career these days

The problem is that the sharpe ratio of discretionary trading is lower than other strategies, and the amount of capital allocated to discretionary trading is shrinking and shrinking with fewer and fewer seats

Nov 26, 2019 - 2:46pm

FWIW - this seems to be the case across highly liquid asset classes - equities, cash FX, IG credit, pass through/ TBAs in MBS... etc. Things like structured credit (CLOs, CDOs), HY Credit (distressed debt/leveraged loans), IG and HY Municipal bonds, and corporate derivatives are all very sought after desks that are still hiring young traders.

So is sell-side trading coming back to how it used to be? Probably not, but if you're smart with the desk you pick (if you can), then you can have a great career in sell-side s&t.

Further - a general rule of thumb is the more liquidity there is, the more trading data points there are. The more trading data points, the easier it is to build a machine learning program that can figure out the expected value of that asset and price it accordingly. Notice all the desks I mentioned that are fine are the ones that have assets that trade once a day (some leveraged loans), once a week (some structured notes), and once every few months (some HY Municipal Bonds). How on earth would a computer find the price of a bond that hasn't traded in 2 months? Bingo, that's why you still need traders in those seats.

Nov 28, 2019 - 11:34pm

As someone who got into a value-oriented strategy a few years back (at the start of my career), I have this to say: value investing is not dead, will never be dead, as long as humans run the marketplace. This also includes ML programs developed by humans, with human biases and hence shortcomings.

I was able to literally more than double my value portfolio in a span of 3 years. Granted, it's not much compared to some HFT returns in say crypto or whatever, but it's literally low-risk high-reward return with just 7-10 well-researched stocks. I was able to beat my risk portfolio, which is essentially money invested with a leading quant HF, by a significant margin.

I just don't see the arbitrage opportunities in the market anymore. Quant HFs have essentially dug their own graves by making the markets more efficient with new technologies. The rest of the grave has been dug by stringent regulation and vigilance. Unless regulation weakens significantly, I doubt there might be another opportunity for quant funds to exploit market inefficiencies as much - unless they introduce a few irrational market bots into the market themselves. I can see weakened regulations and huge budget deficits causing the next downturn, but even then there won't be a major opportunity such as the GFC for quant funds to capitalize on, since the volume handled by quant funds is higher, hence the market corrects itself more often than not.

Discretionary strats apart from value are long dead. Computers can do the same jobs much better. Now that's a dead end.

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."
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Nov 29, 2019 - 6:54am

Checking the numbers, RenTech has had lower returns than before (8%) in recent years. So there's certainly a case for Quant having faded out - for now.

That being said, if quantum computing or a similar innovation of massive impact were to be developed and implemented, I can see a resurgence of quant strategies coming to the fore once more - and a more efficient market as a consequence, reducing opportunity for quant funds further in the future.

Berk has faded a lot in the past decade though. Buffett still lies in his old world blue-state mentality, and is increasingly out of touch with the markets.

GoldenCinderblock: "I keep spending all my money on exotic fish so my armor sucks. Is it possible to romance multiple females? I got with the blue chick so far but I am also interested in the electronic chick and the face mask chick."
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Feb 24, 2021 - 6:34pm

HFT have no future. Here is something you need to know about Wall Street, if I don't get it, you neither!

Many Wall Street companies that are jealous about HFT return are working together to diminish this industry through regulation.

Nov 29, 2019 - 12:03pm

Dumb question, but when people say "trading is dead or dying" does that apply to the sales side as well as they aren't the ones pulling the trigger rather they are pitching the products to clients

Array
Nov 29, 2019 - 1:13pm

What people fail to understand, is that sales is so much important than is let on on WSO. When the traders have a ton of axes, it's up to the sales to understand who in their coverage is going to like what. Do they want to buy outright? Do they want to swap and pick a few BPS? Do they want to extend or shorter their duration exposure? At a BB, when you have a ton of clients, a good sales knows who wants what, and when. This makes both the client happy, since they're getting offered or bid on things they care about, while it also makes the trader happy since you're helping them move their axes. Win-Win. Booyah.

  • Analyst 1 in S&T - Other
Nov 29, 2019 - 3:21pm

In a perfect world this is what sales is supposed to do and how they try to justify their high pay to management.

In reality, 90% of the sales people i deal with on the sellside are worse than useless. They're overpaid price monkeys who relay price requests to traders, and occasionally blast out some axes or commentary, and booking trades. I end up trading more frequently with the banks that allow traders in the chats directly since the prices usually come much faster.

Nov 29, 2019 - 2:01pm
jonahdgraham:

My dream job is in trading. I would kill to work at a prop shop. Will there be jobs in 5 years? I'm going to college at a non target liberal arts. Right now I'm thinking I want to double major in Accounting and Economics. Any advice on the jobs or college majors would be much appreciated!

First, I'm curious as to how you know prop trading is your "dream job" and why specifically. It seems like you would have very little experience doing this, given you're supposed to be in school all day. But maybe you do.

Second, I know there are a lot of young kids on here giving advice to other young kids. In this case, I suspect it's happening again since a lot of people chimed in about "trading"yet are talking about totally different forms of trading. Market Making, Execution trading, Agency trading, etc. are not what this guy is asking about. He is asking about PROP trading. Prop trading is generally 1) discretionary shorter term/day trading mostly based off technicals, 2) some form of arbitrage pretty much using computers, or 3) a high frequency strategy basically front running retail trades and/or following trends or momentum and riding them.

