Is it worth pursuing a career in trading in 2017?

Out of curiosity, what does a trading clerk do in this day and age?

What does your average day look like?

A Liar's Poker environment hasn't existed for over 15 years

Thanks!

The amout of prop desks that would spring up because of the removal of The Volcker Rule would be minimal. Prop trading is too risky for institutions, shareholders don't like it, so I wouldn't count on that.

Prop shops do not fall under limitations/regulations that investment banks do. Prop shops will continue to thrive so long as they keep up with technology and employ individuals that align with those ideals.

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Damn you and your logic!

For many illiquid products, it won't be automated but simply gone. Banks are surpressing business that they consider to have low return on capital.However,some big banks will keep these desks and you can still make decent amount of money now. But if they let you go,it will become harder for you to find similar job.

Depends what you want to get out of the job and what you enjoy doing.

Will it be a life long career that you could do for 3 or 4 decades? Definately not

Is it a big career risk? By definition yes.

But in the grand scheme of things it doesn't really matter. People rarely stay in th same industry for their entire career. I've seen investment bankers burn out after 3 years and lawyers just get fed up of their jobs and move to completely different industries.

At least with trading you have potential to be rewarded (for a few years) and if you aren't very good at it (or dont enjoy it) you will know quickly and can change careers after 1 or 2 years instead of having a midlife crisis 10 years down the line. (On top of that you can blame it on the algos when your new employers ask why you changed industry instead of having to admit that you sucked at it).

I personally knew that it wasn't a growth area but decided to get into trading anyway with my eyes open to the fact that every day at work could be my last (not juse at the company but in the industry as a whole). That's why I worked for 3 years in project management prior to going into trading and kept in touch with old colleages so that I am hedged and have more options than 30 year old who had only ever been trading.

I also don't have a live lavish lifestyle and have built up a decent amount of savings.

When I started the head of desk said the market is as quiet as he has ever known it and frankly it has been downhill ever since. But 7 years on I am still here and have survived as many rounds of redundancies.

Like any job (or even business) you need to adapt and create new strategies models to beat your competitors.

I don't do any coding have the hours are great. I could have have made more money in a select few other industries but would have worked much longer hours. Trading isn't about the hardest worker's but the smartest/luckiest and past a certain point, money (especially once it is taxed) isn't as important as say having family and a healthy lifestyle.

Even if I lose my job tomorrow I won't have regretted it but had I turned down a trading job 7 years ago I probably would have spent my life wondering "what if" and thought I could have turned into a billionaire.

Trading is stressful, hard and not for everyone.

You don't have to go all the way back to the 80s... S&T was the fastest track to wealth in the years leading up to 2007. Those times aren't coming back any time soon.

Weybridge:

More vanilla the asset, more quickly to be replaced by quant/algos. If trading is absolutely what you want to do, focus on complex assets and build your programming skills as you progress, since as these models and technologies develop further, less human intervention/decisions would be needed..just my 2cents

That's a really good point mate.

Wouldn't mind having some insights on the topic as well, if anyone has the time and knowledge to answer to the fellow student above. Yes there are many websites and stuff available, but it's always great to have up-to-date information and be able to follow an on-going conversation.

trading is a great career if you can get in...but it is extremely competitive....so go ahead and try, but also have a 2nd career choice that is equally compelling (investment banking and tech are 2 career paths that would utilize the same skill sets). You are talking about entry level positions 4 years from now...You will need to be strong both in math and programming.

I would suggest taking courses in Economics Statistics Programming Finance

Do not go to Baruch, cannot comment on Rutgers. Typically you will not get into FO out of Baruch unless you are absolutely a top student in your class, and they won't help you out much either. If you are trying to stay in NY/NJ and really want a chance with trading/ib do a year or 2 at a community college and then transfer to Fordham, NYU, Cornell (tough) maybe even Binghamton/Hofstra would be better. Also consider majoring in Math, and learning finance/econ on your own or in minor and elective courses. Baruch is a great school for accounting and middle or back office finance.

The problem is FI trading head counts are becoming less... Though as banks trading are becoming more agency, FICC execution services will grow in future.However, probably not as profitable as structure credit trading.

Trying to scalp direction and sudden movements manually is mostly dead... yes. That doesn't mean day trading is dead. There is a ton of room for volatility arbitrage that is not even close to being fully realized and is, in part, done intraday.

I guess the problem is for those daytraders who specifically try to get extra small profits, and because of HFT, those small profits are tougher to catch, but this is such a broad explanation that I doubt it applies to all systems.

