Career Prospects After working for Firms Like Tibra and Optiver

[cylinder]

hi,

I am very new to this forum. However, I've been doing some reading, and I've been considering trading as a career. Having done a bit of research, its been hard to find some concrete answers so I've come here to garner some opinions. These are some questions I want to clarify:

1) I have read from different places that 'prop firms' seem to have varied reputations. However, I've also been checking out some websites such as Tibra and Optiver and they call themselves prop firms. Are there any differences and what are their (Tibra + Optiver) reputations like

2) Pros and Cons of working at Investment Bank vs. a Prop Firm such as Tibra/Optiver in terms of workload, career prospects, differences in day-to-day duties

3) There are also opinions regarding Investment Banks not hiring people who used to work as market makers or prop traders. Does this apply to people who've worked at the two companies I mentioned, or is just a myth? Are there opportunities to switch to a investment bank later on in one's career?

4) What are the retention rates (I would especially like the opinion of people who have worked at the companies) like? Is there a high failure rate, do they fire a lot of people who don't make the cut?

5) What are the future career prospects for someone who works at one of these firms for say 4 to 8 years, where else can they find work? How marketable are the skills one learns as a trader at these companies?

6) What do they do after they 'burn out', or don't make partner? Do they just continue in their trading or is there some expiry age (as it seems only young people are hired and there doesn't seem many over the age of 30) at which time they cut you loose?

7) What can one reasonably expect to make in terms of bonuses in 2years, 4 years, 6 years and 8 years time? By reasonable I roughly mean the range for all traders within one standard deviation of the mean.

8) How fast and on what basis do you make partner?

I am asking these questions, because it seems a genuinely interesting career, however I wish to fully research what's involved before I can an informed career decision. Thanks in advance to those with constructive feedback.

 

[kendran]

hi,

I have an offer from IMC which also is a prop trader / market maker like tibra or optiver, and I'm just right now thinking about all the questions you asked in your post! I have the same concerns regarding future career perspectives and would be very grateful if someone could answer some of the questions.

thank you very much!

 

[96pills]

does anyone have any opinions on what has been asked here as well, i am also wanting to know the answer to several of these questions

 

[Masquerade]

If you're going to work for an IB as a trader or analyst you'll most likely be going in through the graduate scheme. If you're older and don't possess a PhD or some amazing academic credentials then I don't think you should worry about what the above firms will do to your reputation as your chances of working in an IB are slim to none.

 

[cylinder]

If you're going to work for an IB as a trader or analyst you'll most likely be going in through the graduate scheme. If you're older and don't possess a PhD or some amazing academic credentials then I don't think you should worry about what the above firms will do to your reputation as your chances of working in an IB are slim to none.

Actually, I'm pretty comfortable marks wise, and trying to decide career wise wether to get higher degrees or jump straight in now, and what the possible renumerations at these companies are like compared to IB trading (and what the differences are like)

 

[mmone]

hi,

I am very new to this forum. However, I've been doing some reading, and I've been considering trading as a career. Having done a bit of research, its been hard to find some concrete answers so I've come here to garner some opinions. These are some questions I want to clarify:

1) I have read from different places that 'prop firms' seem to have varied reputations. However, I've also been checking out some websites such as Tibra and Optiver and they call themselves prop firms. Are there any differences and what are their (Tibra + Optiver) reputations like

2) Pros and Cons of working at Investment Bank vs. a Prop Firm such as Tibra/Optiver in terms of workload, career prospects, differences in day-to-day duties

3) There are also opinions regarding Investment Banks not hiring people who used to work as market makers or prop traders. Does this apply to people who've worked at the two companies I mentioned, or is just a myth? Are there opportunities to switch to a investment bank later on in one's career?

4) What are the retention rates (I would especially like the opinion of people who have worked at the companies) like? Is there a high failure rate, do they fire a lot of people who don't make the cut?

5) What are the future career prospects for someone who works at one of these firms for say 4 to 8 years, where else can they find work? How marketable are the skills one learns as a trader at these companies?

