Back in the day Trading floors were the pride of Wall Street. It’s where the money was made. Rambunctious sailer swearing yuppies with chips on their shoulder.
Then interest rates dropped… more and more and more. Does the fed fund rate even exist now?
There was always a strong dichotomy of Financial Institutions: the white shoed intellects of IB, and the edgy Traders. The Traders were in back then.
Now IB is the easier path to hedge funds even. It seems like you won’t get far in trading without a strong quant background.
Salaries are lower than IB, bonuses, for the most part, are lower as well.
Are there still good exit opps? Is this a prestigious path?
What does it mean to be a trader in 2022?
Derivatives and non linear (options) desks are your best bet. Single stock options has been huge the past two years. Traders are more like risk managers on the sell side, rarely profit from your deltas.
Field is a complete dead end.
You might have to wait 5 years and be reasonably good to get to mid 6 fig, rough times.
Surprised you said this after posting that you made 800k in a different thread. So then are you looking to exit the industry then or move to buyside?
It seems sarcasm was lost on somebody
I counter that. I think you can get to six figures for base in 2/3yrs, though despite that generally not much job satisfaction
As a S&T SA ill get paid at a 100k prorated rate this summer. Pretty sure Analyst 1s in Trading across the board are hitting six figure base across the major Sell Side banks.
Following
It all depends on what your choices are. IB you need to be razor-focused on that goal from or even before college. Or you need an MBA. It is a relatively high-commitment career goal. S&T on the other hand there are a lot more ways to get into that seat. Also, you can still get quite far in sell-side trading without being a quant. It is nice to have but not a must.
Wait, what are all the ways to get into an S&T seat? Is it still possible for someone 5 years out of college with no relevant experience?
You can network into trading from support functions (risk, tech, product, ops etc).
Does the sell-side trading without being a quant still have a good future?
It still pays ridiculously well compared to pretty much any normal job and more per hour than IBD at least through the first couple associate years. I think if you want to feel at all secure in this industry today you do want to have some technical and quantitative skills.
It's a very different path than IB and does not really draw the same type of person. If you are super concerned with prestige and just want to maximize expected comp at the expense of all else then IB is the choice for you. Personally I would rather kill myself than be an IB analyst unless they like 10x the comp so I'm happy with the path I took. If you have quantitative skills there will always be exits available for you.
Yes. Trust me when I say the "S&T is dead" trope is way overblown. It's product dependent of course, but there are still plenty of opportunities to have a long and fruitful career starting out in S&T. That can mean staying in your seat from day one to retirement to moving to the buyside.
I spent two years in a rotational program at the bank not focused in S&T but also not focused in ops. More of a project management / internal consulting type gig. I found it to be wildly unfulfilling although it was cushy and there was room for advancement. I switched to S&T as a first year analyst and have zero regrets. It's certainly more challenging, but I am way more fulfilled and feel it's opened up a world of opportunities for me, both at my BB and on the buyside.
It's certainly not what it once was, but that is more a testament to how ridiculous it used to be than how bad it is now. WSO is a very IB-focused website so unfortunately there is a lot of S&T hate on here. I'm convinced this is driven by the fact that many posters are (1) college seniors or recent graduates who know very little about how the world works, and (2) IBers who feel the need to justify their working 90+ hours a week by putting down other professions which offer good WLB with a similar growth profile.
Don't let WSO deter you from pursuing a career in S&T. I almost did and it would've been one of the biggest mistakes of my life.
do u think S&T will ever go back to pre volker?
how old r u and how much do you make?
too much
+1
Are you in sales or trading and what product do you cover? I’m in IB and would love to switch to s&t.
Besides interns and first year analysts, don't S&T guys get weekends mostly free and come back home earlier (caveat being they have to wake up earlier to go to work). Work is still work and having some more free time seems better especially on the weekends.
It's not even "besides interns and first year analysts". I've been in S&T for almost 8 years, starting as an intern, and have probably put in a grand total of 10 hours of weekend work.
Wow good to know
A day the markets aren't active is a day off from work.
