Sell Side and Buy Side Trading Career Path

RKBanker's picture
Rank: Baboon | banana points 164

I am very interested in becoming a trader. Could anyone post about the career path of a trader. And how many years on average will they be in that position until promoted?

What is the Career Path of a Trader?

The answer to this question is different for different types of firms. Trading itself is the career path, but traders will hold different positions during their time at a company.

Trading at Sell Side Firms

Sell side firms such as Bank of America, Goldman Sachs, and Morgan Stanley have large, prolific sales and trading arms that have hierarchical levels just like the investment banking side of the business in which analysts become associates who then become VPs, Directors, and finally MDs / Partners.

creditderivatives - Sales and Trading Analyst:

Many firms have something similar to the following:

Analyst->Associate->Vice President->Director->Managing Director

(Vice President, Directive/Executive Director can all be the same "level" depending on the firm)

You can see a sample hierarchy below - however, in most cases an MD will between VP and group head.

Proprietary Trading Firms Firms

Prop trading firms are much flatter in structure and therefore reward people with money rather than titles.

MasterBlaster01 - Sales and Trading Analyst:

Prop trading firms: assist trader -> trader

Once you're a trader, there won't be any more promotions in terms of position name. you will continue to get salary raises and your bonus will be dependent on your's or your group's performance. very flat hierarchy.

Career of a Portfolio Manager

The career path of a PM is more of a journey and much less of a structured path as there are many ways to get to the point of running your own book for a firm.

Bondarb - Hedge Fund Partner:

On buyside there are all sorts of jobs where the person doing them probably wants to run money/trade himself one day. Everything from research analysts who crunch numbers, to strategists that usually focus more on trade ideas or portfolio management, all the way down to trading assistants who book trades and middle-office guys who make sure they settle right. Every one of them along the way sees themselves as one day making "the big call". Of course most never will. There is no one career path but I can give u mine...

back-office/reconciliation----> Trading Desk Assistant-----> Assistant Trader/Analyst---->same but with more of a strategy bent...ie less running numbers and more coming up with ideas, advising PMs on position sizing and risk management, etc.---->managing my own money/balance sheet (and also still acting as a strat for other guys on my desk)

Once you get to the point where you are managing money then promotions have to do with capital and autonomy. But that doesn't mean those aren't promotions...a young PM with tight risk limits has a lot different potential to make money and a much different job then the guy who runs the fund who is allowed to take as much risk as he wants and doesn't have to answer to anyone. Also more senior PMs will be the ones who interface with investors when necessary at large funds...at a small fund every PM will likely have to spend some time in front of the investors.

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Comments (107)

Dec 16, 2009

Traders don't become something else just because you're promoted.

What's your question exactly?

Dec 16, 2009

Most of us would like to become a trader...but saying it is easier than doing it.
1) What skill sets can you provide?
2) Do you understand stocks, commods, futures, or forex?
3) Have you invested personally?
4) Above guy is right....there is no promotion for a Trader. Based upon performance you either get more/less money to trade with.
5) How much chart work do you know?
6) Have you ever created a statistical trading model?
7) I could go on for forever based on your basic question. You need to hone that in.
8) It's similar to putting down - I want to be CEO of Barclays Bank...what should my career path look like.
9) There was a post earlier - a day ago about a an entry level prop trader...you should go back and read my post. It's pretty solid and lays out a career path.

Dec 16, 2009

Are there any levels to a trader? For example, as an undergrad out of college, you're first an analyst, then associate, then something else. And what books would you recommend to better understand what a trader does day in/day out, the different types of commods, futures, forex. In essence, any book that would help if you would like to become a trader

Dec 16, 2009

Many firms have something similar to the following

Analyst->Associate->Vice President->Director->Managing Director

(Vice President, Directive/Executive Director can all be the same "level" depending on the firm)

There are books out there that will tell u a lot about sales/trading for straight equities (because its the oldest product), etc. but there tends to be limited info regarding the more "sexy" stuff

so google some of these terms if you want

In the Equities Division, some examples are:

-Structured Equity
-Equity Derivatives (variance/volatility swaps, equity swaps, OTC equity options)
-ETF Trading
-Portfolio Trading
-Program Trading

In the Fixed Income Division, some examples are:

-Structured credit
-interest rate swaps, T-bills, notes, LEAPS
-high grade credit
-convertible bond trading
-FX vanilla, exotic options

so many things people don't even consider, do some searching on the above products

CD~

Dec 18, 2009

what's "structured equity"?
(this is a serious question)

creditderivatives:

Many firms have something similar to the following

In the Equities Division, some examples are:

-Structured Equity
-Equity Derivatives (variance/volatility swaps, equity swaps, OTC equity options)
-ETF Trading
-Portfolio Trading
-Program Trading

In the Fixed Income Division, some examples are:

-Structured credit
-interest rate swaps, T-bills, notes, LEAPS
-high grade credit
-convertible bond trading
-FX vanilla, exotic options

so many things people don't even consider, do some searching on the above products

CD~

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Dec 18, 2009

From my understanding, structured equity is essentially creating a portfolio of equities (using derivs, straight stock, or both) that suits a specific risk apetite. It's a balance between an actively traded portfolio and an index fund.

