Professional Trading

Discussion in 'Prop Firms' started by Dustin, May 24, 2001.

  1. Dustin


    Has anyone here had experience working for a firm (MLCO,GSCO,MSCO etc.) on their trading desk? I've always pictured myself someday working in that field but I really don't know anything about it.

    <u>Here's my questions:</u>

    What types of positions are available?

    What are the differences in the positions?

    Which positions pay the best?

    What type of training is needed? Eg. I have been daytrading for some time now and plan to graduate college this winter with a Finance degree. Do these firms frown upon daytraders, or would they be wise enough to realize that a successful daytrader could be an asset?

    Thanks to anyone with input.

  2. WarEagle

    WarEagle Moderator


    I have also wondered what was involved in getting on a professional trading desk, and have done a little research. I found a book called "The Fast Track: The Insider's Guide to Winning Jobs in Management Consulting, Investment Banking, and Securities Trading" by Mariam Naficy. It was very informative. It basically covers things like what the positions involve, an explanation of the career paths/salaries and how to go about landing a position. This is a good place to start for getting answers to your questions.

    It seems that it is very difficult to get in the field without a degree from a top 20 business school. It is very elitist, and that is why I decided to focus on trading for my own account. With your success I wonder why you would want to go into the investment banking/trading world with the stress involved. Sure, there is a lot of money to be made if you are good, but I remember seeing a post of yours a while ago that seemed like you were doing about as well as you could do at a bank, plus you get to work your own hours. Expect 16 hour days (of course, you may already do this) at a large firm, where taking vacations are a sign of weakness and are heavily frowned upon.

    Another thing I've learned is that while institutional traders are talented, they don't have the same skill set developed by private traders. Those guys are not trained to trade directional moves, which is more difficult (in my humble opinion) than market making. They are only trying to make the spread off of customer order flow, which, when you have the advantages MM's do, shouldn't be very hard. They are middlemen and their business plan is built on that. I believe that successful private traders have a much harder job, afterall, how many market makers go out of business? If you are successful on your own, you would be way ahead of many bank traders, and I doubt that a firm would recognize or appreciate your daytrading skills since its a different game for them. They seem to be much more concerned with your educational pedigree. Why not look at a trading firm like Bright (which is like a mix of the two styles) if you are just looking to increase your trading leverage. Your skills would be better utilized at a place like that, and you could certainly make just as much money as the institutional guys.

    I haven't worked as an institutional trader, so I may be way off base and someone on the inside could shed a little more light, but that has been my experience when I was job hunting.

    Good luck in whatever you do,

  3. Dustin


    Thanks Kirk,

    I will look into that book. I know that hours can be awful in corporate finance (analysts etc.), but I wasn't sure if that applied to the traders. What do traders in SF do after 1pm?

    I am doing fine on my own as I have stated in old posts, but I will always be curious what it's like to work in one of these firms.

    Thanks for the info,
  4. WarEagle

    WarEagle Moderator

    I'm sure you're right, the hours on the trading floor are probably a little better than in the M&A department, but the bulge bracket firm mentality will prevail, which is firm first, life second...and that doesn't interest me as much as it used to now that I have a family, no matter how much money is involved. But I admit, I have been curious about life on a big floor too.

  5. Wareagle - Wow, I'll have to look up that book if for nothing else to see how the heck she manages to put three dissimilar jobs into one book.

    I did Big 5 consulting for about 10 years and also worked with a bunch of IBs and traders (institutional and private floor traders) - there's not much similarity among the jobs.

    Seems like it would be like writing a book for Jethro Bodine about how to become a nuclear physicist, brain surgeon, or double naught spy. :)

    As far as institutional traders skills - it's important to differentiate what's meant by "institutional". If you mean, "not a private retail trader" then that group encompasses a whole lot.