HFT = Day trading

ive put up 4k+ past two days. oorah.

Shorttheworld,

is Trillium still part of Schonfeld, and if yes, have you actually seen people leaving after his July letter ?

Also, based on your experience, have you noticed any difference in regards to level of difficulty of making money since you first joined the company a few years ago ? Have you noticed any increase of weird, unexplainable, out of the blue movements in the markets (other than May 6) that can only be associated to HFT computers ?

Because I suspect the answer would be no, that is why I am surprised that Schonfeld, who should know a thing or two about the prop trading industry, would come up with such letter, unless he's using the HFT reason as an excuse to hide problems of his company in particualar.

Thanks !

daytradings dead but value investing ain't, providing u kno where to look ;)

From what I've heard, the conversion rates aren't that much lower for S&T - about 50-70% depending on the bank, whereas banking is usually 60-80% or something. I'm not sure, but I don't think it's that different. Fewer SA are hired though for S&T.

Volcker Rule and Basel III don't affect proprietary trading firms. On another note, it doesn't make sense to me why so many people want to trade at banks.

@peyo212 Thanks for the reply but I was mostly interested in the perspective of trading at a bank.

If you're at one of the top prop firms, DRW, CTC, Jane Street, SIG etc. all of the training programs are between 1-2 years, and it does vary by firms, but the education is great. In terms of salaries, the base at top props is around 85k, with JS and SIG around 100k. I have not yet worked at a prop firm, but I would assume bonuses are relatively similar. Hours at prop shops are 50-60 per week.

I think it is more of a personality type decision on which route to go. If you're trading at a bank, you're working more with people and developing relationships, whereas at prop shops you're spending most of your time in front of a computer and working with the guys on your desk. The down side of prop is the skill set is less transferable, unless you have a CS/Math background (which most prop traders have anyway).

In my opinion, and from speaking to people both on the sell-side and buy-side, I think banks are a better place to start. I think most people who go into trading(myself including) have aspirations to move to the buy side one day. First, banks are a safer choice. Hedge funds and prop trading firms seem to have a tendency to implode. Also, banks have much more of a clear pipeline in terms of training and moving up the ladder, gaining a larger book as you go. Many people warned me that starting at hedge funds can be dangerous because they are less likely to allow you to take risk. So you end up in a situation where you've been working at the fund for 5 or so years and with nothing to show for it. Prop trading firms on the other hand can be a lot less patient with younger people and are more likely to toss you if things start getting bumpy. So for many people, their ideal situation would be to crush it at a bank for 6-10 years and then switch to the buy-side and be able to take a good amount of risk(because you already have years of proving yourself) immediately when you get there. Another reason is that you are more likely to get locked down in a particular product at prop trading shops and hedge funds whereas banks tend to give you more exposure to more areas. Also if you do end up deciding that trading is not for you, banks are a better platform to make a jump to another field in finance or to an MBA/JD/MD/whatever program. Lastly, as the person above me mentioned, you're surrounded by more of your peers at a bank and you also gain a much larger and diverse network.

Along with what everyone else has mentioned, I think it takes a unique blend of skill and luck to last in trading. While the upside if definitely higher, I think very few actually reach that summit. IBD seems more "safer" if you will in terms of compensation for time and effort. There's a clearer path that with trading.

Budfox, I think the biggest thing you're missing is that in most cases, different types of people chose prop firms over banks. On superdays I have had at the top shops this past semester, a significant amount of the people applying had done SA in sales and trading at major banks. From the brief amount of time I spent with them, the general consensus on why they were moving into prop trading was because they saw S&T opportunities shrinking (especially with volcker).

In terms of people being less patient, that is also false when you're talking about legitimate shops. As I said before, the best shops all have training programs that last 1-2 years, with the variance here being in how fast you excel in mock trading/options classes/etc. What I was told directly from the heads of the training program was that if someone is taking over two years to finish the program, thats the point where you get cut. Obviously at less reputable shops, this is different, but thats no different than what you would see at a smaller boutique bank.

You also discuss the exit opps as a major reason to choose sales and trading over prop trading. I do agree that if you're interests are not in the technical side (e.g. you want to do an MBA/JD and some point), then yes, S&T is definitely a better choice. However this goes back to my first point, the people going into the top prop firms are mostly from engineering/CS/math backgrounds, and these people can easily pursue masters in these fields if they decide trading isn't for them.