Obviously varies, but i work 7-430 or 5 and haven't worked a weekend since I was an analyst. I also don’t ever have to access email off terminal. That isn't to say you aren't sweating markets off hours, though
when was a time u had to sweat markets when the markets were closed
I envy the 7-5! I found I have put in quite a few weekend hours over the years, but it's on and off. There just seems to be an infinite amount of projects to do, pricers to build, research to read, etc. all for the sake of improving your pnl. But overall I agree the hours are pretty flexible outside of market hours.
Can I dm you about some questions?
I remember hearing about the days being a prop trader at a BB was the entry and exit option. They were at the top of the hierarchy. Would love to see the volcker rule repealed.
I envy my S&T friends, we make the same amount and they have full use of their weekends + most evenings.
Also, an under-appreciated aspect of the fewer hours is that if you want to be a rockstar, in S&T you can dedicate a few hours free-time in the evening / weekends and separate yourself from the pack. In M&A, its incredibly hard to start pulling marginally extra hours after a 2am or spend limited free time on the weekend to building out knowledge of LBOs as opposed to catching up on sleep.
That being said, I moved from a cap markets team to an extremely busy coverage team so maybe I am a masochist...
How do you become a "rockstar" in S&T? Do you mean spending more time on building client relationships or doing more research or something else?
S&T is more of an eat what you kill environment. Depends on the bank and desk. The more you kill, the more you eat.
From what I have seen from S&T peers. At the very beginning, just taking more time to learn your product, technicals, and how the space works. That leads to more responsibility which leads to more client interaction -> positive cycle perpuates until you can be very young and have your own book / clients.
Print a ton of trading PnL or sales flows
Can I pm you about your transition from cap markets to coverage?
Sure
S&T is still an incredibly lucrative industry with great comp and very good WLB for finance. That said, you need to understand the future trajectory of your role in the space. Vanilla linear stuff is and has been on the way out for the better part of a decade. Look at the margins and levels of autmation in cash equities, or FX cash, or vanilla IRS. Basically, the lax bros who could trade Delta One in 2006 and the sales bros who got by just getting their clients high or laid are dinosaurs in the space. There are fewer people that are going to be needed in S&T, but the median comp will be flat to higher on a per person basis.
Instead, the things that matter are understanding where the edge in whatever you're trading is. For a bank, that means finding ways to cleverly leverage the balance sheet and managing risks that are bespoke or at least nontrivial to get out of. That means a lot of e-trading and derivatives. You don't need to be a math genius or anything to do it, but you have to understand where the business is heading, and position yourself well for it. The most important trades you make are (1) your life partner and (2) the desk and role you pursue. It's just kind of fucked up that you have to commit to your desk so early in your career.
As far as comp and QoL, my range since late VP thru director has been 700k-1.5mm all in and I'm working probably 35-40 hours a week. I get weekends off for the most part unless there is some major geopolitical headline (but even then, trading during those times is more fun than anything else I'd be doing anyways), and I have the time to have a life in the evenings. A big part of this has been actively working to build systems and business lines that didn't exist before, automating a lot of the BS, and outsourcing stuff to the junior guys when they show the competence and drive to not just do it, but do it better than I could. This isn't to say I coasted my whole career - I still spent 60+ hours a week as an analyst and associate but focused on learning as much as I could while also trying to understand how my boss and other senior guys approached their thought processes, and how they prioritized stuff.
I'm sure there are a lot of guys in IBD who have a similar promotion history and get paid and extra $100-300k a year than me, but I wouldn't make that trade in a million years. I make way more than enough money to support my lifestyle, have the freedom to plan my nights, have healthy relationships with my parents, gf and friends (who all have "normal" hours), and have an incredibly fun and interesting job. I realize I'm very fortunate to be in this position, and given how many people in my analyst class are no longer in the industry (upwards of 80-90%), there is definitely some survivorship bias at work here, but there is definitely a path to a successful career in S&T.
Really great write up. Mind sharing what product you trade? See you mentioned derivatives. Are you using them to hedge or take a directional position? Thanks so much!
