How much do you make? How much do you think Market-makers make?

Discussion in 'Professional Trading' started by Verdais, Nov 9, 2005.

  1. Verdais



    I read a lot of posts on here that mention market-makers and how they actually get their bid or offer when they trade. It just seems like people think that trading is a cake walk for market-makers. I will admit that there is a big advantage for MMs vs. retail traders, but what I was wondering is how much of a difference do you guys think that advantage makes?

    I'm just curious as to what everyone considers doing well in the markets because there seems to be some pretty big variance in how much people seem to be making. Some guys post about their $200 profit with all of the excitement of a kid on Christmas and others talk about several thousand dollar profits with a totally blase attitude.

    So, what do you consider doing well for retail and then...

    What do you think the yearly trading earnings should be for a fixed-income options market maker? Or any market-maker?

    Let's try and keep it realistic, although I know its gonna get crazy... :D
  2. It depends on what do you mean by a market maker, and their trading status. There are different classes, one class are the NYSE Specialists, or the DPMs on the options and some futures products, another are the plain locals. who may be independent locals, or the locals / specialists / DPMs hired by the market making firms, who are paid a salary and bonus.

    The income level differs wildly, from 5-10M+ for a great lead market maker, or a great floor local, making market in a good few names / products (say crude), to 60-70k (or less) for a crowd local, in a poor name / product on a declining exchange (say AMEX or PSX).
  3. dac8555


    like he said depends on the product. I am an EM bond guy..but not mm, IDB (interdealer broker). As far as bonds go the top guys are the trader not managing is probably in the 3 sticks range. Managing guys maybe a million more than that. In IDB i would say total comp for a rookie 120k...head of desk 2 sticks at a top NY firm..most of that will be bonus as always. keep in mind these guys are brokers, they dont take risk. I run an IDB in Central America...but i am no where near even rookie salary...but then again i live in tropical paradise which makes of for it.
  4. You have to remember that "Market Maker" is vague b/c it depends on the instrument. NAS is dead. Almost all wholeslaers shut their doors and a few places survive. These guys are lucky to make 100K and most will be out of jobs within 3 years.

    I used to be one, but stopped trying to hang on after the 2nd firm went under.

    NYSE guys are facing a similar fate, although the bleeding is much slower, do to lobbying and politcal protection, (which is being slowly eroded.)

    I cant really speak for the pits, but common sense says over years, electronic trading will put pressure on them.

    In short, dont be amarket maker. It isnt worth "doing your time" being an assistant for crap money, with a dead end career path.

    Although difficult, try to get a job at a hedgefund through contacts you know. Or a mutual fund company and be a trader/order handler there.

    If you can latch onto a good salesman with good books, work up with him.