Bonus for fx traders?

Discussion in 'Forex' started by UK2004, Oct 19, 2001.

  1. UK2004


    Does anyone know how much the highest paid forex traders earn and is it in spot, futures or options?Thanks for your help.
  2. It's all over the board, dependent upon institution, skill and market dynamics. I ran a f/x derivatives desk for an investment bank. While I won't discuss my personal pay structure, when I hired new staff, the starting salary was generally $75 - 90k plus bonus based on group profitability. The bonus is where everyone gets paid. It varies, but for a good trader with a two + years experience total comp should be > $200k. With five or more years of profitable trading and the right institution, you are looking at $450 - 1,000k. Prop traders can negotiate for 5 - 10% of profits, make $25 m for the firm, get a bonus of $1.25 - 2.50 mil.
    Most places put a cap on salary, say $150k/yr max.

    In the early days of f/x derivs there were a few guys who took home $10's of millions a year. Couple of famous names even made the front page of the WSJ and made more than their CEO's did in a few years! Not the kind of attention you want, really.

    Then there are the chief dealers, corp sales guys and m.d.'s who can command a greater slice of the whole trading revenue pie.

    In the past ten years, however, more bonuses have been granted in stock and options - and have big restrictions on time, employment, profitability and non-compete clauses. Fewer and fewer firms are giving out cash bonuses.

  3. UK2004


    Thankyou for your reply i have been trying to find out on but to no avail how much though would you say the top currency traders earn if you are very good like a superstar trader can you earn like 10 million pounds/dollars when you have been trading for 2 or 3 years?Once again thankyou for your help.
  4. tntneo

    tntneo Moderator

    OK. now it is clear. money is in FX
  5. That's a 1 with seven zeros following!

    Two to three years is far too early to be taking home that sort of bonus, imho.

    There's money in f/x, but again it's down to institution, skill and how the market has been performing.

    If you knock the cover off the ball but the rest of the room has lost money, unless you've a contract based solely upon your performance (extremely rare), you're not going to get paid.

    Also remember that firms like to allocate costs to those persons producing profits and expect you to make larger profits every year. Bonuses go up only when you exceed your previous high water mark, not by meeting it.

    I might be a bit biased, but I always went for the most complex product mix available - give me exotic derivatives and structured products, please! Spot monkeys and forward flippers make money, but they're really just commodities now (every minor bank in the world can quote a tight spot price with the advent of EBS) and forwards, well they're only a challenge to linear thinkers.

    Try for a seat on the LatAm structured products desk or in the Emerging markets exotics group - there's more vig in one price there than a morning in spot eur/chf.

    The real money, imho, is in stat arb / quantitative trading - one good friend took home $75 mil in 2000 and is one reason I'm starting my own fund.

  6. dozu888


    In the late 80's and early to mid 90's, just look at some daily charts of the major pairs, the swing is so huge. No wonder those guys made so much dough, if can hold on to the right position.

    I think the market is more efficient now, but who knows, the world is still a dangerous place, that means opportunities in the markets.
  7. UK2004


    I am going to take a gap year next year i live in london i think in usa it is the year between school or college then univeristy i am gonna work in fx for 9 months what area do you advise me to go into it will be in an investment bank should i go for derivatives if i can get in?
  8. pay better than commercials, have a bigger product mix and generally less restrictive risk managers. Don't forget hedge funds, however, they're buy side and appreciate / reward strong analytical thinkers. If you want to trade, though, get on a trading desk. Equities, FI, credit derivs, energy, whatever

    London is a great place to start; probably the only major centre with an 'apprentice program'. I worked in London for years. If you get a strong degree in a quantitative discipline (maths, engineering, physics, 'phynance'), learn to program in VBA and C++ and write a good thesis on an interesting topic, you'll be on your way. Head over to the LBS or CUBS and get a masters in computational finance or financial engineering and you'll have 'em calling day and night.

  9. UK2004


    "The real money, imho, is in stat arb / quantitative trading"
    Could you please explain what this means i am not familiar with imho i presume its an abbreviation and stat arb is this arbitrage and quantitative trading?Thanks for your help you are helping me learn.
  10. Most intern programs will rotate you through a number of desks in a division. In f/x, almost everyone starts with spot, moves up to forwards, then on to plain vanilla options, then exotic derivatives and structured products.

    Some places will also rotate people through operations (trade confirmation, documentation, blah, blah, blah). Not where you want to be, btw.

    Take advantage of a chance to be on a desk, get to know the traders, be yourself. If you find a group that is comfortable you'll certainly get more out of it.

    #10     Oct 19, 2001