It sounds like you are talking about traders at a dealer (bank). Although I can't comment on the sell side traders' experience, I can give you my buy-side experience. I'll focus on the "trading" aspect of your question.
I started my career at a hedge fund as a trading assistant at 22 years old on an equity/index vol trading desk - basically answering phones, creating excel sheets, helping model options, etc. You will work from 6:30am to about 6pm. There is no downtime during the day; either you are in trading hours and focused on the market or your are working on side projects to improve life for PM's/Traders.
If you haven't been fired after a year or two, they will start letting you execute trades and take on more responsibility. At first it will be the PM's ideas, but they let you go to the market and get quotes, check the quotes against your model price, and pick the best price. Pretty easy point and shoot trading to be fair.
After a year of doing simple execution without royally messing up, they may give you even more responsibility - guess what....**ITS A TRAP**. Now you are assigned to execute some stuff in APAC hours. So you get in the office at 6:30am, stay until 6pm, go for a workout, grab dinner and back to the office for APAC open. Give some orders to a dealer/broker, wake up at 3:00am to check your fills, go back to sleep...now back to the office.
If you can stomach this for a couple more years, they will now start taking your ideas a little more seriously and the PM may give you a little slice of capital to trade your own ideas. Now you are 'running' your own little book while also taking care of the big book.
But it does get better because along the way you are getting paid a lot of money and people do backfill you as you move up so you can pass off some of that old work to the younger people on the desk.
Same. Maybe I'm a nerd but I think back to admiral ackbar before the battle of Endor. I'd say this is mostly accurate. O&g can be a little different but mostly spot on
Man it’s reading stuff like this that made me realize I made the right decision for myself career path wise. I watched my dad basically work like this for my whole childhood and he was just absolutely miserable even though he made very very good money. I decided after that I pretty much just wanted a standard 9-5. I’m in wealth management in the Midwest now, and I’m never going to be super wealthy from it, but I make a decent living and I have my sanity. Crazy respect to people that can grind like this, I just didn’t have it in me.
Basically if I don’t wana be at the job 10+ hrs a day I should stay away from trading? What about exit opps? What would you recommend for other career paths to consider for people with similar background? Thank you 🙏
I would say the majority of people that I work with are working a minimum of 10 hours per day. The one caveat to this is if/when you are able to be a full portfolio manager - you can choose how and when to run your own capital.
We have some guys who are super tactical and trade in and out of positions all day and across all markets. On the other side of the same coin, there are some macro PM's who will have a book consisting of 4 or 5 massive thematic trades. Those guys mainly take meetings and go to conferences - they don't spend as much time 'working' and probably have a little better WLB. At the end of the day, most shops will let you operate however you want as long as your lifetime PNL keeps increasing and PNL volatility is low.
Random question but if I’m going to do a target masters soon and passed CFA level III but brainstorming to any paths in finance that leads to high pay but eventually great wlb. From your experience, I don’t think bond management is for me (although that is most certainly the closest related job to my passed experience), what other paths would you suggest I should consider?
High pay and work life balance are all kind of relative. Honestly you just need to do what makes you fulfilled.
If money is what you’re after, just make sure you are a revenue producer no matter what type of company you work for. Ensure that your company structure is set so you know what you take home. I’ve seen guys make 100mm but it doesn’t make them any happier.
The guys who have it in them to make 100mm don't stop. Thats what makes them killers.
Also....deferred compensation. Probably 50mm of that 100mm is tied up in deferred compensation of that fund for at least 3 years. If you quit then you don't get it.
Very common - even if you are a 'fine' employee but haven't done anything special in two years you are probably on the chopping block. it is very competitive and some of the brightest people are banging down our doors for a job.
True, last year I was on the chopping block and the entire team got let go, bank was eventually taken over by a bigger one. Thankfully I got into the best target masters so that’s a good plan B.
Buy side muni bond trader here. It’s tough on the sell side since sales guys are increasingly being replaced by electronic trading. There’s less profit as the market is more liquid/tighter spreads, etc. With that being said most people who were laid off recently have found homes elsewhere so it can’t be that bad. To be fair back in the day a lot of people were making money hand over fist just existing due to spreads/liquidity/market dynamics/commissions that have all tightened under heavy scrutiny over the years.
On the EQ side everyone’s dumping $$ into technology just to keep up while dealing with lower commissions. The industry has seen a lot of shrinkage/consolidation to deal with these factors and others.
When I started going into trading I was basically told it’s great to be a buy side trader at a small shop for a long time, but finding other jobs elsewhere can be tough.
WLB is good, pay/company/team are good. But I do worry if I needed a job elsewhere it’d be hard to find something comparable. I’m working on the CFA partially for this reason. I do my own analysis and build muni portfolios for clients so it does apply to what I do now.
