Hey guys. It seems like you've got a nice forum here. I have a few questions you could help answer. In April I will graduate with a Computer Engineering degree. I have been offered a Trader position with a prop shop in Chicago, as well as several engineering positions around the country. I'm not 100% convinced that I will take the plunge but am strongly leaning that way. One of my main concerns is what kind of doors this job will open for me in the future. What roles can one take after trading for 3, 5, 10 years? If I were to take an engineering role, I would have my MBA paid for (I would go for business) and then try and bust into something else after a few years. How long does a typical trader last, before trying something else? How many make it through the first year? What's a typical starting salary? Are all offers commission based? What percentage? I don't know many people to ask personally, so I would appreciate any input you can offer. I'm sure these are newbie questions but I didn't see a particular thread that addressed these issues. Thanks. Edit: The prop firm is salary based, with commissions at 50% after the training period.
If you got a trading position at an investment bank, go for it! but if you got it from a prop shop, don't value it so much. anybody and their grandmothers can get into a prop firm. if you're a recent graduate, go to your engineering job, gain valuable working experience in the real world, at least build some personal capital, and if you don't like it, you can *always* get into a prop shop to check it out later on. just keep in mind that the trading opportunity at a prop shop will be there forever, and i'm hardly exaggerating about that. the reality is there's really no real prestige in it if you work for a prop firm. besides, you're really more of a customer than actual employee.
That wasn't quite the response I was expecting. But interesting nonetheless. I was under the impression that it would be easier to switch to trading right out of college, and if it doesn't work out fall back on engineering. I wouldn't expect as many firms to hire a 2-3 year experienced engineer as they would the next "hot shit" out of college. But I could be wrong.
I'd have to agree w/ Anseld. If the job offer is from a prop firm vs. from an investment bank or one of top tier trading firms, then working as an engineer would be a wiser/safer choice. One can always go into trading whereas if you're going to be an engineer, it's best to start right after college. Build up your capital and you can trade later when you get sick of your engineer job. I have few friends that started off working as an engineer right after college and they make pretty close to 6 fig salary if not more. You wont make this kind of steady income from trading unless you are one of very gifted few. Plus, you can always swing trade while working as an engineer. But the bottom line is...go with your heart, young man. And dont ever look back.
I started out as an engineer out of college and then went into full time trading later on. I have both experiences. My best advice to you is to start in your field of study first. Establish experience working in a corporate environment and treat trading as a hobby that you do with a small account on the side. It is very important that you establish a string of positions with progressively increasing responsibility in engineering before you go to trading. Otherwise, you will have not benefited completely from your degree and will have a hard time falling back on engineering if trading doesn't work out. There is a lot you can learn working in a corp that will later help you when you finish with prop trading and go on your own. If trading doesn't work out, you will be very difficult to hire in engineering without any experience at a more advanced age with the same credentials as a new graduate with more skills, no luggage and who is willing to accept a lower salary. This is probably not the advice you want to hear, but I have done both and I'm glad I worked my way up to becoming one of the youngest manager in my engineering jobs before leaving for trading. Besides, engineering will provide you with a 401k and a salary and an opportunity to save to pursue your trading ambitions later. I lived for 3 years without pay solely on my savings, stock options and investments made from my salary. Also, beware of a firm that says they will train you with a salary. It sounds to me like you have a futures deal. There is no firm I'm aware of in Chicago (things change all the time, however) who pays a salary. A draw is totally different. It is a loan against future earnings and is due back to the firm if you get fired or leave. It will effect your credit just as a default on a car loan will. Very few people know this until they go through it. Do a search on "prop draw" and look for my posts on the subject. I have discussed it elsewhere.
Go for it, buddy. I was in the same situation, and I took the trading job. I'm making more money than I ever imagined was possible for someone just out of college, so far thigns are good. It's not a big risk as many others have stated. If it doesn't work out, you'll know within 6-7 months probably. You'll still be fresh out of college, take a regular job.
I know a bunch of portfolio managers that started out as engineers and then made the move to trading. of the four people I know that have made that specific move, they all handle many millions of client money. I would by all means start off in engeneering. You can truely always make the move to trading (for a prop firm and/or hedge fund). Make the right move and go get your MBA for free! It may be worth noting that all the guys I know who started trading right after collage only lasted a few years in the business and none were very profitable.
I'd take the engineering job. Like everyone else said you can always trade later. Speaking as a former engineering manager, I'd be skeptical of a new college grad who traded for a couple years and then came back to engineering. One of my biggest concerns would be that you're back just to build a new bankroll to start trading again. I'd also be concerned that you'd be trading during work hours. I swear Yahoo finance was on half the screens at my old work and it was a giant distraction, particularly when our stock was moving. My experience with new grads is they were useless for at least 6 months and I want some assurance they are there to learn and not pulling up quotes every free minute. For me, your trading would be baggage that I'd rather not deal with. Maybe I'm overly sensitive since I'm now a full time trader, but I tend to think that every engineering manager in the tech industry has to deal with the amateur traders in their department. Most of the time it's overlooked, but I wouldn't think they're looking to hire a real (even if former) trader into their department. Engineering is a career and should be treated as such. You went to school for it, so I assume you have at least some interest in engineering. Try it first.
great advice guys! i think i am in a similiar situation. i'm a 4th year cs student, and i am going through two more years of school to get my masters. i am trading prop currently. i could finish my masters in 1 year. spreading it out into 2 years will give me the crushion to see if trading is something i like to do for a while.
I say try trading while you are young, open minded, and have few responsibilities such as wife, kids, etc to support. Give it 1 year, you will know in this amount of time if you are cut out to trade for a living. Good luck.