TL;DR people who go to prop firms are usually 'quanty', people that do sales and trading are more interested in the business/finance side. you can't compare apples to oranges. Each route allows you to make a lot of money and can be very rewarding, it just depends on where your interests lie.

Yea I agree, I think it definitely depends on the person. To qualify my first sentence in my post above, I think banks are the best place to start for someone like myself (I'm not a quant. I know a decent amount of advanced calc and basic programming, but I think I'd shoot myself if I had to code all day) for the reasons I gave above. Since the person was also mentioning IBD, I just assumed that the person probably wasn't looking into the more quant type fields. If i was more of a CS/engineering person and was 100% set on wanting to code, I'd definitely choose a top prop firm over a BB, especially since you can always move to software engineering or any other position that involves coding if you decide to get out of trading.

Also do you know if the people at those superdays who did S&T SA got offers? In my experience, literally all of the people that I know that got offers for S&T accepted (although I admit this is from a small sample size of ~15 people) and the people who ended up looking for jobs at prop shops, other banks, other areas in banks, and hedge funds were all people who didn't get full time offers. This may be because my schools on the east coast (are you in the midwest?) or my small sample size. I just thought what you mentioned was kind of curious given my experience.

Didn't really have the opportunity to talk that much about previous experience and offers, but I know that two of them did (one at BB, one from like BNP Paribas?). Granted the one moving from the BB had offers at literally every top shop that people talk about on here. The only reason I knew their backgrounds was because the first day we went around as a group and talked about our schools, majors, and experience. I doubt anyone would openly say they didn't get an offer, especially in front of the firm you want to work at.

Parker11ston:

it seems like it isnt the place to be anymore.

Really depends what you mean by that, and if what i take you mean by that is plain vanilla equities trading (feel free to correct my assumption), then yes you are probably right and one should focus on other (much bigger, and more lucrative) parts of the cap markets world.

While banks are showing lower FICC revenues more recently, those areas (for trading) are still performing much better than the pure equities part of the business. Of course, when i saw equities i mean eq trading, but it's hard to imagine any respectable trading desk these days that doesn't have equity derv's and structured notes which are part of the same team (or at least, working together in a certain extent).

An equities flow trader can easily be replaced by an algo (i.e. execute buy/sell @ vwap on x date) but not so easy to replace the salesmen, since they typically generate ideas. Also, while humans make mistakes many a time, when a machine makes a mistake (arguably, less often), the reported mistake seems to be more costly (a la Knight capital fiasco from last year, FB IPO).

It's hard to imagine fixed income trading being ran by machines - and I don't mean programming an algo to sit on the bid/ask of the 10year note, which there are obviously many of. Curve trade ideas, butterflies, spreads (to an extent) all need a human aspect, if not for the execution, then at least for the monitoring and constant risk mgmt aspect.

Trading itself is as old as time (bartering..) so while the past few decades have seen an almost complete progression from pits/phones to screens and hidden venues (DPs), there will likely be another progression at some point, but most likely not an absolute 'freeze' whereby noone is trading anymore and everything is executed by SkyNet.

Totally agree with zeropower.

Moreover all the markets skyrocket or plummet throughout years. Although the banking world has encountered issues since 2008, they'll keep rising even if some people forecast a new worldwide downturn within 5 years.

This question is too broad. Figure out what you're interested in as far as product type and cash vs. derivatives. Then read up on the trends for those specific interests. Then when you have precise questions, come and post. You need to do some research and search this site.

Is it a lot harder to succeed now and there is a lot less good seats everywhere. But the machines have not fully taken over, quants/algos do not like to lose there is still many areas of trading that are a zero-sum game where one loses.

That all said, I would rather probably do corp strategy or hands-on PE/VC stuff instead. But I had/have little interest in banking and would not want to start there.

This is an interesting question and I am curious about the answers. If I may add another question to the original post, if you would not go into trading today, where would you go instead?

Having a trading seat at a BB is still a great seat to have -- just listen to some of the stories from veterans about how much they appreciate the seat after seeing all of the consolidation in the industry. As stated above, there are not as many seats as there used to be and the better seats are harder to get. We all know that cash equities isn't the place to go right now (and so do the banks, which is why they aren't hiring 22 yr olds for block cash equities trading). Still a lot of room in FICC (IR derivs, EM, mortgages, credit, etc) where you can stand out.

Just my 2 cents though

Like many of these folks said machines are replacing people on the cash equity side, but structured credit is a world where the majority of the deals are created by humans and sold over the phone.