Dec 18, 2009

Thanks Ortsman

Dec 21, 2009

prop trading firms

assist trader -> trader

once u're a trader, there won't be any more promotions in terms of position name. you will continue to get salary raises and your bonus will be dependent on your's or your group's performance. very flat hierarchy.

    • 1
Dec 21, 2009

it depends on what u mean by "trader"...i think u r more talking about the sell-side but i will answer from the perspective of a buyside "trader" or portfolio manager.

on buyside there are all sorts of jobs where the person doing them probably wants to run money/trade himself one day. Everything from research analysts who crunch numbers, to strategists that usually focus more on trade ideas or portfolio management, all the way down to trading assistants who book trades and middle-office guys who make sure they settle right. Every one of them along the way sees themselves as one day making "the big call". Of course most never will. There is no one career path but i can give u mine...

back-office/reconciliation----> Trading Desk Assistant-----> Assistant Trader/Analyst---->same but with more of a strategy bent...ie less running numbers and more coming up with ideas, advising PMs on position sizing and risk management, etc.---->managing my own money/balance sheet (and also still acting as a strat for other guys on my desk)

Once you get to the point where you are managing money then promotions have to do with capital and autonomy. But that dosent mean those arent promotions...a young PM with tight risk limits has alot different potential to make money and a much different job then the guy who runs the fund who is allowed to take as much risk as he wants and dosent have to answer to anyone. Also more senior PMs will be the ones who interface with investors when neccessary at large funds...at a small fund every PM will likely have to spend some time in front of the investors.

Aug 14, 2012

Hello Bondarb, hope you are doing well.

I have read a lot of the posts on WSO as well as a lot of yours, they have been quite helpful. But I still need some advice, so I have sent you a PM.

But the gist of the question/background:

I graduated college with a Finance degree from a Top 30 School in May 2012. I realize that one day I would like to end up in a Macro/Forex Hedge Fund. But obviously I am not going to be able to get in now, so I have looked at some of the common paths to get in there: Sell Side Research, Buy Side Research, and Sell Side Trading. Ideally, I would like to work as a Sell Side Trader in Forex, because as you mentioned in one of your posts it shows you can manage money. Also, after trading on my personal account, I find it to be quite exciting. However, I missed the boat for Sell Side Programs at Bulge Brackets and Boutiques, because I was not sure what I wanted to do then. They seem to be quite structured and I do not think I can break in now.

So I do not know where else I can apply now or how I can get in? What are some feasible options or options I may not have considered?

Aug 14, 2012

"I want to be CEO of Barclays Bank...what should my career path look like."

...oh the irony.

Aug 14, 2012

depends on the firm and thus if you get a base or what.. but if you were just on purep erformance id say like 120-250 depending on how 'okay' you were

Aug 14, 2012

ok sweet thanks I do a significant base, and 100k is enough for me
time to sign

Aug 14, 2012

What does 'okay' firm mean? There are people here who don't include SIG/Timber Hill/etc. as top firms.... I know people at those firms who are paid shit compared to friends at much 'less respected' firms.... Size/rep of firm does not correlate that strongly with pay. A smaller firm generally has more room for growth and you will be given more responsibility quicker than you would at a place like DRW/SIG/etc., which can mean a chance to make more money.

Aug 14, 2012

I would be interested in knowing the name of the firm if it wouldn't put you out too much. It would let me know who is hiring...and if you send my resume their way I don't think I would protest TOO loudly :P

Aug 14, 2012

Monkeysama dude, go back to school. Your resume is solid and you seem like a smart guy, but it is unlikely to get a real look over the hundreds of resumes received through OCR from seniors @ top targets with equally great resumes. You should have no problem getting into a good MSF/MFE/etc. type program.

Aug 14, 2012

Not true. And at least 3 of those firms don't pay their bonuses @ the same time people start (I know this bc I am at one and best friends are at another 2), so you can't even receive a bonus to reach 6 figures by that point anyway. T4L, get out of college and get a job at one of these places before you make-up shit like that. What you are saying is simply false--no reason to continue debating it.

Aug 14, 2012

It's just insane. I need to get a worthless degree even though I'm equally if not more qualified than a lot of people getting in just because they're connected through their university. You'd think these places were in the business of, you know, business.

