(This is going to be a long opening post to set the tone; I do hope that this will lead to constructive and objective discourse, rather than degrade into a flamefest like many of the threads here. I do understand this is an anonymous online forum, but I have nothing to lose.)
I would like to begin a proper discussion on trading at an investment bank, prop trading firm, and hedge funds or buy-side funds.
My background:
Undergraduate in Singapore, graduating in December with a strong Science/Engineering degree. Did an internship on the trading desk at a top tier investment bank, and consequently received a full time offer for the said position. I would like to get into trading (probably in the Fixed Income, Currencies and Commodities sphere), with a focus on Asia. [Not set in stone obviously, as I believe in being open minded early on in one's career, but it is a preference.]
While it may seem obvious I am now in a very good position (rather rare, considering the bleak job market now), something has caught my attention: au959 has said that the basic salary of Tibra is GBP60k/AUD100k. This is much higher than what I am being offered. I am looking to maximize learning and development in my first job, but this premium being paid by the prop firms has compelled me to take a second look at opportunities there.
This is a list of notable prop firms I have gathered:
Jane Street Capital
SIG
DRW
Tibra Capital
Optiver
Transmarket Group
Saxon FInancial
STA
While all investment banks operate and are structured in much the same way, every prop firm is a different animal. The only contact I have at any of these firms, is someone from Saxon. He has been with the firm for 2 years, is very happy, but his basic is less than a quarter of what Tibra offers fresh. His trading limits are also about 20 times smaller than a junior trader at an investment bank. (Given, prop firms generally give their traders a larger % of PnL as bonus than banks.) He trades only intraday, and is limited to a single product (say, a particular equity index).
Is this reflective of all the above prop firms? I have looked at all their websites, and Jane Street Capital (as well as SIG) looks more like a quantitative hedge fund. What are the others like, and where may I get a focus on Asia?
Firstly, I would like to say that based on my friend's experience, I'd say the learning and development there is terrible; being limited to one product at a time, I cannot imagine that there would be enough to learn to warrant devoting months to trading multiple contracts on a single product. Second, of course, is the quantum being traded. The trading is mostly electronic and the size is extremely small; it seems almost on par with a wealthy retail trader (and being a retail trader is an uphill battle). At a bank, however, a market maker, with his size, can actually affect prices (albeit in the very short term), and you have access to a vast amount of information (client and otherwise). I know my view on prop firms is extremely myopic; I hope someone with more experience can come on to clarify.
Lastly, I would like to add a note on hedge funds or the more portfolio-management oriented buy-side funds. This is a long shot, but does anyone here have any experience on what starting out in a hedge fund is like? I have been under the impression that the pay is the highest here, but you start out as a research analyst, and then the move into trader/portfolio manager positions is a long and arduous journey. The learning here is also the steepest, since, generally, hedge funds usually operate over multiple asset classes and do not divide funds into specific products (segregation by broad themes more likely). The situation in buy-side funds are generally similar, except with a much longer horizon and a smaller basic pay.
Thank you for reading to this point. I do hope we can have some good discussion here on starting out in either an investment bank, prop trading firm, or hedge fund (or buy-side fund). I have more to share on investment banks but would like to see how this develops before I proceed further.
I would like to begin a proper discussion on trading at an investment bank, prop trading firm, and hedge funds or buy-side funds.
My background:
Undergraduate in Singapore, graduating in December with a strong Science/Engineering degree. Did an internship on the trading desk at a top tier investment bank, and consequently received a full time offer for the said position. I would like to get into trading (probably in the Fixed Income, Currencies and Commodities sphere), with a focus on Asia. [Not set in stone obviously, as I believe in being open minded early on in one's career, but it is a preference.]
While it may seem obvious I am now in a very good position (rather rare, considering the bleak job market now), something has caught my attention: au959 has said that the basic salary of Tibra is GBP60k/AUD100k. This is much higher than what I am being offered. I am looking to maximize learning and development in my first job, but this premium being paid by the prop firms has compelled me to take a second look at opportunities there.
This is a list of notable prop firms I have gathered:
Jane Street Capital
SIG
DRW
Tibra Capital
Optiver
Transmarket Group
Saxon FInancial
STA
While all investment banks operate and are structured in much the same way, every prop firm is a different animal. The only contact I have at any of these firms, is someone from Saxon. He has been with the firm for 2 years, is very happy, but his basic is less than a quarter of what Tibra offers fresh. His trading limits are also about 20 times smaller than a junior trader at an investment bank. (Given, prop firms generally give their traders a larger % of PnL as bonus than banks.) He trades only intraday, and is limited to a single product (say, a particular equity index).
Is this reflective of all the above prop firms? I have looked at all their websites, and Jane Street Capital (as well as SIG) looks more like a quantitative hedge fund. What are the others like, and where may I get a focus on Asia?
Firstly, I would like to say that based on my friend's experience, I'd say the learning and development there is terrible; being limited to one product at a time, I cannot imagine that there would be enough to learn to warrant devoting months to trading multiple contracts on a single product. Second, of course, is the quantum being traded. The trading is mostly electronic and the size is extremely small; it seems almost on par with a wealthy retail trader (and being a retail trader is an uphill battle). At a bank, however, a market maker, with his size, can actually affect prices (albeit in the very short term), and you have access to a vast amount of information (client and otherwise). I know my view on prop firms is extremely myopic; I hope someone with more experience can come on to clarify.
Lastly, I would like to add a note on hedge funds or the more portfolio-management oriented buy-side funds. This is a long shot, but does anyone here have any experience on what starting out in a hedge fund is like? I have been under the impression that the pay is the highest here, but you start out as a research analyst, and then the move into trader/portfolio manager positions is a long and arduous journey. The learning here is also the steepest, since, generally, hedge funds usually operate over multiple asset classes and do not divide funds into specific products (segregation by broad themes more likely). The situation in buy-side funds are generally similar, except with a much longer horizon and a smaller basic pay.
Thank you for reading to this point. I do hope we can have some good discussion here on starting out in either an investment bank, prop trading firm, or hedge fund (or buy-side fund). I have more to share on investment banks but would like to see how this develops before I proceed further.
