trader's job security and long-term career path?

hey guys, what is the expected career path for a trader 10, 20 or even 30 years down the road? do they really just do trading their whole lives? i heard that burnout's a big issue, because of the stress.

also, i've heard that trading is risky and you might be fired if you make big losses - but how often does that happen? i.e. if you WANT to be a trader your entire life but you're not very good at it and just about average, would you be able to remain employed for 10-20 years as a trader?

Comments (37)

Mar 29, 2011

Traders can follow several market oriented career paths
1. Management position within S&T (a head of sales/global head/mid-level manager)--assumes the desk head is still a "trader". These are more client facing roles and require you to manage traders and their risk--decide how the desk should be positioned, authorizing extremely large trades or positions, ect.

  1. Sales-Lots of sales guys used to be traders. Sales is sometimes known as the retirement track for old traders--they know the product, the clients, and can generally make close to what they did as trader without all of the stress
  2. Risk Management-Some traders move into risk management. This move isn't the most common (sales and management are very common), but I have seen it done.
Mar 29, 2011
Gekko21:

Traders can follow several market oriented career paths
1. Management position within S&T (a head of sales/global head/mid-level manager)--assumes the desk head is still a "trader". These are more client facing roles and require you to manage traders and their risk--decide how the desk should be positioned, authorizing extremely large trades or positions, ect.

My own experience with this is that there's several layers of management who are all traders. The desk head is a trader, and his manager is often a trader.

2. Sales-Lots of sales guys used to be traders. Sales is sometimes known as the retirement track for old traders--they know the product, the clients, and can generally make close to what they did as trader without all of the stress

  1. Risk Management-Some traders move into risk management. This move isn't the most common (sales and management are very common), but I have seen it done.

I can vouch for both of these tracks, as well.

Bottom line though is that there's not a lot of job security in trading, but your job security largely depends on how much P&L you generate. If you're making the firm money and the company isn't going bankrupt, only a fool would fire you.

i find that most kids who want to be traders have never traded and no amount of advice or suggestion will replace actually going out and diving into the deep end of the pool.

+1. I think most kids who want to be traders really want to be mutual fund managers, but watched Wall Street, Boiler Room, or Wall Street 2.

Mar 29, 2011

also, i've heard that trading is risky and you might be fired if you make big losses - but how often does that happen?

playing with other people's money requires success, so if you suck... quite often

if you WANT to be a trader your entire life but you're not very good at it and just about average, would you be able to remain employed for 10-20 years as a trader?

yes, but if you're one of those guys dragging his weight for 10-20 years you will likely eat, drink or drug yourself to death...your best move is to trade some monopoly money and then move on to real account (if you haven't already)...see how you do and whether it is for you

i find that most kids who want to be traders have never traded and no amount of advice or suggestion will replace actually going out and diving into the deep end of the pool.

Mar 29, 2011

asset managementtt

Mar 29, 2011

strategy as well

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Mar 29, 2011

InterviewBeast says...

There really is an expected career path for a trader, as so much depends on the individual.

For those who enjoy it, and WANT to carry on trading, they could;

a) Move in to a more senior management role (explained in point 1 by Gekko21)

b) Find an area of specialization, generally developing a key focus on either -
- the market making side, or
-the proprietary trading side - and just continuing to trade day in day out.

c) Move to the buy side, prop. house, hedge fund etc

d) Trade their own money/set up their own prop. business or hedge fund.

You also mentioned burnout being a potential issue and well yes, it is a very stressful occupation. Whilst some traders like the idea of getting in, getting paid, and getting out, those with a longer term view will often consider;

a) switching firms (as this includes a gardening leave period of paid unemployment between the 2 jobs - effectively the reverse of working your notice (typically 3 months))

b) switching product (within a broad product area (eg. foreign exchange), the skills are often very transferrable to other product, with just the nuances of a new market to learn (eg from fx forwards to spot fx)). This change can provide renewed focus and enthusiasm for the job)

c) taking a sabbatical (you may have to wait a while for this and pay your dues, but after proving yourself consistently, many firms would rather you take some time out than lose you to a rival firm)

In terms of losing jobs for losing money, well at a junior level this tends to not be the case, as long as you are operating within your risk guidelines and keeping your manager informed of your trades.
It also depends on your seat; if you are a market maker for a high margin product, there will be issues if you are consistently losing money, but in your first 3 months prop. trading, there shouldn't be any expectations of being millions in the black. All that said, at the end of the say it is a profit-motivated role, and repeated/excessive losses will eventually result in getting the sack. and yes, it does happen (though somewhat infrequently i'd say, based purely on anecdotal evidence)

Finally, if traders are not good enough/don't enjoy it?

