hey guys, i'm curious on what the turnover/retention rate is typically at some of the top prop trading firms.
for example, i heard the turnover at Optiver is quite high while DRW retains pretty much most of their assistant traders
looking for info about SIG, DRW, Optiver, Spot, Jane St, etc...
thanks!
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Would it be a waste of time to get an MBA to join a prop shop? Can a prop shop trader really make good money >120k/yr?
Sincerely, Da BroadStreetBully
"Everybody needs money. That's why they call it money."-Heist 2001
have heard good things bout jane st.'s turnover. supposedly very low and overall people are happy to work there.
^of course.
When I interviewed at SIG, I went onto the trading floor and most of the mid-senior traders (5-10 years of experience) had been there all through straight out of college or a masters program, the junior traders seemed to be happy to be there and said they had no plans to move on.
do most assistant traders make it through at these prop shops to become traders? or is it pretty competitive for assistant traders?
depends which shop...but usually most make it through
specifically SIG, DRW, CTC, and Spot Trading
Some of these types of turnover, but not because people get burnt out, but because they don't get to the level of understanding that the firm is willing to put millions down on their skill. Part of the business, that's the better way, rather than throwing cash at every guy who comes in. Sometimes it just takes one guy to make a costly mistake...
so if it comes down to how well you do in mock trading, how difficult is it to do well in mock trading? what kind of skills do you need? lots of mental math, quick decision making, etc.
yes, lots of mental math. simple arithmetic, but you need to keep a lot of numbers straight in your head, and use that mental math to help make sound trading decisions. I think of it as equal parts mental math, options theory (simple synthetics, really), and trading tactics (knowing when/whether to lean, fade, finding the best available hedge, etc.). It's a collection of option trading basic skills that can be tricky to pull together well, if the instructors are throwing a lot of orders at you.
one rough analogy might be to playing a couple hands of poker at the same time. estimating your outs and calculating pot odds and knowing others' stack sizes relative to the pot, etc.-- none of that is hard math, but to do it systematically, on the fly, rapid-fire, is a skill that requires a little theory and a lot of practice.
Ditto what EVM says.
First you need to know every single kind of spread a broker could ask you for so that you use the right options and the right prices (bid or offer) to make your markets (if you make them wrong, you get picked off).
Then you need to hone your mental math skills to quickly and accurately make your markets (if you price them wrong, you get picked off).
Then you need to know your greeks, so that you can (a) carp your markets if the spread you're quoting has less risk than the markets on the outright options (e.g., a straddle swap has far less vega then a straddle, a call spread has far less delta than a call), (b) know like options so that you can quickly offset your risks once you make a trade, and (c) trade the sizes and positions that appropriately offset the existing risk in your book, or at least not present an unappropriate amount of risk given the risk profile of your book (e.g. if you're already heavily short gamma, you will probably want to trade in smaller size and at higher prices than the screen markets). If you don't know your greeks, you can get picked off and you can also make a portfolio w/ horrible risk and you'll either be at risk of losing too much $$$ or else you'll have to go out and pay up on other options/stock to hedge your greeks.
Then you need to know the synthetics extremely well so that you move your screen markets on both sides of the board. If you don't, you'll get hit on the other side of the board and get picked off w/ more risk than you wanted.
Then you need to know the skew so that as you get hit on quotes, you move your markets on the other strikes accordingly. (Otherwise, you will trade every strike and be picked off w/ an unappropriate amount of risk)
Then you need to know the calender so that you move other months in conjunction with what you're trading. Otherwise, you'll get picked off there.
Mock is the synthesis of mental math, option theory, synthetics / arbitrage, modeling volatility, game theory, being loud and having a presence, and much more. This is why it is, at many firms, more than 50% of your 'grade' perse in determining your ability to trade. If you don't know mock very well, YOU'LL GET PICKED OFF!
:)
Well put Sean. You are on your way to becoming a kick ass trader.
"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
dr_sean is a close friend of mine. That wasnt sarcasm.
"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
Turnover at Prop Firms (Originally Posted: 07/27/2011)
Are there any prop firms in Chicago or NY that have low turnover? If so, how are they able to do that? Just a different business model?
On an unrelated note, when I talk to people outside the U.S. and they use 'turnover' it confused me, because they use it to mean revenue.
JumpTrade, Getco, Peak6, SpotTrade, Wolverine, DRW....
I think turnover is pretty low at all of those. I assume they can do that because their traders make retarded amounts of money.
I'm not doubting that the top guys at those firms make pretty good money, but a lot of the compensation stories at these prop shops are pure hearsay. I do know the starting base at those places, but that's common knowledge. nobody knows the bonus numbers unless you work there, or you have a very close friend who tells you the numbers.
I have friends at 4 of the 6 that I listed.
I can confirm this. I know a 25-year old guy at Jump who made $500K including bonus this past year. And a fixed income trader at DRW in his late 20's who made close to $2 million including bonus. I'm sure there are more.
That's consistent with the guys that I know. Similar ages / incomes at those places.
A head power trader at Jump used to be my neighbor in Toronto a few years ago. I've never asked him his compensation, but he doesn't exactly live a highly affluent lifestyle. I'm somewhat shocked to hear that a 25y.o pulls in 500K a year at Jump.
I've heard figures like these as well, but that doesn't say anything about the turnover... It just says the guys who stay make it big
Think of it like this if you're good your stay if you aren't good you wont be around for to long.
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