Market Making Prop firms

Discussion in 'Professional Trading' started by 6ptPrime, Oct 19, 2006.

  1. 6ptPrime


    I've got an interview later this week with an options market making firm that reportedly does good volume in the Eurodollar options. My question is two-fold I guess...

    First off, it seems most of these places are super-keen on bringing in guys that can work with numbers rapidly in their head. This seems to be the major determining factor in what makes a good market maker, or who fills the most incoming paper. Am I wrong? To those of you who have worked in this arena, is it ALL about how quick you are with numbers?

    Also, with the advancement in technology, wouldnt one think that these types of roles in the pits will be increasingly supplemented by algorythms that can work faster and more efficiently than a human and perform the same role in the market, but via Globex rather than outcry? Is this niche of trading a dying breed?

    In talking to some different prop groups I'm finding that most of the credible and highly capitalized groups (and even those who offer salaried positions) are those who have been designated by the exchanges to act as market maker in some designated futures market.

    Are these jobs dead-ends for those who can't program? The whole assistant trader progression from clerk/classroom training to "Trader" just seems like a joke with emerging technology.

    Also, I suppose one would have to literally LOVE working with numbers and be passionate about crunching numbers to be around this everyday and to work as a market maker. It doesnt seem so exciting to me. Would others agree with this assumption? What other qualities/attributes (if any) make a good market maker on the floor?

    I'd appreciate any thoughts from those who work in this arena, have worked in this arena, or have considered it.

    Thanks fellas...
  2. rosy2


    I write autoquoting trading systems for a marketmaker but until the exchange can handle option spread quoting better the floor is still required. Most options orders come in as a straddle, butterfly, vertical,...
    so far computers are not handling it as well as the pit and you can see by the volume.

    is it a dying breed?
    Maybe. But you can transition to upstairs OTC market making (IR, energies, anything). The experience you get can't hurt.

    A good quality for a floor market maker is to be friends with the filling brokers.

    If your in your 20s, my advice is to learn to program. Not necassarily well, but just learn the basics. You will find that you can automate most jobs out of existence.
  3. Stacked


    Sounds like DRW group. I've never worked with him but I see all the traders in that group. It seems like they churn through alot of people, but I personaly would'nt want to pass on an oppurtunity with them. They are some of the smartest people I have ever seen.
  4. esmjb


    i personally dont believe fast number crunching is important at all. i realize a lot of firms use it in their screening process so in that sense it is important but once real trading begins developing an inate sense of edge in a trade is the most important, and that only comes from experience.

    i trade a product that is 100% eletronic and i have no automation and i do well. so to say that pure human trading will die and it is foolish to undertake anything but automation is foolish itself. there will always be a place for human traders.
  5. 6ptPrime


    Yep. I agree.

  6. Solving simple math problems fast can be an indication that someone can make quick desicions under stress, that's always a good skill while trading.
  7. I agree with rosy2. I am a market maker.
  8. Iceman14



    I was in your exact shoes until just a couple of months ago. I worked for a market-making prop firm in the bond options pits, but never cycled through Eurodollars. Not sure what firm you're looking at, but just beware, the floor is dying out quickly in Chicago (it's kind of sad), and a lot of pits, even 5yr, 30yr options are turning into ghost-towns.

    My old firm had an autoqouter, just like rosy says, and it's true, it's hard to put the strategies on the screen, but they are doing it, and everyday screen volume continues to grow as more guys just figure out how to make it work and are able to look at multiple products. Look at equity options...they trade spreads, condors, butterflies, all kinds of crazy stuff on there. Is gonna take over in IR sooner rather than later.

    Just be aware of the various "training" programs out there -- a lot firms are looking for glorified clerks to hold them over until this stuff moves to screen, with no intention of making their clerks/trading assistants into traders. It happened to me, and it's happened to a lot of guys at several shops, big and small, known and unknown. Am a little bitter, yeah. I would've liked to trade in the pits while it was around, but part of me felt like I was getting left behind I was at a disadvantage to guys that were starting out on the screen. Now I'm committed to making it on the screen (but not in interest rates), and you should think long and hard about it too. Yes, the pits still seem to attract a lot of people, but it's not the same pits as it used to be, trust me. Nobody wishes the "good ol' days" of pit trading were around more than me, but you just have to get with the times.
  9. amanda


    investment banker --->pit trader=funny?
  10. what about the standar and poors pit?
    #10     Oct 24, 2006