How to be a Millionaire Trader
We all know that Wall Street is extremely competitive as it is. There are people fighting for summer associate internships at less known banks to gain enough experience in their sophomore year, to then apply for a junior summer associate position at a company like Lazard, (Investment banking wise.)
We also know that Investment bankers in their first year, usually make $80k-$150k, plus a bonus etc. The salary is capped after a while, for example you won't be able to make $50 Million in one year, by working your way up. Once you reach $500k, people usually move for bigger roles or just stay to reach the million dollar mark. (You can confirm this or prove me wrong, regardless at least we get more knowledge it helps everyone.)
Now investment bankers usually have, Economics/Accounting/Business/Finance degrees.
But when it comes to Trading, like something what Steve Cohen did, or just an average trading job in wall street, how does one attain it? I'm talking about a job that can make you $100k per day such as what Steve Cohen did, or 8 figures annually, (and I know if you don't perform you're kicked out.)
Let's say:
-University of Berkeley Student
-Junior Year
-Expert in Python, Programming Language R, Gradient Descent Concepts, and Excel.
-Computer Science Major
-
What type of internship would you get in your junior year?
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What type of job would you get after graduation?
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Is it more competitive than investment banking in terms of being recruited or getting an interview?
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How much money would one realistically make per year?
Since you already have taken the most difficult Physics/Computer Science/Math courses available already and are familiar with Python, should you forget trading and just become a Quant at a Hedge Fund? How much would one realistically make as a Quant? Please give me a payscale bracket if possible.
This thread may seem kind of obvious with some of the questions, and I sincerely apologize if these have been answered in other threads, but this is the only one I have seen that is this comprehensive in terms of asking certain questions, and I'd greatly appreciate any input.
Thanks.
If you are going to be a trader I would say go for a S&T Internship. If you cannot get one, then get something using your computer science degree and try to have it somewhere within the finance arena. There will be certain similarities to getting an IB job, high gpa, networking and having a solid resume will never hurt. They are going to want to know you are smart and can handle stress. Also, you will need to convey an interest in the markets. Competitive vs IB, I would say industry wide it is substantially less competitive from the perspective that there are pay to play prop shops and technically all you need is an account to be a trader. Now to get into GS, JPM or a large fund it would be just as competitive if not more so. Salary can have a massive range. If you are a top trader you can make a fairly sizable piece of change - i.e. prop who nails it can take home a descent portion of their profits. If they have a small year, small check. However, if you are filling retail orders at a call center expect 45-65 range. Even in that scenario you are getting some experience and will managed to get your licenses squared away.
Edit: I had removed this, check out quantnet it may be useful for your purposes.
Why are you so focused on compensation? If you are interested in becoming a millionaire working at a startup with an equity stake or starting your own company can get you there. Your chances of becoming a billionaire are also significantly higher if that matters to you.
Juniors apply for analyst positions, associate positions are directly senior to analysts and are followed by 2-3 years of work as a full-time analyst or recruited out of graduate school.
Investment bankers can have any degree, although the four you mentioned are common. Investment banking is not the same as trading. Investment banks perform financial services for their clients which include M&A, IPOs, debt raising, etc. One of those services is market making. Any 'trading' work at an investment bank will require you to spend 80% of your time market making.
'Trading' at an investment bank is not what it used to be. Traders used to flock to investment banks because they could get access to large sums of capital and earn substantial bonuses. Because of regulation and industry movement away from volatile trading returns, you won't be reaching the ridiculous sums new hires could reach in 3 years or so.
It seems like your opinion of 'trading' is heavily influenced by a few pieces of media highlighting specific returns at some arbitrary point in time. (Under no circumstance are you to watch The Big Short) Unless you do a lot more research, I think most people here on WSO would agree it would be extremely difficult for you to convince anyone you have a genuine interest in the financial markets.
Onto the 'quant' segment of your questions. You will not become whatever you imagine a 'quant' to be (the definition can vary) out of undergraduate studies. High-level quantitative roles have advanced degrees such as PhDs in Physics, Math, and Engineering. Undergraduate Computer Science and math is quite frankly a joke compared to what these programs require.
Prop shops that are quantitatively driven have junior positions available that you might want to take a look at. At least take a look at what those roles are expecting and then move on to some of the interview questions you might come across. Jane Street Capital & Akuna Capital are two names that should post some of those details.
Quanty/electronic funds that will definitely interest you include Two Sigma and Renaissance Technologies (RenTech). Check out the profiles of the people that work there. Some of these places can approach 30%+ PhDs.
Hedge funds (the 'buy-side,' where you eventually want to be, as opposed to the 'sell-side' S&T roles at investment banks) do not like to train new talent. Ehmerica is right, your best bet would be to try and secure an S&T internship. The application process for a junior summer internship at an investment bank can begin as early as sophomore summer.
There are many types of hedge funds. Read books and do real research if you're dead set on applying to hedge funds.
If you were to run your own fund the payscale is theoretically unlimited. The payscales of work at a hedge fund vary widely and should ultimately be of no concern to you at this point anyway. I don't think anyone has been left unsatisfied by the extent to which you can be compensated for working as a successful portfolio manager at a hedge fund.
Are you actually a genius and think I'm full of shit? Start trading right now and develop algorithms on the Quantopian platform. If you develop a contest-winning algorithm they will trade with it and give you money. Think the contest is rigged? You can develop an algorithm and connect it to your brokerage account and trade your own money. You can buy shares at 9:30 tomorrow morning if you want. They also have an API to connect to Robinhood where you can trade commission free and low minimum deposit.
There are also electronic trading competitions: UChicago Midwest Trading competition, Traders @ MIT. I've never been but they seem like a good opportunity to showcase talent ESPECIALLY to prop places which sponsor those events. Prop firms tend to be in the Chicago area.
BTW, nice formatting. The idiot business majors on this website have no idea how to use a computer or format information.
Just want to give a thanks to this reply, I needed to hear something like this as well.
Well said. But who knows he or she will be successful in his or her investment.
$100k per day lolz get a job at UBS that's how
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