    "Institutional" doesn't necessarily mean market maker. There are a lot of guys either trading their own bankrolls on the floor in the futures pits. There are also a lot of people working trading desks at private trading companies who are doing all kinds of different trading that have nothing to do with making markets, but they've got a lot of skills and discipline. Then there are the institutional traders working at mutual funds, etc. who have to deal with moving very large dollars and are often restricted by fund regulations about whether they can short and/or use option hedges. And moving $10-100 million at a time is a lot more complicated than trading around the usual sized personal trading account.
  6. WarEagle

    WarEagle Moderator


    I am referring primarily to market makers because that is who Dustin asked about. I used "institutional" mainly for simplicity, but perhaps I used it too loosley. I am not referring to individual pit traders with whom I have a great deal of respect for and believe they have incredible skills to survive in that atmosphere.

    I think the author lumped consulting, investment banking and trading all together not because the jobs are similar, but because the recruiting practices are. Consulting firms and invesment banks tend to have similar interviewing processes. Trading was included because investment banks hire traders in their "Sales and Trading" departments, and since most market makers are also investment banks, they go through this process to hire traders. She does make note of any differences in the process between job types when there is one.

    Good to see you on the boards again, its been awhile.

  7. Htrader

    Htrader Guest

    I've been around the college recruiting scene, and from what I hear there are basically three ways for someone outside of the industry to enter the securities division at a major investment bank.

    1. Recruitment straight from college - normally you'll be working as an assistant to a main trader and learning the ropes. After a 2-3 year rotation, if you are good the firm will promote you otherwise its off to business school or another part of the firm. The time frame can vary dramatically depending on how good you are, but three years is about the max you can spend at a bank without getting promoted or kicked out.

    2. Recruitment straight from business school - The big banks recruit heavily at all the ivy league business schools and the other top tier ones. Any top B-school listing from businessweek will pretty much cover it. When the market was going crazy, some banks also tapped state university business schools. But this comes and goes as the market changes. In these conditions, recruiting is tough at any university. Business school grads get placed into higher positions than college grads, and its easier to get into the lucrative divisions like derivatives and risk arbitrage.

    3. Personal contact - if you know someone in the industry, or if you know a friend who knows a friend whose brother-in-law works at a bank, use them as a contact. The key is to get an interview. Once you get your foot in the door and if you are truly talented then you'll have your chance.

    It might be easier for an adult looking to crack into the industry to first work at a proprietary trading shop to get something on the resume. I'm not talking about some daytrading LLC, but rather firms like GroupOne that have some respect on wall street. Some of the smaller nasdaq market making or new york specialist firms might also be easier to get into.

    Lastly, its really hard to get a job in these market conditions, even coming from an ivy league school. Now would be a good time to spend a couple of years at a good business school if you can get in. Good luck.
  8. Wareagle - was that book mostly geared toward inexperienced hires (i.e., undergrad/grad school graduates)? There is at least moderate similarity in the process among those industries for those ranks, but the experienced hire process is very different and what they're looking for are naturally different too.
  9. WarEagle

    WarEagle Moderator


    Yes, it is a guide for entering the business, focusing primarily on recent grads, both undergraduate and MBAs. I would imagine someone already working at a bank or for a fund would have a different process based on their experience and who they knew, but I wouldn't know for sure.

  10. it was full of dreamy scenarios then, and even more so as the years passed by...

    Wall Street has always been a haven for special interests and specialized invitations to the boy's club; in some cases because those doing the inviting were bent...., and in some cases because they were under strict instructions not to allow most AMERICANS in.

    So, forget the excuses that you had to have come from a special elite school, or know someone. The reality has always been that if you weren't the:
    1) right kind of White guy, or the
    2) right kind of Black guy (w/ Harvard, Yale or otherwise introducing you), or the
    3) right kind of Chinese guy (w/ top Math degree), or the
    4) right kind of Jewish guy (w/o the head cap), or the
    5) right kind of "whatever" guy (with those devilish good looks, and 6' height), or the
    6) right kind of "woman" (with those devistating assets)

    then you simply didn't get in, and experience the training schools, or opportunities to be on "the desk" or show your brilliance and sit back with over $850,000 in the bank.

    Reality stinks and always has!, and yet the internet has changed everything, especially Wall Street. Thank GOD!

    Ever since the markets have opened up, solely because of competition, the race has been on to recapture the wealth and access to the markets from the masses. Glory be...
    #10     Oct 13, 2001