I just got a summer analyst position at a BB bank and I'm extremely happy with the position. But I was wondering how it compares with smaller prop shops in terms of comp and lifestyle. I know, for example, a first-year at Optiver can make 300k. And this is in Chicago, where the cost of living is half that of NY. When you compare it to a BB first-year analyst, I don't imagine they break 120k even in NY in their first year. I've also been told that the lifestyle at these smaller firms is great, not just for work-life balance, but the facilities in the office. Can anyone make an argument for a BB
24 Feb 2019
Hi, I have an interview coming up that involves a group exercise, I'm guessing that it's going to be a market making game. Does anyone have any links or resources that show and explain how such a game would work? Thanks
09 Oct 2018
So I was reading a book on markets and there I came across market making strategies. The author mentioned Ratio Trades and Flipping. Though I have gone over them I am still unable to understand. Can someone explain these strategies with examples? Thanks
15 Jan 2018
Since TSDemo is offline now, found a new market making simulator. https://astutefx.co.uk/. Would like to hear from people on high scores, strategies, etc. It's kinda interesting that unlike other simulators, it incorporates issues like adverse selection and market impact (tip: watch the news and be very careful about making markets to central banks and hedge funds).
27 Mar 2021
I will be starting full-time at a prop shop who focuses on market making where I would be on the trading side (not algo/quant/development-side), and have no formal background in finance but have read up on the technical basics of derivatives trading, etc. in addition to my personal interest in the financial markets. I know they have a formal training program to start traders out in, but I was wondering if anyone could suggest some good resources to read that provides some useful introductory knowledge for someone starting out in market making. I have picked up Hull and then Stock Market Wizards for some more entertaining reading than Hull. Thank you!
17 Jun 2011
The sports gambling world is remarkably similar to Wall Street market making, and is therefore normally a pretty boring affair. A sports line is set according to the balance between buyers and sellers. Set the line on the favorite too high, and money floods in on the underdog, and vice versa. So I was pretty shocked to see the opening line on next week's Denver vs. Jacksonville game, like many in the sports betting world. It's no secret that Peyton Manning is on a hot streak and is breaking records left and right, but here's one even he has to be surprised at: the Broncos are favored by 28
08 Oct 2013
Hi everyone, my first post here. Apparently there is a trading game that many prop shop like to play to test their candidates all together when interviewing and I just want to find more details about it and see what you guys think is the best strategy here: Suppose that there are 5 people and each have 6 regular dices in a cup. In the beginning everyone roll their dices in the cup face down. After that you can peek what your dices are in your cup and make a spread accordingly. Then there is another person(the interviewer) who will start to provide client ask-bids and each will buy, sell and adjust their spread accordingly. Now this obviously is mimicking market making and you definitely want to keep your position neutral.
30 Sep 2014
Next year I'll start as a Graduate Trader at an options market making firm in Europe. I've been looking for educational books that could help me at the job, but most books I've found are too basic, and just go into basic greeks/risk management. Does anyone know some good ones? ty
05 Sep 2021
I would embrace any opportunity to learn about and be in proximity to equity derivatives trading/strategy in an institutional setting. I'm a math major and I have been trading equity and index options (mainly tech stock options, VIX products, and VIX) since volmageddon last February. I am reaching out to any of those who work with equity derivatives (market making, strategist, trader) to see if they know any leads or where to start seeking for an adaptive internship that would provide exposure to the derivatives field. The field of equity derivatives remains the one subject I am most
21 May 2019
Thomas Mazarakis, head of Goldman Sachs's fundamental strategies group, has admitted to some clients that Goldman has both traded on investment ideas before they were presented to clients and taken the opposite side of specifically recommended trades. The latter tactic is very much at the center of the firestorm brewing over Goldman profiting handsomely by betting against the same CDO products they pushed on customers. In response, Goldman spokesman Lucas van Praag had the following to say: [quote]the company has been "providing this disclosure, which we think is best practice, for a number of
14 Jan 2010
Hi guys, I am trying to figure out market making. I am trying to find the risks that market makers face, what they can do to protect them, and also how to use options to protect them and make profits. Can someone please shed some light on this? Many thanks
06 Apr 2016
Hi, I got a question about the liquidity provider's operating model. Really hope if someone can take a look and share some thoughts! ###Scenario: - Say an ETF investor wants to offload a million ETF shares; the investor is seeking multiple market makers to offload the shares and compare the bid/ask price quotes; he/she will select the highest bid price so the investor can sell high. Now market makers got these shares and will try to offload; ####Question topic 1: I know they should have already got the same ETF's underlying assets and some exposure to the same ETF shares. How exactly do they
15 Jul 2019
For an upcoming interview I have a group trading exercise. My understanding is that there will be multiple fruits and a group of candidates as market makers. I have seen similar posts to this on WSO however I can't seem to find anything that explains how this game will actually unfold or what strategies might be advantageous. Thanks in advance!
