Ok for a start a person who gets a job for D E Shaw in the first place will be the absolute cream of all the graduates that attended any Ivy league you care to list. They demand near perfect academic credentials, are a KNOWN NAME in the markets and are going to actually teach you a ton that you would not learn at any prop shop anywhere in the world. You cannot include D E Shaw as their graduates will be easily getting another job if fired/leave. You are wrong about prop shops attracting only dead-beats, as most investment banks are very selective and only have a small handful of places for entry-level traders. When 4,000+ top-class graduates apply for just 8-12 trading jobs in a year then you better be awesome to get in. Don't think a Wharton or Harvard MBA means automatic admission either, as you will be competing against the very best of your graduating class for a start, and all the other MBA's and experienced guys. Ivy league is a pre-requisite, and just means that you are eligible. Of course many graduates CAN get a job in an IB doing something else NON-trading. But then those positions that are often earned through agencies etc and are not receiving 1,000's of applicants are they? At prop futures firms, where I have worked, traders come in all shapes and sizes, some are Ivy league and some the bottom of the crap heap!!!! Just think how many times on these boards people come on saying how they have been successful doing IT etc, but want to trade and so have saved up their money for a flutter? I know several ivy league graduates who joined prop firms (including ones with salaries), and once they did they stepped into unknown territory. For whatever reason you leave prop trading people will always assume that you were a loser or a burn-out; fact!! And so who wants to employ one of those? Better to just take on some fresh and excited recent graduate than a jaded and bitter emotionally burned wreck is what many firms think. The fact is that people are always dubious of what is unknown or misunderstood. Most employers are not aware of the nature of trading and so will immediately be reluctant to employ someone freshly leaving trading, they would prefer to be the second non-trading employer to employ that person as they view former traders as a potential risk. I know guys who left trading and for 6-9 months struggled to even get a shit job, but once they had left the trading world they found it easier to then get a new job after that. Maybe it is that firms worry that you might get bored and want to return to the markets, better to get it out of your system first before they recruit you. Also most firms hate independent minded people, they like people who will do as they are told and need the security of a steady job. By virtue of the fact that you have tried trading they will presume (wrongly perhaps) that you are a loose cannon. I know lots of people who left the markets and failed to find other legitimate careers, only to then return to the prop shops due to a lack of anywhere else to go. Some people do make the leap, but far more don't and the longer that you work at a prop shop then the worse on a resume for you it will be. Prop trading is death on a resume in many respects and you will find this out if you trade prop and fail. If you succeed then you won't need to be applying for jobs as you will be your own boss, unless you take a salary in which case you get all the usual employer bull shit. You need to decide what you want, if you really want to trade then nothing will deter you but the fact that you seem to have so many doubts tells me that you should take that broker job for MS instead.
I have a cousin who has been with Shaw for nearly a decade, you don't entirely know what you are takling about. Also, I-bank "traders" are flow traders, not "traders" like people who come to this mssg board, the only way they can end up taking discretionary positions is by being a good worker bee on the flow desk for a very long time...generally speaking, then the real trading tends to get worked in with the flow trading.
mr Kamikaze's post is spot on. great post man. no, not all I-bank traders are flow traders. There are many types, including the structured (equity or fixed income) derivatives traders. that's the hot job to get in nowadays. these are not flow at all and involve lots of math and attact the brightest talent, involving personalized derivatives for clients. (like credit defualt swaps, swaptions, etc) however, even more prestigious and even more hard to get in are the prop trading positions within the I-Bank. you are trading the firms capital and the bonuses that these guys get are from millions to tens of millions. these guys are very secretive but that is arguably the pinnacle of trading in an I-bank.
Take the founder of DE Shaw Group as an example: David Shaw received his Ph.D. at Stanford University in 1980 and served on the faculty of the Computer Science Department at Columbia University until 1986. He then joined Morgan Stanley as a Vice President of a proprietary trading group, developing strategies for pairs trading. Unless one has great connections and/or has served on the faculty of an Ivy League School, this is quite difficult to secure a job as proprietary trader at a major investment bank.