6) What do they do after they 'burn out', or don't make partner? Do they just continue in their trading or is there some expiry age (as it seems only young people are hired and there doesn't seem many over the age of 30) at which time they cut you loose?

7) What can one reasonably expect to make in terms of bonuses in 2years, 4 years, 6 years and 8 years time? By reasonable I roughly mean the range for all traders within one standard deviation of the mean.

8) How fast and on what basis do you make partner?

I am asking these questions, because it seems a genuinely interesting career, however I wish to fully research what's involved before I can an informed career decision. Thanks in advance to those with constructive feedback.

Will answer some of this for you but the main thing about trading and these firms is your ability to think on your feet and learn yourself without having to be spoonfed. Some of the things you have asked are a bit odd (1sd of the mean of total income..I mean come on dude, do you think people will come up with this for you??)

1 These firms are very different from prop/arcades. They market make with their own funds so working with them is the same as working with any professional trading operation.

2 Advantage is that you get str8 down to trading and dont have to go thru all the rigmorol of IB (ie. no IB will give a graduate a book to trade after a few weeks, well most that I now any way).

3 Def opportunity to switch to IB later but to do what and for what reason? If you are a gun market maker, how lucrative and stimulating is it going to be to go and buy vol on the back of a structured product that an IB has just created?

4 Retention rates are not great and yes they do fire people who do not 'make the cut'. If you cannot make money (ie. good money) what good are you to the organisation?

5 Skills one learns are fantastic as you are learning to trade derivatives. You become as marketable as you make yourself.

6 You get cut loose when you blow up or are past it but this is up to the individual. You do not all of a sudden become a crap trader when you hit 30.

7 Bonus is based on the ability of the trader and will be a percentage of your P&L. If you are any good you should be on $1m after 3-4 years depending on the market you are trading.

8 Again up to the individual. Why would I make you partner (ie. share the profits) of an organisation that makes good money before you came along. Two main reasons are: you are a great trader and I dont want you going elsewhere, and you can add to the management of the company

 

[cylinder]

Will answer some of this for you but the main thing about trading and these firms is your ability to think on your feet and learn yourself without having to be spoonfed. Some of the things you have asked are a bit odd (1sd of the mean of total income..I mean come on dude, do you think people will come up with this for you??)

1 These firms are very different from prop/arcades. They market make with their own funds so working with them is the same as working with any professional trading operation.

2 Advantage is that you get str8 down to trading and dont have to go thru all the rigmorol of IB (ie. no IB will give a graduate a book to trade after a few weeks, well most that I now any way).

3 Def opportunity to switch to IB later but to do what and for what reason? If you are a gun market maker, how lucrative and stimulating is it going to be to go and buy vol on the back of a structured product that an IB has just created?

4 Retention rates are not great and yes they do fire people who do not 'make the cut'. If you cannot make money (ie. good money) what good are you to the organisation?

5 Skills one learns are fantastic as you are learning to trade derivatives. You become as marketable as you make yourself.

6 You get cut loose when you blow up or are past it but this is up to the individual. You do not all of a sudden become a crap trader when you hit 30.

7 Bonus is based on the ability of the trader and will be a percentage of your P&L. If you are any good you should be on $1m after 3-4 years depending on the market you are trading.

8 Again up to the individual. Why would I make you partner (ie. share the profits) of an organisation that makes good money before you came along. Two main reasons are: you are a great trader and I dont want you going elsewhere, and you can add to the management of the company

Thanks for the reply. Out of curiosity, have you worked or are working in one of these firms? You seem to be quite knowledgeable about them. Also, just to clarify a few points you seem to say that traders at an investment bank 'just buy volume'. I was actually under the impression that at an IB there's more exposure to a greater range of strategies and more rounded training rather than a narrow focus on market making. Correct me if I'm wrong as this is merely what I have heard from second hand opinion.