I don't want to out myself, and I don't think my case is particularly special. I have friends at similar levels in credit, rates, commodities, and FX, and the experiences are broadly similar. In terms of derivatives, my primary role has been as a market maker in derivatives (think non-linear stuff like options, exotics,...etc), but I need to be able to wear a linear trader's hat competently if I'm covering. Over time, my responsibilities have expanded a bit as well, so I spend some more time on electronic trading, as well as time hashing out more high-level strategy and objectives with senior management in my asset class, as well as in the markets/securities group as a whole.
keywords “80-90% gone”… that’s why for most people IB is better. gotta crush it/be exceptional to make it in S&T AND be on the right desk/firm. It’s just a riskier path for similar reward + great WLB
To be fair, how many analysts who start off in M&A proceed to stay their entire career in BB/EB IBD or MF/UMM PE, prob 10-20% as well.
what are your thought on joining a credit desk like distressed or high yield early on in your career?
It's hard to give a definitive answer because it depends on a lot of factors:
1) the specific firm - how strong is the team you're on? If you're joining as an analyst, how many guys are above you on the totem pole? How likely are they to leave and open up space for you to advance?
2) Credit is amongst the most primitive asset classes. Not in the sense of talent, but because the market for a long time was a series of bilateral trades along with bespoke covenants of different underlyings, and low liquidity it has been behind on tightening it's spreads and creating a robust centralized exchange. Although these sort of exist now, I think the big trend going forward will be standardizing products. If you think there might be a niche you can get in on in that space (or develop a new business, like volatility trading) I think it might be a good spot.
Are there any decent s&t roles outside of nyc and sf?
I think there is minimal trading in SF. There are some sales roles in SF, Chicago, and Dallas but it's sporadic.
Outside of the NY area your next best bets for bank S&T are doing energy in Houston, or working on some niche product in a satellite office in Chicago or Boston.
Sales guy here, getting the clients laid is still the best way to get trades done but totally agree with everything else you said. There is a pretty big element of randomness in this line of work and being in the right place at the right time can launch your career and being in the wrong place at the wrong time can sink it. If you can handle the general level of vol in your career and you have a bit of hustle you can make a very nice living not working all that many hours.
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student thinking about going into S&T- why do you say that only 10-20% stay in it?
Super helpful write up, thank you for doing this. Are you at a BB? What are your thoughts on less recognized non-BB banks such as TD Securities for a career in S&T? Thinking the play there would be to try to join one of their more esoteric niche groups that they do well in and either move up or try to lateral to a BB. Thanks again!
Hi - can you talk about career progression within S&T? i.e. how long to make VP, then D, then MD, etc?
Really comes down to your personality and skills, I could never do banking. My friends who did banking were just wired a totally different way. PE possibly cause they allow slightly more freedom of thought...but PE doesn't hire anyone but ex-bankers for a reason haha. Then this whole banking --> PE --> HF path people look to do now I do not think is at all like traditional trading so again would be a different personality. Though I have known people in those style HFs who can cross over somewhat still think fits a different person.
PlsFthx, I think spoke about a great WLB but seem to have over glossed the "stress part" but you can see as they said sometimes the stress is more fun than anything else you doing...again certain personalities it fits. My WLB or friends similar situation or even those older...I have worked many weekends in my life if needed some quick analysis or only time to build a specific model. But, I have also worked many 3hours days, I have worked from the beach, I have worked from kids daycare, I have had weeks I did not sleep, I have had weeks I am playing ps5 to chill 2 hours into the day when I know market is doing nothing. I have friends who have taken off 3 weeks with zero care.
I truly think bankers have higher earning potential in general now solely cause their job is so process based now and the former "sales rockstars" in "S&T" has almost fully switched to banking, including the CEO of Goldman role hah. But S&T if your personality fits is by far still the easiest area of the industry where you can set your own lifestyle/hours.
yo, can you PM me. general FI S&T question.