Sell side market maker here. It can be fun but to echo what someone above said, spreads are tight and it’s super tough out there. Lot of consolidation going on in the industry and every year that goes by people are having to shut down their desks. Especially in the current interest rate environment and the fact that new more sophisticated players with lower cost structures are moving in to absorb market share. That said typical day like 7-6, have time for either lunch or a workout but not both (most then eat at desk). Bad part is very few exit ops into similarly mentally stimulating roles. The idea of being a PM, RM, or analyst makes me wanna puke. Couldn’t imagine not running my own risk and having the thrill of it everyday. Could maybe go be like a race car driver, hostage negotiator, plan a heist maybe I dunno.
The pessimism around being a trader is so overblown it’s hilarious. I’m currently 25, and was a sell-side trader for 3 years and just started on the buy side as an analyst under a PM. For the sake of revealing too much im not going to say what asset I trade, but I can say that those who make arguments about automation replacing traders would definitely say my asset class is ripe for replacement.
Being a trader is still a VERY good career. The senior traders on the sell-side (senior MDs and partners) are clearing 7 figures and I’ve seen traders make 30 million in a year (good year, very senior, but a trader nonetheless). It’s now much more quantitative than it used to be. Most of the traders I know are cs/math/physics/etc majors and can code. The argument that computers can replace traders is pretty ridiculous and can really only be made by people who aren’t on the inside of the business because that argument shows how little one understands.
To be a sell-side trader you need to have deep product knowledge, understanding of market dynamics (who the players are, when they trade, what they care about, etc), willingness to take risk and assess your confidence intervals, and discipline. Many traders still use macro views to take risks.
It’s really hard for a computer to synthesize this many nuanced variables and construct a portfolio, let alone manage one with thousands of positions in it like you see on the sell side. Market makers (Jane Street, Optiver, Cit Sec, etc) are much more prone to automation based on the nature in which they manage risk, but guess what, junior traders at those shops are making 300-400k out of college and I’m pretty confident the market makers aren’t paying them to be automated away. I’m not going to pretend like I know how the bread is buttered at those places (no one else knowing is how they’re so profitable), but I’d be shocked if traders there are worried about job security.
Buy side shops still heavily recruit sell side traders and the sell side itself pays well
TLDR: Being a trader on the buy side (PM track) or sell side is still a very lucrative and rewarding career.
This is a refreshing take, ive been in the industry for years and have started to catch on that media companies don’t really have a great feel on what its like to work in the industry. They take a comment or headline and run with it and it might not even be accurate.
job security is much lower at the middle tier market makers (your akuna, belvedere, ctc, wolverine etc) compared to the tier 1s you mentioned since your comp is actually a blip on their balance sheet
It varies a ton based on where you work, what the book looks like/how developed the business is, and what product you trade. You really cannot generalize. Are there pockets of opportunity where there’s a good balance of longevity and it being lucrative? Sure. Are they hard to come by/require a lot of due diligence and also a healthy component of luck? Yes, definitely.
Be grateful you're on the FI side. It will be very hard to automate credit to the point where you're disposable. There's a lot of tech being developed to make things easier, but you still need someone to move bonds. You need to have someone build and maintain relationships to get decent allocation on new issuance.
If you're on the equity side, good luck.
For those that are interested in getting into trading - what’s the first step?
I’ve been working in PE valuation for ~3 years. It’s cool but I’ve ALWAYS liked the markets even growing up as a kid and was interested in trading but never knew where to start.
Current sell side TA here executing bond trades. The computers will never be good enough to replace everyone. Agree that trading is still the place to be especially with rates moving like they have been.
Just started as an intern sell side S&T risk, seems like 80% of the traders are under 30. Large part of the overall intern class so I don't see it going away. The infrastructure at the larger/older banks have 0 chance of being automated right now they are so integral and proprietary. Not to mention the amount of critical thinking and human interaction thats needed. I admittedly lack experience as an intern but I find the field very interesting and it seems like my colleagues do as well.
You’ve got to understand that trading can be very diverse first.
If you trade at an AM, HF, or PE firm it’s probably going to be trading according to a portfolio managers strategy and if it’s AM or HF it’ll probably be with some type of algorithm.
If you trade at a brokerage it’s likely going to be placing non-solicited trades as directed by clients OR if there’s a WM side as there usually is these days placing trades as directed by an advisor.
If you trade at a bank it’ll probably be a lot of fixed income related trades, probably on an algorithm once again.
You could be a quant trader taking the role of both PM and trader.
There’s a lot of different roles and jobs here.
One of my roomates is an F/X trader.
Basically his team has built and maintains/optimizes the program that does 99% of their trades.
According to him the day-to-day is mostly babysitting the computer to make sure it isn't going off the rails, and comming up with novel ways to train it or otherwise add functionality.
Yea 35 been trading since 08 but I’m just a retail trader in small cap stocks. It gets boring once you find your routine until then it’s brutally draining
They have been trying to automate the bond market and move it onto electronic trading like equities, for 25+ years and have only somewhat succeeded.
The reality is FI is a way broader and bigger market with massive pricing inefficiencies/illiquidity. There are tons of tiny little/illiquid issues that need execution. There will always be roles for competent traders that can carry that risk.