The future is definitely in some sort of computer programming based, as the last 2 forms above indicate. You don't sound like a quantitative/programming guy at all. My guess is you want to be a discretionary trader. I'm sure people can still make money doing that. tehcnicals and charting works until it doesn't. Patterns can create opportunities but now that computers with AI and machine learning exist they are quickly taking that profit since you'll never be able to act as quick. There's always going to be someone that can find the next trick/chart pattern/technical analysis that makes money. Question is how much, for how long, and will anyone give you the money to trade vs the other strategies they can invest in.

So is it dead? No. Is it truly a relevant career anymore? Probably not and less so day by day. But again I ask myself if you've actually learned anything about what you claim your dream is. For one, I can tell you prop traders, and certainly talented programmers, are 99.99% of the time NOT the same folks who care about or can be successful in IB, yet that's your plan B.

You're a senior in high school! Take your time and figure out what you're good at, what type of learner you are, what your style of work you excel in, and what specific type of pressure you thrive in (if any at all)...… If you're a very intellectual/academic person who is very analytical and thorough with their work, nearly all forms of trading aren't for you. If you don't mind downtime and don't get frustrated when you don't have every minute filled, then maybe consider banking. If you don't like being put on the spot and asked to answer things with limited information, maybe trading isn't for you. This is what you need to learn about your own personality and style so you can find the right career path to thrive in.... not just chase a romaticized idea of a career, not just show up X days a week and power through each paycheck/bonus period.

Nov 29, 2019 - 3:30pm

I appreciate this, thanks so much! I will continue to investigate the investment banking route. It's hard to find people to shadow especially at my age. Thank you for the advice.

Jonah Graham
Nov 30, 2019 - 4:42am

Trading = provide liquidity, i.e. market making
Liquidity -> Automate execution (kill flow execution) -> Tech / programming + infrastructure needed

'Prop' Trading = take liquidity to arbitrage information inefficiencies
Information -> Speed up (tech better than people)

Is trading dying?

Better question - what is the maturity of the product (i.e. amount and distribution of market participants, fragmentation, technology and infrastructure, volume and size of transactions, volatility)?

This gives you a proper answer.

Anything on an exchange I don't see as needing a trader. Broker driven markets will need someone.

Feb 24, 2021 - 6:25pm

You are absolutely right. That's why I think equities are a terrible space to be in trading, even for equity derivatives. It's a product that heavily commoditized. You can trade stock option at home but not bonds. Bonds are under monopoly of broker dealers.

Feb 24, 2021 - 6:23pm

Agree with you. Even though regulators nowadays are foolishly and maliciously attacking Wall Street, Wall Street will still win. Tax hike, more regulations, bonus cap, stricter risk capital requirement... you name it! None of these will threat Wall Street. Wall Street will win in the end because we always able to find a way bypass it.

  • Intern in PropTrad
Dec 6, 2019 - 12:34am

I know there is the A I Utopia that everyone keeps going on about, but I always think of what I thought 2015 was going to be like when I watched Back to the Future 2 as a child in the 90s.
The over-estimation of AI is unfounded imo & I am still waiting for those flying hovercrafts you promised us scientists.

Jan 22, 2021 - 12:02pm

I can't say that trading is dead, and will die shortly, I think this is a good way to make some additional money. This is my second source of income but I have friends that make money only on FOrex Tradings. I started to learn to trade with them> we tried to make our own patterns and after some time we realized that it is easier to find candlestick reversal patterns . It is hard to create one and also it needs a lot of time. The most annoying is that you have to spend a lot of time analyzing different graphics and making a pattern of their behavior.

Feb 8, 2021 - 5:15pm

Not sure about what's actually going on at banks but the narrative here is that trading is always "dying" because BB's keep paying like dogshit and firing useless middle managers that are "experienced traders". The actual reality is closer to a world in which top trading talent is getting paid hand over fist and top trading firms are expanding exponentially into new markets, narrowing spreads and increasing volumes while driving weaker competitors out of business. Currently at one of those firms and can confirm that we absolutely smashed last year and are having another great year, paying our traders grotesque bonuses and planning to double in size over the next few years. If you aren't intensely competitive and able to adapt quickly you shouldn't do trading but if you can hack it and start in the right place its goddamn amazing. 

  • Junior Trader in PropTrad
Feb 22, 2021 - 6:13pm

Definitely at one of the quant prop shops (Jane Street, Citadel Securities, Optiver, SIG, IMC, DRW, etc) and I absolutely agree with the above comment. Grotesque is a great word to describe the size of the bonuses my firm handed out as well.

Trading isn't dying. It's just changing.

Feb 24, 2021 - 6:09pm

Same apply to BB. I rarely see people can switch to a profitable trading desk if they weren't there at beginning. Part of reasons these desk pay well is they are small, hiring more people won't necessarily increase more P&L but definitely will make everyone's bonus smaller.

Feb 24, 2021 - 6:19pm

Agree. It's all about if you can get those hot seats or not. My friends have better GPA and stronger passion about market than me, if they could get a trading seat they may do better than me, but the fact is they couldn't. If you can't secure a seat as a fresh grad, leave this industry ASAP! Don't waste your time, you are unlikely to get a good trading job later. 

Feb 23, 2021 - 11:27pm

i know very well the accountant for a number of quant funds...2sigma, etc...they are all struggling...humans outperform machines during periods of time that are not "the norm" of past years.

just google it...you're welcome
  • Junior Trader in PropTrad
Feb 24, 2021 - 1:38pm

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