This is a really difficult question to answer. Let's simplify it into two components: 1) risk/reward of the seat and 2) the actual job itself. Note that I think 2) is vastly more important than 1) but since you're going to cover your ears until I talk about comp let's get it out of the way first.
1) risk/reward of the seat -
Stop thinking in averages. Think in terms of distributions. IB makes more, on average, than S/T, but the variance in comp is far, far higher in S/T than IB. At the beginning of your career (first 2-3 years) your comp will be in a really defined band and the bankers will take home more than you do. Past that stage, S/T becomes a total eat what you kill environment, and so the distribution of comp is so wide that talking about averages obscures the whole story. If you think you're going to be average (which is fine - self-awareness is critical), you should 100% go into banking. Your performance will be a function of hours worked, which you will have control over. In S/T, your performance will be a function of the quality of your ideas, and your ability to get senior management on board with your ideas (i.e. committing their risk capital).
If you're solely focused on comp, you're passionate, and you think you have what it takes to compete with the best, S/T will be far more lucrative. You're also more likely to be fired.
Note that when I refer to banking and S/T, i'm also referring to the exit ops for both of those roles. Banking folks who go into PE will still have comp tracking generic beta. If carlyle pays slightly more for someone with 7 years of experience, apollo will counter. If you decide to leave S/T for a job at a fund where you take home 15% of what you make, you don't care what other HFs can offer you in base, all you care about is risk constraints and % you take home. Again, higher variance.
2) the job itself - which is far more important
It's really hard to see this in college, where all jobs in this industry are opaque, but the two jobs are extremely different. Banking is a process job. You are paid to help clients execute very complicated transactions. On an average deal, the clients aren't paying you for innovation. They're paying you for certainty of execution. Time spent matters. Details matter. Relationships really matter at higher levels, when you're bringing in deal flow.
S/T is an ideas job. Putting on a trade varies from extremely easy to mildly difficult depending on the product and market, but overall the fundamental role of the job is to maximize return for the risk capital you are provided. Whether you work 100 hours or 30 hours really isn't going to matter if you have results, and it's not like P/L is some opaque measure. If you bring in 100mm a year for the bank, they truly do not care if you're working 9:30-4pm or 7am-10pm. Process matters insofar as it drives results.
That's not to say one is better than the other; both have their pros and cons, and this is a very very gross simplification of how the two different jobs work. Traders who put in more time tend to be a hell of a lot better than traders that don't. Likewise, bankers that innovate are going to have far more interesting and remunerative careers than bankers who don't.
Pick the role that matches your personality first. If you do a good job, the comp will follow. And I didn't even get into the fact that for the first 5 years of your career your mentor matters way more than your comp does. And 10 years into your career, in either role, it's all a sales job.
Good luck out there.
Great comment. Thanks for taking the time to write it up.
What do you think about the recent huge bonuses for investment bankers (AFAIK outpaced those on the S&T side; could be wrong, though). Does your first point about risk/reward still hold true given the comp numbers today?
I think this year played out exactly as expected. On average:
-In high volatility years, traders make more (2020)
-In low volatility years, bankers make more (2021)
Again, these are averages. S/T comp is still going to be way more variable, and there were plenty of folks who took home great numbers this year.
I think the bigger question is still which role will play more to your strengths. The comp will always be there if you're good.
this is a very *good response. thanks for sharing
Thanks for sharing this! Very helpful! I am looking to make a move from a MO VP role at a BB (think Treasury) to S&T next year. What advice can you share in terms of choosing the product and the level I should move at? Given I am looking at an internal move, I am wondering what level I should move at? Do I need to go a level below? Also, any advice on networking will be helpful.
Focus on the team. You're entering something new, so your success the first six months is going to be governed more by how much and how quickly you can learn than any other factor. Figure out who you want to be your mentor and prioritize that above level and product. If you have a great mentor and you put in the hard work, you'll be much happier 1 year forward.
As a general rule, the more illiquid the product, the longer your job will be around. Again - a very general rule.
