Proprietary Trading at Investment Banks

Discussion in 'Trading' started by London2002, Aug 3, 2002.

  1. Does anyone knwo how prop desks are structured at Deutsche Bank? Are the prop traders all trading specific instruments like fx or IRD or currency options, or are some allowed to get into a bit of everything like Spot FX, Precious metals and couple of commodities maybe government bonds, how much leeway do they have? In my experience it has been like fx prop trading desk and IRD prop desk but I don't know about the major investment houses like Deutsche(although I knwo their profit from fx prop trading last year was rediculously high!), Merrill Lynch, Goldman.

    Do most prop traders at investment houses work their way up from being an assistant trader, then a market maker, then a prop trader if they are very good, are most prop traders taking long term trend positions or are there quite a few short term traders in the investment houses, obviously the long termers will have smaller positions, knowing that Morgan Stanley, Deutsche, Goldman etc are not averse to prop traders taking 1 billion dollar fx positions they must be short term prop traders?

    Appreciate your views.
  2. Husky02


    i have worked at some of the large investment banks, and at least from experience(commodities) traders are giving a certain sector or concept to trade. risk management is very large political issue at large firms and it is often frowned upon to deviate from what you should be trading out of your book.

    as far as become a prop. trader at a Deutsche bank, there is a certain hierarchy of rising up the train...ta, marketer, trader. it also helps to go to an ivy league school or have a friend already at the desk. unfortunately, i don't have either under my resume and that is why i'm looking to go to a small prop firm and be a ta for a year or so and then get my own book. doesn't haven't the prestige of a large investment back, nor the monetary rewards, but i'm sick of the beauracy that one has to deal with at this firms.

    anyway, i'm probably venting more than helping you, but keep me update to date on your findings. hopefully they will be more pleasant
  3. Babak


    An acquaintance once told me that while working as a co-op student in the IT department, he expressed some interest to be a trader and was given a position after an interview. His background is an unfinished bachelor of computer science. He trades currency and commodities as well as equity.

    I thought the whole thing sounded fishy but didn't say anything. How plausible is the story?
  4. Husky02


    depends....becoming a fx spot arb trader is not as difficult, if that's what he's doing...but i find it hard it hard to believe he is doing commodities and equities...never heard of that, and i think you wouldn't find anyone on this board that has. but not to have a finished degree, really makes me suspect. but if you have an excellent political game, you might have a chance to squirm your way onto a desk somewhere at one of these large banks...who knows for sure
  5. Babak


    Well the guy is certainly slick but I just doubted him because he knows nothing about the financial markets, TA, etc.

    He referred to MACD as "mack dee".
  6. Husky02


    lol....i guess you just answered your own question
  7. Babak


    Yeah, I just can't understand why someone would pretend like that. Anywayyy....don't want to be guilty of threadjacking.
  8. trader99


    I highly doubt that. Most people in IT are just IT people. They don't trade. And even then they MUST have a minimum of a compsci bs and even ms if it's at a big i-bank like GS,MER,etc.

    Traders on the other hand can come from any background, but quantitative background are looked upon a little more favorably.

    And it's REALLY REALLY fishy that he trades both currency/commodities and equity. What the hell?! They are usually separate departments.

    What most traders at i-bank do does NOT constitute prop trading. How come people still think that? Most of the time(99%) of the time it's just market-making, providing liquidity to large institutional clients like fund managers.

    Only a very very small group of people actually do prop trading. Small meaning like 15-20 out of an entire organization. I highly doubt that your friend is allowed to trade prop right the out of school w/o any degree even. If you got a top school degree then you can work with other top phds quants to develop the model.

  9. I say "Mack Dee", too.
  10. Trader99 I must tell you I think you are a littel misguided as to prop traders at I-Banks, I have interned in an Ibank already this summer for three weeks and got heavily involved, when you say 15-20 people prop trading throughout an organisation do you mean say Goldman worldwide!!!!!!!!!

    Goldman Sachs take more profits from prop trading than the other IBanks they are huge in prop trading which is why they took a 1 billion dollar hit in 1998 Russian crisis and South East Asia. I can tell you at the trading floor I was on in London alnoe there were around 25 proprietary traders, trading the firms capital purely taking positions on market trends, short medium and long term, this was ona fixed incoem trading floor no equities so it is mroe so than you think but you are quite correct that most people are just market makers all their life, on a team of 40 there are maybe 5 prop traders, 25+ market makers rest admin junior traders etc. ALl depended on the desk though, like fx obviously had some prop traders, IRD had some prop traders, but corporate bonds didn't cus there is little money in them, govies had some prop traders. They were either superstar undergrads as I think you usa people call them people who have done one university degree or people who spent 10 years working their way up to prop trading from the 80's or early 90's.
    #10     Aug 3, 2002