Also, you mention after 3-4 years there's the potential to make upwards of a million dollars. I must admit, this sounds improbable if not impossible, even at the bigger insitutions such as hedge funds and IBs I haven't heard of this kind of renumeration. Are these outliers, maybe one or two brilliant market makers while most make much less?

Once again, thanks for the replies.

 

[smarks999]

No, that is true, good traders can earn far over a 1M in that time. My knowledge is solely from a prop level though. But the question is......are they still trading after 10 years. I have some experience in a number of arcades and I have seen very high earners who have made a killing in 2000 - 2004. Now it is a different story though, many of those same traders are now having a hard time keeping up with their mortgage payments. Although I think that is also due to their extravagant spending, but they are not earning nearly what they use to do.

 

[smarks999]

mmm Im not too sure whether we are thinking of the same guy. The guy I know of made a fortune of one trade and got branded for being this amazing trader. But just the next year he dropped the better part of half a bar and I dont even know whether he is still with the same company. The last I heard about that guy (the one I am refering to), he was barely clawing back the losses he sustained over 12 months after his "big win"

 

[mmone]

cylinder

when i said buy vol - i meant volatility (ie. options) on the back of a structured product (or sell options depending on the position)..dont get me wrong there are opportuinities within banks but alot of them are sales oriented (selling products) and the opportunities to be on a true prop desk are few and far btwn..depends on your role but believe me there are many talented but disillusioned people working with large banks trying to get to a true prop trading role in some way shape or form

alot of hedge funds out there are market making in some shape or form ie. arbitrage trading..yes there are other types of strategies but in trading it all comes back to risk adjusted profits and you ability to make them..this is what earns you money..total earnings are very real and to be honest if you know so much about them do not bother asking for the info..why are so many people trying to make it as traders if max earning potential is say $400k..one tip if you want to be a trader, ask the right questions from those who know better than you and filter the info you get back but do not be an upstart as no-one will want to help you and when you are starting out that is exactly what you need..first thing to do is be liked by the people above you so they want to give you assistance (and even then some will, some wont)..you might think this sounds pompous but a very important lesson nontheless

smarks

i have zero experience in arcades no idea who this guy is as there are thousands out there but making windfall profits in one year does not make you a trader..similarly someone who wins lotto is not all of a sudden regarded as a professional lotto player..consistency and discipline is key..by the sounds of things this guy got lucky, or maybe his 'system' worked at the time and now it does not but that is not how to be a professional trader

 

[cylinder]

cylinder

when i said buy vol - i meant volatility (ie. options) on the back of a structured product (or sell options depending on the position)..dont get me wrong there are opportuinities within banks but alot of them are sales oriented (selling products) and the opportunities to be on a true prop desk are few and far btwn..depends on your role but believe me there are many talented but disillusioned people working with large banks trying to get to a true prop trading role in some way shape or form

alot of hedge funds out there are market making in some shape or form ie. arbitrage trading..yes there are other types of strategies but in trading it all comes back to risk adjusted profits and you ability to make them..this is what earns you money..total earnings are very real and to be honest if you know so much about them do not bother asking for the info..why are so many people trying to make it as traders if max earning potential is say $400k..one tip if you want to be a trader, ask the right questions from those who know better than you and filter the info you get back but do not be an upstart as no-one will want to help you and when you are starting out that is exactly what you need..first thing to do is be liked by the people above you so they want to give you assistance (and even then some will, some wont)..you might think this sounds pompous but a very important lesson nontheless

Yes, I totally agree with you. Being an upstart doesn't help. Getting answers is an important reason why I ask questions, as I've stated in my previous post I do not know a lot about funds/banks which is why I try to canvass as broad a view as possible and through overlapping perspectives gain a more objective and informed understanding. Your advice is very helpful and I absolutely concur that in any place (not limited to just trading) is to be on a good working relationship with others.

Its curious how you mention "why are so many people trying to make it as traders if max earning potential is say $400k", I didn't quite understand, within context, what you were saying. Whose earning potential were you referring to? And also on a similar note, what percentage of market makers working at the marketmaking firms would you consider to be able to consistently make >500/600K per year? And in regards to trading derivatives, are you allowed to take a view on the direction of the market or hold overnight positions? Or is that totally irrelevant in a market making role, as only arbitrage is exploited?

