Prop Trading vs Quant Firm Compensation
Suppose I have offers from Two Sigma and a couple small time trading firms (100 employees), what should I choose if I want to maximize my earnings in the: 1 year time frame, 2 year time frame and 5 year time frame?
Glassdoor says this trading firm has a salary of only 80k for traders and Two Sigma offers 140k for initial associate quants. Of course, the trading firm has the potential for more upside, but what is a good ballpark estimate?
If it matters, Two Sigma does everything and trading firms market make for commodities options, fixed income and equity/ETF options.
Thanks
Two Sigma.
I am asking what I can expect in terms of bonuses at the trading firm and two sigma.
Surely expected bonuses at the trading firm depend a lot on the exact firm? The 140k figure for 2 sigma is presumably just base. I think expected all in first year comp at Two Sigma is probably more like 250k. I would think the only 100ish employee prop firm that is competitive with Two Sigma is HRT and their base is a lot more than 80k.
I didn't know it varied a lot by firm.
Do you have an idea of compensation at trading firms for first year "assistant trader" type roles? Even if you only know what's paid out in large firms, that info would be useful. Is it acceptable to email them about average bonuses?
I think first year comp also varies a lot by firm. Some firms might have a base salary of 70-80k and a smallish first year bonus while others might have 125k base and 50k+ first year bonus. Most firms are pretty vague about bonuses even to candidates with offers which makes comparing offers hard. Some firms give expected ranges for first year bonuses or guarantee some sort of minimum first year bonus but almost all firms are pretty opaque about future bonuses. Partially, this is because firm profits are fairly volatile and bonuses tend to track firm profits and partially this is because they regard historical compensation data as sensitive information.
Two sigma almost certainly will be higher comp for years 1 and 2. 5 years is too tough to tell and will likely depend on how successful you are at either firm. Median 5 year comp will be higher at two sigma but it's always possible to make more in prop trading if you're at the right firm at the right time and get lucky.
Regarding the first few years in prop trading, you can expect all-in comp for most firms to look similar to first and second year analyst comp at banks (~120k all in, reasonable expectations in the 100k-150k range). The top quant firms will pay considerably more than this and the lower tier prop firms will be toward the lower end of this range. Once you start trading though (probably in your 2nd year), comp will be considerably more variable (including the very real chance you get no bonus and/or get fired).
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