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 31,2011

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.

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Mar 31,2011
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 31,2011

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 31,2011
 
Mar 31,2011

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 31,2011

SB to you, comprehensive post.

 
Mar 31,2011

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 30,2011

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

 
Sep 30,2011
farmerbob:

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

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Sep 30,2011

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

 
Sep 30,2011

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 30,2011

^ PM'd you

Get busy living

 
 
Sep 30,2011

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

CNBC sucks

"This financial crisis is worse than a divorce. I've lost all my money, but the wife is still here." - Client after getting blown up

 
Sep 30,2011
 
 
Sep 30,2011

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 30,2011

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 30,2011

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

 
Sep 30,2011

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 30,2011

@"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 30,2011

@ArcherVice Now that is what I'm talking about, this is the kind of explanation I was looking for. Thank you for the break down.

I definitely have thought about everything you mentioned and I do agree with everything you say, but you know, these guys on the floor make it seem so easy and it just makes you want to dream big. The reality of it though, is that it's a tough field and requires a lot of emotional strength and an insane amount of patience. You see these traders making 15k one day, 7k the next and you're like 'holy shit', there's so much money to be made, but you ignore the fact that they lose twice as much every other day. There's a lot of what if's involved with me following this path and I'm not so sure I want to lower my stock in the job market by sticking with this gig for too long.

I'll take it for what it is though, it's probably not a bad experience to have on my resume. I'll try to absorb as much as I can and hopefully come away with a decent amount of knowledge so that I'll be able to trade from home on the side one day.

Thanks again for your insight, it really helped put things in perspective.

 
Sep 30,2011

So basically it's like running a business. If that's your sole source of income and your company isn't financially stable yet, who will give you a loan for a house and a car? What happens when your business isn't making any profits for a few months in a row, or goes under? You're out in the job market with nothing but a failed business endeavor.

I'm not really disagreeing with you, as you do bring up valid points. Trading full time is a huge risk to take and very few will make it. But if trading is really what you want and you literally spend all of your time trading and learning, why not give it a shot? I'm not saying to take out your life savings, drop out of school/quit your job and become a day trader, but if you have a decent amount of capital to trade with and you're relatively young with nobody depending on you, then why not give it a shot? Maybe after some time you realize it won't work for you so you move on. Looking back, you've lost some money and time, but you still have a college degree to fall back on and there will always be jobs out there. Plus, if you find a way to be profitable and can accumulate a good amount of money, you open up many other doors and can move onto other sources of income.

Treat it like a business and you'll make it further than most.

 
Sep 30,2011

You aren't disagreeing with me, but you kind of are :-)

I'm saying get good and you can make just as much money trading on the side as you can day trading so you are better off avoiding the massive career risk. You're saying to take the career risk. And yes, it is a business like any other with the ease of entry skewing results.

The only other point we overlap on is in the example I provided above where a trader had so much financial resiliency it made perfect sense to make the switch to full time (he'd also been short term trading on the side since high school). There are no exit opps for a prop trader apart from becoming a CPO which has the same career risk, you just have a higher income in the interim.

Trust me. It's not worth it. Escape velocity is readily attainable in about 8-10 years so there is no need for such foolishness. The best advice I can give on life goals is to figure out what life you want to live and then pick the career that is most likely to get you there, you can learn to love a thing that gives you everything you want.

Another dead give away on these forums and life in general about whether or not someone has had a silver spoon in their mouth, is their rhetoric toward taking big chances. When you've come up from the bottom there is no way in hell you'll ever risk going back. Not saying that is necessarily you but just a general commentary. I also don't mean to not take chances, look at my advice it involves taking substantial risks with large sums of money. It's just a safer (longer) route to great success. Look at it another way, if you've got the skills than it won't matter if it takes you a bit longer. If it turns out you don't, you'll be thanking me.

 
Sep 30,2011

Archer I do not know your background but most of the people on this website are college graduates with good educational backgrounds. The OP has an accounting degree. If someone like that doesn't make money and blows out of trading he isn't going to be out on the street or dealing with the worst case outcomes you seem to be implying. So when I recomend that young people take risks for things they want it has nothing to do with me being "born with a silver spoon in my mouth" (you dont know anymore about my background then I know about yours) it has to do with me understanding who I am talking to and what the real consequences of failure will be. A 23 year old with an accounting degree and no family is absolutely in a position where he can take a risk with extremely minimal downside...if it doesn't work out he will likely just have wasted a year or two and then be back in the same corporate-type job he would have had. Let's not make it out like I am telling an inner city kid who hasn't graduated high school that he should pin his hopes on going to the NBA or something like that.

And btw I know very little about floor trading so don't have a strong opinion on whether this is a good idea or not for the OP.

 
Sep 30,2011

I wasn't directing that comment toward you at all. As far as I can tell this is your first post in this thread so I'm not sure how there is this level of confusion on your end. It was directed toward people that are too willing to throw caution to the wind chasing a lofty goal with no mind for potential consequences, which isn't something I've seen you suggest. Or to the people that say IB or nothing, or other such nonsense statements.

I'm not suggesting that after 1-2 years giving it a shot that if worst comes to worst the OP would be screwed. Far from it. What I am pointing out are the major risks inherent in a business where you are only as good as your last trade, so if you do make it and 10, 15 or even 20 years down the line and something goes awry it can be devastating since there is no recourse.

It isn't a business worth staking the next 30 years of your livelihood on. If you can make it full time, it is just as easy to pull out a lot of money over the long run while working somewhere else. So my contention is, why take the unnecessary risk? I even briefly outlined the best way to go about switching to full time.

We aren't talking about a typical job path or opportunity. It is a job/profession like any other but it is a results and performance based business. If everyone in the world that had a job were paid for performance most people would starve.

 
Sep 30,2011
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 30,2011

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 30,2011

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 30,2011