Thanks for replies.

 

[HoodTrader]

Thanks guys some very informative ideas in this post. I have a further question, which is possibly not a common one I know there is never a outright correct answer but opinions are appreciated.

Firstly just to fill you in on my situation and then questions at the end:

I am currently working for an IB on a very successful desk, I have been here about 6 months and enjoying the atmosphere and the projected salary benefits but not the resposibility. We take prop positions on interest rates and last year my boss made £1.1m in bonus (yes thats right pounds), he has been here 12 years though so I am a long long way off that - but this just gives you an idea of the situation here.

Recently I have been offered a place in a arbitrage/market making whatever you want to call it house, the pay is the same right now - but I have been told in future that it stays pretty consistent (i.e. doesnt grow at the same rate as it would in banking). This doesnt really bother me because I find that on the other side the house has a lot of advantages over my bank, like they dont expect me in at weekdnds/bank holidays and they will give me a book within 1 month, whereas at the bank it will take me 1 year. And the house provides me better opportunities for working abroad.

Honestly I make the house sound great I know, but I have 2 major concerns:

1) My main question is I wonder how much as a successful trader I can reasonably expect to earn at Optiver/IMC/Tibra or any similar place. Im not talking millions supertrader, just the average guy? I ask because I have heard bonuses do not grow anywhere near as much as they do in a bank. Clearly 5 years down the line I would not want to be earning pretty much the same as I started on, so I wonder if anyone has heard the same rumour as I have about bonuses remaining at a similar level.

2) Why is it that people only last 10 years in this profession, the hours are less than I currently work and we trade the same products? Are they moving on and doing something else? What are the realistic choices after a few years in this business?

Cheers guys for opinions/help etc. I am far from an expert on prop houses so any help is really appreciated. On the other hand if anyone has any questions about working for an IB I will gladly help if I can. Please feel free to ask. Thanks again!

 

[roohif]

Thanks guys some very informative ideas in this post. I have a further question, which is possibly not a common one I know there is never a outright correct answer but opinions are appreciated.

Firstly just to fill you in on my situation and then questions at the end:

I am currently working for an IB on a very successful desk, I have been here about 6 months and enjoying the atmosphere and the projected salary benefits but not the resposibility. We take prop positions on interest rates and last year my boss made £1.1m in bonus (yes thats right pounds), he has been here 12 years though so I am a long long way off that - but this just gives you an idea of the situation here.

Recently I have been offered a place in a arbitrage/market making whatever you want to call it house, the pay is the same right now - but I have been told in future that it stays pretty consistent (i.e. doesnt grow at the same rate as it would in banking). This doesnt really bother me because I find that on the other side the house has a lot of advantages over my bank, like they dont expect me in at weekdnds/bank holidays and they will give me a book within 1 month, whereas at the bank it will take me 1 year. And the house provides me better opportunities for working abroad.

Honestly I make the house sound great I know, but I have 2 major concerns:

1) My main question is I wonder how much as a successful trader I can reasonably expect to earn at Optiver/IMC/Tibra or any similar place. Im not talking millions supertrader, just the average guy? I ask because I have heard bonuses do not grow anywhere near as much as they do in a bank. Clearly 5 years down the line I would not want to be earning pretty much the same as I started on, so I wonder if anyone has heard the same rumour as I have about bonuses remaining at a similar level.

2) Why is it that people only last 10 years in this profession, the hours are less than I currently work and we trade the same products? Are they moving on and doing something else? What are the realistic choices after a few years in this business?

Cheers guys for opinions/help etc. I am far from an expert on prop houses so any help is really appreciated. On the other hand if anyone has any questions about working for an IB I will gladly help if I can. Please feel free to ask. Thanks again!

G'day Hoodie,

I can only really answer your questions from a market maker firm's perspective - I'm a co-founder (and current director) of Tibra along with au959 and others on this forum.