Well again, a couple of common moves Gekko21 mentioned are to sales or risk management (particularly the former). This does of course assume they want to stay in the industry; some participants just take a couple of nice paychecks and go and pursue something completely different, such as enterprise, teaching or further study.

As you can see there really is no rule, but it is a lucrative career path for those who pursue it, whilst opening a lot of doors for those who do not.

Mar 29, 2011

SB to you, comprehensive post.

Mar 29, 2011

InterviewBeast says....

Many thanks, particularly as there was an error i the first line!

Should read..

There really is NO expected career path for a trader, as so much depends on the individual...

Regards

Sep 21, 2011

many thanks

Sep 21, 2011

none

Sep 21, 2011

^ You're being too generous, it might be lower than that...

Sep 21, 2011
farmerbob:

^ You're being too generous, it might be lower than that...

http://youtu.be/OBCoq0Cn-dk?t=24s

Sep 21, 2011

Largely depends on how confident your superiors are in you and your ability.

Sep 21, 2011

Having just had my office closed on me, firing the whole team (we made good money I know the results), I can safely say its pretty insecure at all times. It's part of the reason the pay is so high.

Redundancy money rocks!

New job required PST

Sep 21, 2011

^ PM'd you

Sep 21, 2011

HAHA. Cant wait for the guys on the trading floor to hear this.

Sep 21, 2011

midget toss? wtf?

Sep 21, 2011

I shadow at the Chicago Board of Trade it is an awesome place. As much as the CBOT is an awesome place, I feel that floor trading is not very transferable and a lot of people at the CBOT tell me they feel that the CBOT will be gone eventually.

It is your choice, but a lot of traders there tell me to not go there because of this. I wish you good luck and I am a fellow non-target and feel your pain.

Edit- After thinking this over, if it was me in your situation I would stay where you are at. You miss 100% of the shots you don't take it and would always be second guessing yourself your whole life saying imagine where I could of been right now. It may not be the rational choice, but accounting jobs will always be there.

PS- Holy shit with the news today and the murder-suicide. My dad sent me pics he was outside the CBOT. And also that new NY style pizza place is pretty good.

Sep 21, 2011

Blackhawks, that's exactly what I've been telling myself...As much as I want a serious job, making a respectable salary, I do want to see what the possibilities are as a trader. I guess it's a risk I'll just have to take. No ragrets.

Where's this pizza place?

Sep 21, 2011

Very bad idea, take it from someone who has been trading a long time.

Sep 21, 2011

ArcherVice, Give me a reason why it's a terrible idea and then maybe I'll think about what you have to say.

I'm not just going to sit here and take you seriously if all you have to offer is a period and a one sentence worthless post.

Thanks for reading though.

Best Response
Sep 21, 2011

@"AP3" OhhK, where do I begin?

Trading as a sole means of income is not what it's cracked up to be. For example, you will never be able to get a car loan unless someone cosigns the loan. It is very unlikely you will get a home loan, ever. In the eyes of a landlord (though this is not always the case) you are viewed as unemployed which means they will likely want you to put down 40-50% of you rental lease up front.

Now let's talk risk once you are consistently profitable, which BTW very few people are able to do. What happens in 10 years time if you are only making OK money? Or what if you aren't making much at all? You are kind of screwed because that saying "you are only as good as your last trade" is very true. That work experience counts for nothing especially if you stop performing, so then what are you going to do? Start over at 33 with no work experience outside of shorting Soybeans.

But that isn't even BAD, what happens if you start losing money? Markets change, so all of a sudden after a period of 2-3-6 months you are down 15-20% from your high mark. Do you stop trading and then start over with zero work experience? Your bills don't go away so now you are in a pickle, if you don't make a trade you can't make any money, but your trades have now been losing money. Which means you are likely to just lose more money and put yourself in a worse position if you keep trading. Now if that happens in 3 years, it's recoverable, but picture that at say 35, 40 or even 45 years old and you get the idea of how bad that situation can be.

I've seen guys pull in well over 50k on a single trade spanning a few hours. I've also seen guys get carried out on stretchers because of a single day where they were caught against order flow and averaged down. All it takes is one time to go on "tilt" as they say, average down against a trend day and you can be in for a brutal wake up call.