When it comes to networking, be honest and straight forward. Explain your situation and ask for advice. You'll find most folks love talking about themselves, their experiences, and what they learned. Be genuine - think about what you want from your career 10-20 years forward and trace that back to today to figure out what steps you need to take, and then reach out to the people who took those steps so you can learn. Life is guaranteed to throw you off the perfectly planned path, but its better to be thrown a little off in the pursuit of something you like than wander aimlessly. (At least, that's my 2 cents.)
Thank you for sharing this!
I think trading is still a pretty awesome career choice.
I’m 29, started in back office, managed to move internally to a desk strategy role and then onto trading.
I trade an illiquid area of IG credit and have just moved to a BB getting promoted to director as part of the move.
This year I’m guaranteed 1.4m although there is a ton of deferral.
I work 7-6 on average with probably an average of 1 night out with clients a week (0 a week in Jan, 3 a week in December) and would only come in on a weekend for something pretty big (shock election, war, terror attack). I also know I will get paid roughly 3-8% of P/L every year with a floor if I lose money for a good reason.
I still find the role interesting and engaging every day although I am someone who finds it very easy to disassociate my personal life from my P/L ( a lot of people do not).
There is also something incredibly refreshing about having a live updated quantitative metric or your performance.
Trading also removes some of the politics, if I’m well liked internally and by clients and make money you’ll get anywhere you want.
At the end of the day whatever desk you are on it’s much more interesting than flogging yourself in PowerPoint for 16 hours a day.
Sales wouldn’t be for me but if your a massive people person it can be great.
Finally to dispel a myth. Pretty much all bank desks prop trade, they just call it hedging.
Amazing! These are great insights! I am currently in MO at BB and looking to make a move to Trading. Would love to connect and get your advice if you have some time. As you have posted anonymously, I can't message you. Thank you.
Those are solid numbers, and impressive that you have been able to climb from back office to FO trading Director by 29. Can I send you a PM?
does it require quantitative abilities?
Yeah but if the hedge goes the same way in which you have risk on (long), people will see that it really wasnt a hedge? Am I missing something here?
The ultimate back to front hustle.. Amazing! At roughly what level did you make the move from BO to FO? Also, do you have a quant-ish background / education that you think maybe helped you move to the front office? Thx in advance!
Let me add a different color to the discussion. You can also look be a trader in the commodities space. Oil, gas, chemicals, grains, metals, ships, barges are not going any where. And any producer worth their salt has a trading floor to be able to optimize their value chains while taking opportunistic bets as and when they appear. Add to this trading houses who are literally the main powerhouses making these supply chains click. Squeezing out each and every drop out of every deal sometimes not exactly in the straight way. In commodities trading is alive and kicking. Is it like the hey days ? No. Margins are being squeezed every day and hence you need to hustle to make sure you are not getting eaten. Not being scared of being sneaky to make sure your needs are met while ensuring you still maintain relationships. All of that is part of the physical trading world. Hell there are products out here in the physical world that does not have any derivatives and basically you are taking directional bets based on your analysis, read of markets and rumors, learning to separate the grain from the chaff. That's physical trading.
You dont need to be a rocket scientist to do good in commodities though it can certainly help. Are you able to maintain relationships that allows you to change pre-established contracts because of changes in market due to regulations? Are you able to get favours out of people while helping them out as and when need be to make sure you come out positive in the long run? Can you see ahead of the curve and anticipate what might result if a certain manufacturing unit goes down and position yourself to take advantage of such a situation? If yes, come join the physical world.
You will definitely not become a physical trader as quickly as you might move into a trading position at a bank but that is because you need to gain real world experience because every action, every decision you take has an effect in the real world on real people. Hopefully, this helps you understand that S&T at a bank is not the only avenue if you want to trade.
PS: Fhgf Prestige. Make Money.
S&T --> F-35 pilots
IBD --> Navy Seals
You love to hate this post.
More like
IBD= Civil Affairs Support lmfao
Cool
Lol I know like 4 oil traders who made between 3-7 Mil this year
In S&T? Surely you mean in energies prop trading
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