Aug 14, 2012

And by worthless degree I clearly mean for my purposes. This isn't supposed to be a slur on it in general.

Aug 14, 2012

And by worthless degree I clearly mean for my purposes. This isn't supposed to be a slur on it in general.

Aug 14, 2012

That I should brush up on my burger flipping skills?

Aug 14, 2012

No, you haven't, T4L. Quit while you're behind and not being called out on more lies, bro.

Aug 14, 2012

Jerome, the only support I've seen for 80% of your claims are to call people names or attack claims they haven't made. Do you think the rest of the forum isn't smart enough to notice this?

And most people here know that many of these top firms do pay > 70k if you count base+sign+guaranteed year end. You're not going to get anywhere with disputing that.

Aug 14, 2012

lol Juked, what would you like me to do? Show you paystubs from these places? E-mail you from a company e-mail? Seriously, quit being retarded--there isn't anyway to 'prove' it that is worth doing (anything you could do is going to get your ass fired really fast), but it is annoying to see silly comments from people not at any of these places.

And I didn't say they don't pay over $70k, I said that >6 figures isn't guaranteed. Realize that at some of these places a substantial portion of each class is let go before year end, so there is by no means any 'guaranteed year end bonus'.

Aug 14, 2012

It's more annoying when someone disputes correct statements and puts people down, then makes incorrect, unsubstantiated statements. Tell me how much you think first year comp at SIG or DRW is, if less than $70k all included.

No Jerome, you called T4L a liar when he said 70-100k. So you must know that it is either <70 or >100. Which is it? How do you know this counter consensus info?

Aug 14, 2012

Moron, he said:

"Yeah ok but places like IMC/SIG/Optiver/DRW, while maybe not 'top' like JSC still pay 6-figures starting, which is a lot more than was being mentioned."

I already answer the question of what the compensation 'is', which is varied. There are many that make >$100k and there are many that don't make $100k. There is significant variation.

Aug 14, 2012

as someone who trades at one of these firms i want to line all of you would be monkeys up in a line and execute you when you ask what potential earnings are at prop shops.

IT IS FUCKING PROP TRADING ITS BASED ON HOW MUCH YOU FUCKING MAKE SKYS THE LIMIT FUCKFUCKFUCKFUCK

asdfasdfasdfasdgakldfjaskdlfjakldsf

vent

there arel ike fifty threads going on asking the same fucking thing right now.

and monkey hes prolly right. debt and hope of good jobness>no jobness :x

Aug 14, 2012

Fuck it, I'll just join the military.

Aug 14, 2012

@shorttheworld - i get it, you get what you make, but i still jus wanted to make sure that if i wasnt a star, what i could still make is good enough to reject other "safer" offers even if they paid more

Also, when I said "legit" I meant a firm that gives a base salary (not say which one) and doesn't ask to put your own money... I interviewed with a couple and I am not saying which one I'm taking

I don't get a 100k base, but I guess based on what I'm reading on these boards I could be pulling that in a year or two.

Aug 14, 2012

dont go back to school. keep grinding and staying aggressive.

Aug 14, 2012

I think, from what admittedly little research I have done (talk to people in the industry etc), that the firm you go to has SOME bearing on how you do. If you're a straight manual trader you still have a support network of quants and trading strategists that give recommendations and trading strategies, on going education, etc. Once you get good at what you're doing or have some more experience then maybe this would be less important, but it might be more useful starting out. On the topic of compensation, you should probably worry more about not washing out than anything else IMO.

And thanks for the vote of confidence PnL.

Aug 14, 2012

Here's something I've been wondering. What do you guys think is profitable right now: market making or HF/algo trading positions. Based on what I've been seeing, it seems like the algo trading positions are paying the most, although I have anecdotal evidence to support that only.

Aug 14, 2012

if you suck you wont make it to month 6

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Aug 14, 2012

If it's market making and/or HFT, then you have a career with upside that is proportional to your time and effort spent on the job.

If it's an arcade, good luck. You're really just paying the bonuses of guys at banks and market making firms as you play around in their markets.

Aug 14, 2012

If you're currently having success in your own personal accounts while working, what's precluding you from continuing to do so? I'm assuming you are headed into an arcade shop. Forgive my brevity since I've answered this exact question a few dozen times but I offer you the following hypothetical situation:

Three to five years from now, you are only making OK money. "OK money" is entirely subjective but assume it's less than you thought or hoped. Or what if you stop making money? What do you do in either scenario?

It isn't pretty and if you start to lose money it can get ugly fast, at least in terms of your options. Three to five years out is recoverable, but what about 7-10 years out? Literally imagine what that would mean for yourself, finding a job would be brutal. How would you even spin that or get through a resume screen?

