It just seems that the number of traders who make good money under 30(300k+) seem to be very far and in between vs. banking where virtually everyone who sticks it out (into their late 20's..)...is almost guaranteed good money (once again 300k+)
I feel that a lot of people who try to get into trading (still in college) have this belief that the profession is showered with golden trees of money, when in reality its a volatile field, and the ones who make tons of money are the outstanding few. I could totally be wrong...am i? comments appreciated
by average do you mean median or mean? Big difference there.
Self-selective bias also, are you counting people who entered in and then dropped or burned out or went to a different career?
Mean
I've heard that people in S&T who aren't actually trading but are in support functions like structuring and strategy, risk management etc (most of these guys are quants i think) can eaisly cross 300k by their 30s and work far less hours than bankers and have stable jobs. check out this link to get an idea of the general pay for quants (not sure to what extent it represents reality)
http://www.hrg.net/
?? How did you arrive at this?
Since when was structuring a "support function"?
First of all, it seems most of you don't understand how traders make money and how diverse trading is. Trading is all about hedging and today I was speaking to one of the top thirty traders in the world who made a super huge bonus last year and he was telling me that so far no one in his team has lost money over the past 7-8 years. Trading demands using a particular strategy and sticking to it. It involves hedging each position and involves more risk management than anything. Most traders make a lot of money, more than bankers after a certain level. Trading also involves things like distressed products, principal finance, structuring, securitization, complex equity etc...these areas are actually more valuation based than anything. Even convertible bonds actually has a lot of valuation. You essentially talk to a client and try to get him the right product and you take positions to benefit him. Don't forget stabilization in trading. Traders make so much money there. It's basically a three week window that allows traders to use inside information. So traders do make a lot of money and very little of it has to do with luck. Think of an investment bank like a casino. A casino makes a lot more money off you than you do from it, because casinos have a certain edge. Investment banks with trading desks have the same sort of edge which is that they know more than the market does. Traders also do so much hedging for clients that their job is not that of making sure their lucky but that of making sure they made the right hedges. In trading, try to avoid making stupid mistakes and you will get very rich.
To quag_mire: Structuring is NOT a "support" function as you describe it. It is most certainly front-office, and on many desks is actually a part of either the sales team or the trading team. It is not mid-office like risk management or legal.
To the OP: the average is the exact same in both IBD and S&T in the long run. Your average associate makes $300+, in either IBD or S&T, within the first 18 months, so that's not a good metric for "good money". It's probably more appropriate to use $500K or even $750K as the benchmark. But to answer your original question, the guys making over $3m that we love to talk about really are few and far between (even more so for those making $5m, $10m, etc.). They are definitely there, but they are not all over the place like everyone likes to act.
Honestly, from what I've seen there are tons of people out there making between $400k and maybe $800k. You can't really make below that after your first few years or you'll probably get fired. Making above that requires you to be very good. And if you're exceptional then you can go much, much higher in S&T, whereas you're a bit more capped in IBD.
All of this also depends on the shop you are at. There are banks out there that pay each person (sales, structuring, or trading) a % of what they individually bring in, versus many other shops that pay based on performance of the entire desk or group.
"today I was speaking to one of the top thirty traders in the world"
on what basis do you make this claim?
^^^assuming Trader Magazine....top 30 under 30
or trader magazine top 30 traders
...salaries are quite varied in trading but if u mean a sell-side trader at an investment bank there are almost none who are 30 and dont make at least 300k/year. Unless u lost alot of money or your desk lost alot of money you should make more then that 8 years into the business. Generally guys who would make less then 300k have been weeded out well before age 30.
so can we conclude that over a 10 year period, S&T people on an average make more?
Nah, I'd say the average is probably the same for both. But you also have to keep in mind that IBD has a fairly well-defined and standard career path and payout structure. S&T does not--the comp and progression on, say, a spot FX desk is drastically different from that on a commodities desk, which in turn is different from a structured credit desk.
On average they're probably about equal, but since S&T is so much larger than IBD you can't really generalize across the entire floor, across every function, or across every desk...
Could you be more specific about how comp progression differs between these areas?
Bankers get paid on a scale which tends to increase the more years you put in and the higher you go. S&T, in contrast, after the first few years pays based on either your own personal performance or your team's performance (with other things like firm performance, general economic conditions, whether your MD likes you, etc. obviously playing an important yet unquantifiable part).
What I meant by mentioning different desks is really just the average deal size. Flow products might have higher volume but lower margins, so if you go to an area of the desk that focuses on flow you will have a different average deal size than an areas that focuses on more structured products (and "structured" has a lot of different meanings). So things will differ within a desk, as well as from desk to desk and across roles.
So for example, on a desk that has both flow products and more exotics products, sometimes junior people learn the flow products first before moving on to more complex products. Thus your average P&L could be lower, and then ramp up over time. Other desks they may just toss you into a structured role right away, so average deal size will be much, much larger, but volume will be much, much lower.
The point is that asking which, on average, makes more--IBD or S&T, is like asking which, on average, makes more--a doctor or a lawyer. You can discuss it all you want but you will never come to a definitive conclusion....
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