Offer on the table - Need advice ASAP

I was fortunate to receive an offer from a top prop. shop (Trillium/Susquehanna/First New York) today.

I am also interviewing with a Commodity Trading Advisor (CTA) which is basically set up as a hedge fund (2 and 20 structure) for a night trading position. The CTA position would be trading futures contracts on the Asian/European markets therefore it would be overnight hours. I pretty much have this position set I think (I have gone through 4.5 hours of interviews and just have to meet the other partner). We kind of indirectly discussed starting dates, where to live, salary, benefits etc.

The CTA is very small (5 guys) but the two principals are extremely smart (think top 5 MBA for both) and have extensive industry experience trading futures. The two other employees are also graduates of top 10-15 schools and very knowledgeable. The assets under management are only $50 million but the firm has seen excellent returns over the past 3 years (16% on average). Last year the firm had a 13% return while the market fell apart. Basically the CTA is in a growth phase and is looking to add people and grow their AUM. With these types of returns the firm can explode to $150 million+ AUM and I could certainly make a lot over the long run.

So, how do I tell the CTA about the prop. shop offer and which one should I accept??

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Comments (13)

Best Response
Apr 7, 2009 - 4:03pm

Also, the CTA is for a systematic trading position, not discretionary (I don't make decisions regarding what to trade). Basically one of the principals created this algorithm that tells me when and what to trade.

The atmosphere at the prop. shop is very laid back (which is what I like), I would be trading during daytime market hours (the U.S. markets), the other traders are my age or only a few years older (many went to the same school as me), and the compensation can be very high if you are great, or terrible if you suck.

The CTA is also very laid back, but I would be trading during the overnight hours (7:30 pm-4:30 am) and likely by myself after the initial training period is over which can get depressing very fast according to the current night trader. The base salary will be roughly $50K and the bonus will be based on the firm's performance and my performance. I can make a ton of money if this fund takes off, or I can work by myself at night for a very mediocre salary and hope that the AUM eventually grow.

Apr 7, 2009 - 4:04pm

CTA and prop shops both sound like great ways to go.

One thing I might want to add is working nights is a bitch. I have worked Asia/Euro hours the last year and a half and am just about to go back to US hours in may. It is really a cramp on every aspect of your life, and as time goes on it wears on you more and more.

But if this is something you are interested in, (job sounds awesome) go do it.

Apr 7, 2009 - 4:27pm

I'm thinking my social life would suck big time at the CTA. Although there is another really young guy who just graduated from my school that works there. It ain't any better for him though, he comes in at 4:30 am! Talk about getting up early.....

Now that I think of it, I'm sure I could craft out a better social life despite the overnight CTA hours considering I have worked with a top BB in their PWM group right down the street from both the prop. and CTA offices and know a lot of the guys there.

I would be all by myself at the CTA, but I can call the principals/other employees if something goes wrong or I need help. Unless that happens though, I'm the only one at the office.

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Apr 7, 2009 - 5:35pm

It seems like at the CTA you will be an execution trader? Whereas at the prop shop you might have a bit more of an involved trading experience.....

I am currently working in research at a large managed futures fund part-time and it seems like unless you are looking at developing the system and conducting research, the role at the prop shop would be more rewarding...

Apr 7, 2009 - 7:17pm

Is this for the summer or FT? Either way, I would definately take the prop position. I've looked very closely at both, including a well known CTA (excellent returns, $10+ billion AUM, which was mostly day but a few weeks of night trading) but in the end you are an execution trader. It seemed to me that it would be much more beneficial (and interesting) to be in a prop firm because of the discretionary nature. You would also get a lot more training and hands on mentorship, which seems like it would be lacking at the CTA. Even if you think the two heads are brilliant... are you ever going to get to see them?

I'd certainly take the Prop gig.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard.
-30 Rock

  • 2
Apr 7, 2009 - 8:03pm

This is for a full-time position. Yes, I would be an execution trader aka systematic trader. Another words, one of the principals of the CTA developed a unique algorithm which would tell me when and what to trade. I would NOT have discretion over what to trade or when to trade it.

I'm also thinking my trading experience at the prop. shop would be more involving. On the other hand, what if the CTA takes off and its assets triple from $50 million to $150 million or more?? I certainly would make a lot of money if that happens considering I started at the firm relatively early on and my experience would be actually trading (discretionary or not) therefore I would directly affect the returns of the fund based on my ability to execute the trades properly.

Apr 7, 2009 - 8:39pm

Well that's your prerogative, just mentioning some reasons that it might be a good idea to start at a prop fund. Since it is a smaller fun, if things turn bad you don't have much backing, and wouldn't be easy to lateral IMO. Best of Luck.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard.
-30 Rock

Apr 7, 2009 - 11:38pm

Well the CTA is for an execution trader position and I would work by myself at night for only a guaranteed $50K salary plus benefits. Pretty damn pathetic. If you ask me that is worse than banking because at least while you work those crazy 100 hour weeks you have other people to talk to at the office. I would be waiting for the fund to take off so my bonus would be something worthwhile and if it doesn't take off my bonus is gone, my social life is gone (both at and off work), and opportunities to lateral to larger hedge funds probably won't be there because its so small.

I'm going with the proprietary equity trading shop where I will have discretion over the trades, normal daytime hours, more people to talk to that are my age, and good lateralling opportunities to hedge funds plus the guaranteed huge compensation based on my profitability.

Sep 11, 2011 - 4:12pm

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