On the other hand, had you stuck with consulting and pushed yourself up the ladder... Where would you be in 3-5 years? Or 7-10 years from now? Now assume you were able to generate reasonable and consistent returns while working. It's hard to imagine that situation ending badly, even if your trading failed, which if it did fail you'll be happy as hell you stuck with your job. From what I understand consulting is very lucrative with some cushy (and also lucrative) exit opportunities.

With all of that being said, it might be worthwhile if you are at a point to go off to b-school. Take part of a year off and give it a shot, if it doesn't work out maybe you could re-brand yourself and continue on your way without too much headache. Though you'd still be subject to long term career risk. The successful independent day traders I know have all of their bases covered and long histories with trading prior to taking the plunge.

Aug 14, 2012

As posters above said, if its a true legit prop shop (feel free to PM and I can try and chime in and if i dont know i can ask around for reputation in the market) and that is what is your dream then Yolo. If you know you can handle the stress (and tbh unless you are in a boiler room its not that stressfull, you quickly learn to disassociate yourself from the numbers, and they just become what they are, numbers).

Its like if a GM asked you to sign with an NBA team, and that was what you truly wanted, but you were content with the consulting gig and why risk it. Sometimes you need to swing the bat and see what happens. Just my 2c of life advice. You need to know your risk aversion.

Aug 14, 2012

Are you ColtsForTheWin (cftw) from the online poker days?

Aug 14, 2012

@3 handicap, haha not quite, I had a host of user names over my stint on stars and FT
@"derivstrading" I will dm you I would be interested to hear your thoughts
@archervice yes I believe I would be us equity options trader for the firm

Aug 14, 2012

Good Luck

Aug 14, 2012

Finding a prop firm which will take you straight out of undergrad AND pay you a base salary AND give you some funds to trade with is going to be highly unlikely.

    • 1
Aug 14, 2012
Asatar:

Finding a prop firm which will take you straight out of undergrad AND pay you a base salary AND give you some funds to trade with is going to be highly unlikely.

I'm actually more interested in the their training program than getting paid. I guess I could find a part time on weekends so that I can earn some cash for transportation and living expenses.

It seems like most reputable firms have 18-24 month training periods. I want to make sure I have an extensive and excellent training experience. So far the only two firms that I know pay you a base during this long training period are FNYS and Trillium.

I saw a training program at SMB Capital that seemed rather comprehensive, but I know they have a division called SMB Training which I believe is a paid for education costing around $8,000.

I guess my question is which NY Firms have an excellent training program for new traders right out of college?

Aug 14, 2012

Anyone else have an insights? I would really appreciate them. Thanks.

Aug 14, 2012

First New York, Jane Street, SIG, DRW(7 world trade)

Aug 14, 2012

that's one heck of a switch. just curious, why prop trading?

if you dont already know, you should be VERY strong with math and VERY comfortable with stats. at least for interviews.

man made the money, money never made the man

Aug 14, 2012

The independence factor of prop trading is appealing. Handle my own trading, but use firm capital.

Bored out of my mind at my current job.

Looking for something more dynamic. (open to suggestions, folks)

"The American father is never seen in London. He passes his life entirely in Wall Street and communicates with his family once a month by means of a telegram in cipher." - Oscar Wilde

Dec 21, 2009

def possible to switch, i've seen assistant traders (assist trader -> trader) at top prop shops who are in their 30s

Aug 14, 2012

When do prop shops generally recruit? I am guessing that full time recruiting is already in full swing. What about summer internships? Anyone have any ideas?

Aug 14, 2012

Double post

Aug 14, 2012

campus recruiting for prop shops is happening currently (at least at my school). i imagine it happened a bit earlier for most other places.

Aug 14, 2012

I was curious if assistant prop traders at these shops make anything else beside the base salary. And how much is total compensation at shops like First New York and DRW for the first few years starting out. Are they up to par with the compensations at bulge bracket S&T programs?

Dec 21, 2009

most prop shops will recruit all year (although heavily during college recruiting season). but their philosophy is, as long as they thing you'll make a good trader, they will hire you, no matter when or how old you are.

to ra: assist traders's sign on bonus, salary and yr end bonus will be on similar to BB ibd and s&t 1st year analyst's if you're at a prop shop on par with the ones that you've listed. the yr end bonus will be discretionary since you're not trading. range is between 80%-120% of base salary depending on firm's performance.

Aug 14, 2012

Veritas14 check your PM

    • 1
Aug 14, 2012

this is a good start.

Relatively new to job searching on the Street. Any other suggested paths for a newbie career switcher? (albeit a young one)

"The American father is never seen in London. He passes his life entirely in Wall Street and communicates with his family once a month by means of a telegram in cipher." - Oscar Wilde

Aug 14, 2012

You should try livetradingdemo.com especially if you don't know much about trading...

Aug 14, 2012

FNY is the best!