1) I don't think anyone on this forum will give actual figures on the average bonus at their respective firms, suffice to say I am not shocked by or in awe of your boss' bonus. I'm not sure where you picked up the idea that bonuses at prop firms or market makers don't grow in the same way as investment banks bonuses - there's no way after five years you are "earning pretty much the same as you started on" because you would have either been let go, or be now earning many multiples of your salary.

2) My personal view on this is that any good market makers that have been in the game for up to ten years have most likely retired

Cheers!

 

[Tobi99]

2) My personal view on this is that any good market makers that have been in the game for up to ten years have most likely retired

Hi Roohif, I totally agree with this. If you are a good trader for 10 years, you would have been earning enough funds for retirement. It doesn't mean that you have to retire but you have the option to do so. You are attending the best training and support in this industry, if you are employed by the market makers or IB. So the chance of success will be relatively high.

 

[HoodTrader]

Cheers guys. The information I actually wanted to know was whether growth is pretty good. It seems logical to me that to retain the top talent it would be, but obivously having heard a rumour that is something that I am unsure about. Also with the career prospects, I dont know I dont see myself as a guy who can retire in 10 years I have to be doing something - so I wonder what people who dont retire actually do? Any ideas?

I have to make my decision within 2 weeks, so thanks for opinions and I will keep you posted

 

[kendran]

it is clear to me that as a trader you earn lots of money if you are successful, be it in a bank or at a prop trader/market maker. the other thing is how many people that start out as a trader are actually successful.

@ roohif: we can read in several posts here how selective tibra is in hiring graduates. can you give a rough indication as of how many graduates actually make it, e.g. stay with the firm for more than say 1-2 years? and what made the ones fail who didn't make it? do you also have these experiences for other market makers?

 

[HoodTrader]

One of my current colleagues used to work with IMC he said that they used to offer new starters a 6 month initial probation-type contract, he said that nobody was ever let go during this 6 month period but at the 6 month point only around 50% of them stayed on.

He also added that some of these were choice of the employee - whether they didnt like the job or couldnt settle into their new location - but he couldnt tell me what % of people out of the leavers that it was.

Apparently if you last 6-12 months then you are going to become a decent and more importantly consistent trader and in this case you trade until you decide you dont want to anymore.

 

[roohif]

@ roohif: we can read in several posts here how selective tibra is in hiring graduates. can you give a rough indication as of how many graduates actually make it, e.g. stay with the firm for more than say 1-2 years? and what made the ones fail who didn't make it? do you also have these experiences for other market makers?

Very difficult to say. I think the rate overall is somewhere between 50% and 75% retention (at the probation stage). It is/was very rare for a trader to leave after they've been there one or two years.

What happens to the guys that fail? Well, we do our best to screen the candidates but after the training it becomes clear which ones are going to "get it" and which ones won't. The guys that won't are let go pretty quickly. Then at the end of the probation period there's another review, and if we're not convinced that they'll make it as an independent and proactive trader, then there's another tough decision to be made.

I'd say this applies equally to both Optiver and Tibra.

Hope that helps.

 

[kendran]

Very difficult to say. I think the rate overall is somewhere between 50% and 75% retention (at the probation stage). It is/was very rare for a trader to leave after they've been there one or two years.

What happens to the guys that fail? Well, we do our best to screen the candidates but after the training it becomes clear which ones are going to "get it" and which ones won't. The guys that won't are let go pretty quickly. Then at the end of the probation period there's another review, and if we're not convinced that they'll make it as an independent and proactive trader, then there's another tough decision to be made.

I'd say this applies equally to both Optiver and Tibra.

Hope that helps.

thanks roohif. can you think of 2 or 3 guys who you hired and who didn't survive the first months. why specifically did you let them go?

 

[swedendenmark]

thanks roohif. can you think of 2 or 3 guys who you hired and who didn't survive the first months. why specifically did you let them go?

Roohif's answer would be appreciated.