Now let's say you have a short term account and are able to pull in 20-25k per year on the side in addition to your regular income. That's good money, thing is you can easily increase your size in the market so if you get good that 20k could be 40k or 80k or the sky. On the E-mini 5 contracts goes off as easily as 50 contracts, so don't worry about making a ton of money just get consistent and good at managing your risk. So like I said you don't need to trade for a living to make good money. Now let's talk bigger portfolios, if you can rake in 12-15% return each year without using leverage. Which isn't too difficult, at least compared to trading full time, that is some huge money in the long run. But you can do over 20% in good years from less sophisticated investing strategies than day trading. I've never had a losing year (so far) and my father before me only had one losing year of a whopping 5% over a 35 year career of managing the family's money (he'd sit out during bear markets). There is a saying, learn to cut your losing days in half and you'll be the richest guy to ever walk onto the floor.

Say by 30-35 years old you were able to save up 100k to invest (not counting anything you do in between now and then). Where would you be by 45? Depending on where you live you could be making over 150k at your job, live in a nice home, have over 500k in the bank, sitting court side with your wife and have excellent career prospects with a highly marketable resume. The same hard work and drive that will make you a good trader is the same amount of work and drive that will make you good in a career (it's unfortunate the work experience doesn't transfer), so a VERY good lifestyle is easily obtainable if you have the skills and drive.

Starting to get the picture? We can talk shop if you'd like to "test" my knowledge about this bullshit. But the bottom line is you need to watch your risk, you don't need to stake the next 30 years of your livelihood on trading to make a lot of money from the market. Repetitive? Perhaps, but I hope that is enough for you to take me "seriously" and think about what I have to say.

FWIW one of the best traders I know worked for many years on wall street, his wife makes +150k/yr, he saved up a lot of money, got good at trading and then made the switch to full time trading. He makes around 450k/yr and never increases his account size. He also has an Ivy education and years of solid work experience, they live in a low cost of living city. What is the WORST case scenario in his shoes? He loses his account and it takes him a year to get back into the workforce? He's made so much more than is currently in his account it doesn't really matter. They live like kings as is and could do so off his wife's income alone.

Food for thought my man, food for thought. The markets will ALWAYS be around to pull some money out of, be patient you have your whole life ahead of you. I really don't mean to come across as harsh or whatever else, this an earnest opinion toward your situation and I hope it has caused you to think about your career and lifestyle trajectory.

P.S There is nothing better than logging in and seeing you had 10 contracts fill their targets while you responded to emails for work and are leaving at noon for a makeshift 3 day weekend. Especially at a job you like.

Sep 21, 2011
AP3:

Blackhawks, that's exactly what I've been telling myself...As much as I want a serious job, making a respectable salary, I do want to see what the possibilities are as a trader. I guess it's a risk I'll just have to take. No ragrets.

Where's this pizza place?

Right next to the McDonalds, can't think of the name I will ask my dad.

Good luck with what ever choice you make though.

Sep 21, 2011

.

Sep 21, 2011

Just do what you enjoy, if you enjoy trading then go 100% into it. If trading evaporates then move to the next thing you want to do. Taking a job for a salary because the pay enables you to achieve your dream of owning a nice car will make you very depressed

Sep 21, 2011

I came from an IT background out of school and started on the NYMEX floor almost 2 years ago. I did bitch work and all that just like you but now I'm at a small hedge fund outside the building. They're options market makers, just like it seems the group you're with is at the CBOT. I'm currently thinking very hard about if I want to stay in the game or not, and I've set myself a deadline. I'm looking at possibly switching over to the physical side of the business to learn more about the diff energy products and do something new and interesting....it's hard man, there is no set path and I'm at a crossroads like you.

Working on the floor isn't necessarily the greatest place to be, but contrary to what many people would think, there's still some sharp groups down there and it's a great place to learn. ALSO, you'll notice after you have over a year or so of experience, it's easier to get calls from larger hedge fund/bank desks that you apply to....so keep that in mind. Just because you're on the floor now doesn't mean you'll always have to stay on the floor.

Also, you said you're afraid the floor will be extinct and you won't be able to go further with it. You haven't had enough time to really understand how everything works because the same stuff they're doing on the floor can be done sitting in an office with some turrets (phones) and an instant messenger. All the flow is going OTC, so yes, the pits may go but that doesn't mean you can't make markets through the IM and phones.

Is it a solid career choice and should you stick it out for years? Eh...Idk. I think ArcherVice made some good points, and it's the same thing that's made me set a deadline for myself before I 100% go on to something else. I think learning to trade on the side would be good like he suggested, however, the market making your group does in options isn't going to be transferable to your own personal account. As you know, you need good brokers and the ability to quote size to get in on the juicy trades for edge. But whatever, you can learn to trade futures or trade options in a more retail sense on the side.

Feel free to PM me, my group may know yours depending on what market(s) your guys trade.

Sep 21, 2011
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