10 Mar 2018
Hello, never been to the traders train, usually stick to the other side of the wall. But, I have a question. I was reading this from Zero Hedge: http://zerohedge.blogspot.com/2009/05/observation…, and two things stuck out: 1) "The NYSE report that Zero Hedge discussed shows Goldman Sachs trading over 1 billion shares in the principal program trading category. What the table doesn't show, but a deeper look at the numbers reveals is that the vast majority of this total is trades by our quantitative trading desk. This desk is participating in a relatively new NYSE program called Supplemental Liquidity Providers." 2) "SLPs trade only for their proprietary accounts, not for public customers or on an agency basis."
27 May 2009
I am interviewing for the position of trader at a HFT firm (Optiver/Flowtraders/IMC). Part of the interview process is a market making game. I have been looking online for tips for this type of question but I was not really able to find anything substantial. My approach (for now) is very basic and I don't think it's correct: 1. Estimate quantity (e.g: amount of windows in the building). 2. Based on how confident I am, make a market on the quantity. If I'm not too sure about the number of windows, and I think it's around 400, I might start with 350-450 spread. If the quantity I'm estimating is
27 Feb 2019
One thing that's certain about trading is that the game is constantly changing: the growth of electronic trading, the decline of physical exchanges and the decimalization of option prices all being recent examples. The overall trend seems clear: smaller spreads and greater reliance on option pricing models. But, as of 2012, humans are still a huge part of the equation at most of the large options market makers. Almost all of the market makers rely on traders to interpret trading activity and adjust the parameters their models use to price options. While models are critical, and have certainly enabled firms to consolidate option books and employ fewer traders, few (if any) of the major players have gone completely algorithmic.
13 Nov 2012
Hi all, I recently had an interview where I had to make a market on the number of computers on the trading floor. After offering my initial bid and ask, the interviewer either bought or sold and asked me to adjust my market. I want to know, is there any more I should be doing other than adjusting upwards if he buys and downwards if he sells? I also know that I need know my position and what would optimize it. Any interesting strategies? Thanks.
03 Nov 2013
Personally, I think market making is much more exciting than just directional trading or speculating. It involves much more risk management, which to me is more challenging and interesting. What are some other reasons as to why you'd do market making over just directional trading or speculating?
25 Apr 2011
Volcker Rule aims to ban proprietary trading at banks but they can still do market making. However, market making is a form of prop trading. Does that mean it's not really banning prop trading?
02 Nov 2011
I am a senior at HYP and recently accepted a ft offer for a prop firm in ny that focusses on etf and index market making. I would like to do some preparation in the coming months and was hoping you guys might suggest me some books, websites, etc. I don't want to say where I will be working but if you are a prop trader in ny we could talk through pm. I have a bunch of questions about trading/living in ny and would appreciate that very much.
21 Nov 2011
I am presently a MM at a Chicago Prop shop and I have an offer from a Fixed Income fund in NYC (AUM ~ $500 Mill) for a Middle office role. I was looking for some perspective on what would be a better career choice. The FI fund could see me transition into a Front Office role within 1-2 years.
20 Nov 2014
Market making has gone through several incarnations over the last two decades. The move from pit to screen trading in the late 90s to early 00s and subsequently automation of algorithms has seen some wildly profitable years for well positioned firms. But in the last few years there has also been consolidation (eg. Knight, GETCO, Virtu, Timber Hill, etc) as the speed game was won and lost by various players. Curious to hear whether people think this line of business will be profitable going forward. Going off publicly available data points, like Virtu and Flow Traders, seems that firms are
04 Mar 2019
Starting to get a lot of PMs asking the same types of questions so wanted to start a blog. I am a first year analyst at a S&T boutique on an equity event driven desk in particular I follow risk arb.
17 Dec 2010
I have a call with a recruiter at this firm coming up this week, sounds like it's just going to be a short fit interview, and more information about their interview process. Does anyone have any experience with them? Or their interview process, at least? Thanks in advance for any insight.
06 Jul 2015
How do different firms and desks within firms trade/invest? What is their performance? How do they measure their performance/risk/consistency? What is it like to work for them. I'd like both comments about different industries from talking to people and actual experience (you should indicate this in your post). I'll start: Bridgewater (from talking with friends who interned, interviews, and on-site information session after receiving an offer): Strategy:
23 May 2012
So this is a pretty interesting article on the inner workings of major market makers and their relationship to the market: Special Report: For Wall Street, dumb money pays http://news.yahoo.com/s/nm/20101217/ts_nm/us_mark… In particular, securities regulators are taking a closer look at the arrangement in which five large wholesalers -- trading firm Knight Capital Group Inc, hedge fund Citadel, banks UBS AG and Citigroup Inc, and E*Trade's smaller market making division -- are on the other side of virtually all marketable U.S. stock trades by individuals.
17 Dec 2010
what S&T firms are out there for small companies that have lets say $1 to 3 Million in cash they want to invest? i doubt Goldman or JP Morgan will seek clients of this size, but what about a companies like Cowen, Piper Jaffray, or Needham &co? would the small business still execute at market rates of 3¢ a share?
10 Mar 2015