While not all i-bank traders are flow traders, most are. The prop desks are very small. Perhaps one of the more recently known stories is of Driss Ben-Brahim, fx derivatives prop trader at Goldman in London. Estimates of his takehome for 2003 were around $50 million -- though much of this was in the form of company stock I think, in order to keep him at the firm. Apparently, his desk generated as much revenue that year as British Airways. Anyway, most i-bank traders, even if they do have the pedigree of ivy league degrees, do not do this. Most would have a hard time trading for themselves only, and I imagine that there are a handful of guys on ET that could rip them apart in the prop trading arena. The deriv desks etc are probably filled with physicists, mathematicians, and computer scientists, just like DE Shaw. But a lot of these guys are just quants. And just being a quant doesn't make you a good trader.
Trading OTC derivatives is a very tricky game. If trading options vs. trading the underlying is like flying a plane vs. driving a car, then trading OTC derivatives is like flying a jet at night by radar. Derivative desks are filled with smart people, some are from very quantitative backgrounds, some are MBAs from top schools, some are just plain smart, educated people. Most of these people can trade simpler products (i.e. vanilla options, corporates, swaps) very well, it's part of the job. Truth is - managing any book is pretty hard. Any sell-side options marketmaker would have no problem making it on his own. I would not speak of equity traders, since I never dealt with that side of the business.
You seem to have difficulty with understanding my answer to another person's post, so allow me to walk you through the steps. Firstly, to get into D E Shaw you would generally need out-standing Ivy League credentials (FACT!!) and so if you sucked at trading then you would be more than likely to get a job elsewhere doing something new. After all the thread WAS supposed to be about life after trading and the affect that prop trading would have on your CV, would it kill your chances. A person good enough to get into D E Shaw would typically have a lot of choices pre and post DE Shaw is all I was saying. And they do teach a lot at D E Shaw which is the reason that they can afford to be selective. You CLAIM your cousin worked there for nearly a decade, if true then why stay that long unless it was a great place. Secondly I highlighted the fact that NOT everyone could get into an IB even if they were Ivy league, as was implied, I pointed out the vast number of usually top level Ivy League candidates relative to the tiny handful of places. YOU INVENTED the idea that all were great traders, I never said that YOU DID by countering an argument that you yourself made up. I just made the point that MOST people who want to get into an IB to trade even if they have great credentials DON'T succeed and so are faced with attempting to get into an IB doing something NON-TRADING or trade at a PROP-SHOP, which disputed that ONLY idiots worked at prop shops. As I said earlier NOT all prop traders are morons, some are sure, but in equal measure are guys who were just not picked to trade at IBs. I know loads of graduates who left prestigious IBs where they had good jobs with prospects in areas like IT, Operations and EVEN Sales. They gave up such jobs due to their desire to trade and the realization that they would never trade doing what they did for whichever IB they worked for. The choice WAS simple; leave or DON'T trade and so they left. You need to learn to read properly, as to just leap into presumption makes you look stupid. Had you taken the time to read my post then you wouldn't have needed to reply. I never called I-Bank traders great traders, and MANY do trade off of customer flow sure, where did I even talk about that until you brought the topic up; oh maybe it was the voices in your head talking. The fact is that former I-Bank traders are more likely to secure work in other areas after trading because Joe-Public respects names like Goldmans, UBS etc. They may be shit and the prop trader may have been awesome, but the public is fixed in its prejudices and they think that IBs are for the gifted and so their former employees are more marketable regardless of skill. Prop shops are usually misunderstood and so will be treated with suspicion naturally. People trust RESPECTED names (falsely perhaps) and they trust what they think they know to be true. What you forget is the name of the thread. The post was about life after trading and I think that my post is clear in explaining the difficulties faced by former prop guys regardless of how good or bad they were, relative to guys who were at IBs. I bet that if you met two guys one from Harvard and one from a local State Uni., that you would automatically assume that the Harvard guy was smarter. In reality the Harvard graduate may have scraped a pass by the skin of his teeth and the other nondescript kid may have excelled to the point that he was offered a sponsored Ph.D. place at every Ivy league in the country. But the fact is that presumption as to who went where is all that would have mattered to the average know nothing who draws conclusions without facts, proof or even thinking.