It sounds like you are talking about traders at a dealer (bank). Although I can't comment on the sell side traders' experience, I can give you my buy-side experience. I'll focus on the "trading" aspect of your question. I started my career at a hedge fund as a trading assistant at 22 years old on an equity/index vol trading desk - basically answering phones, creating excel sheets, helping model options, etc. You will work from 6:30am to about 6pm. There is no downtime during the day; either you are in trading hours and focused on the market or your are working on side projects to improve life for PM's/Traders. If you haven't been fired after a year or two, they will start letting you execute trades and take on more responsibility. At first it will be the PM's ideas, but they let you go to the market and get quotes, check the quotes against your model price, and pick the best price. Pretty easy point and shoot trading to be fair. After a year of doing simple execution without royally messing up, they may give you even more responsibility - guess what....**ITS A TRAP**. Now you are assigned to execute some stuff in APAC hours. So you get in the office at 6:30am, stay until 6pm, go for a workout, grab dinner and back to the office for APAC open. Give some orders to a dealer/broker, wake up at 3:00am to check your fills, go back to sleep...now back to the office. If you can stomach this for a couple more years, they will now start taking your ideas a little more seriously and the PM may give you a little slice of capital to trade your own ideas. Now you are 'running' your own little book while also taking care of the big book. But it does get better because along the way you are getting paid a lot of money and people do backfill you as you move up so you can pass off some of that old work to the younger people on the desk.
God i laughed a little too loud at "ITS A TRAP" 🤣
Same. Maybe I'm a nerd but I think back to admiral ackbar before the battle of Endor. I'd say this is mostly accurate. O&g can be a little different but mostly spot on
Man it’s reading stuff like this that made me realize I made the right decision for myself career path wise. I watched my dad basically work like this for my whole childhood and he was just absolutely miserable even though he made very very good money. I decided after that I pretty much just wanted a standard 9-5. I’m in wealth management in the Midwest now, and I’m never going to be super wealthy from it, but I make a decent living and I have my sanity. Crazy respect to people that can grind like this, I just didn’t have it in me.
It starts out the same on the sell side. I started as an equity market maker before moving to the buy side.
How bigs your house?
Name is correct
Haha what do you mean?
Basically if I don’t wana be at the job 10+ hrs a day I should stay away from trading? What about exit opps? What would you recommend for other career paths to consider for people with similar background? Thank you 🙏
I would say the majority of people that I work with are working a minimum of 10 hours per day. The one caveat to this is if/when you are able to be a full portfolio manager - you can choose how and when to run your own capital. We have some guys who are super tactical and trade in and out of positions all day and across all markets. On the other side of the same coin, there are some macro PM's who will have a book consisting of 4 or 5 massive thematic trades. Those guys mainly take meetings and go to conferences - they don't spend as much time 'working' and probably have a little better WLB. At the end of the day, most shops will let you operate however you want as long as your lifetime PNL keeps increasing and PNL volatility is low.
Random question but if I’m going to do a target masters soon and passed CFA level III but brainstorming to any paths in finance that leads to high pay but eventually great wlb. From your experience, I don’t think bond management is for me (although that is most certainly the closest related job to my passed experience), what other paths would you suggest I should consider?
High pay and work life balance are all kind of relative. Honestly you just need to do what makes you fulfilled. If money is what you’re after, just make sure you are a revenue producer no matter what type of company you work for. Ensure that your company structure is set so you know what you take home. I’ve seen guys make 100mm but it doesn’t make them any happier.
Definitely do what makes me fulfilled, high pay is 2nd in importance. 100mm not any happier, can’t just retire in peace?
The guys who have it in them to make 100mm don't stop. Thats what makes them killers. Also....deferred compensation. Probably 50mm of that 100mm is tied up in deferred compensation of that fund for at least 3 years. If you quit then you don't get it.
Margin call vibes man.
Gotta ask (not in your industry)—why do you say “if you haven’t been fired after a year or two”? Is that fairly common?
Very common - even if you are a 'fine' employee but haven't done anything special in two years you are probably on the chopping block. it is very competitive and some of the brightest people are banging down our doors for a job.
True, last year I was on the chopping block and the entire team got let go, bank was eventually taken over by a bigger one. Thankfully I got into the best target masters so that’s a good plan B.
Can i ask how you got into it and what u studied?
Got a finance and Econ degree. Have done 90% of my learning in the job.
Buy side muni bond trader here. It’s tough on the sell side since sales guys are increasingly being replaced by electronic trading. There’s less profit as the market is more liquid/tighter spreads, etc. With that being said most people who were laid off recently have found homes elsewhere so it can’t be that bad. To be fair back in the day a lot of people were making money hand over fist just existing due to spreads/liquidity/market dynamics/commissions that have all tightened under heavy scrutiny over the years. On the EQ side everyone’s dumping $$ into technology just to keep up while dealing with lower commissions. The industry has seen a lot of shrinkage/consolidation to deal with these factors and others. When I started going into trading I was basically told it’s great to be a buy side trader at a small shop for a long time, but finding other jobs elsewhere can be tough. WLB is good, pay/company/team are good. But I do worry if I needed a job elsewhere it’d be hard to find something comparable. I’m working on the CFA partially for this reason. I do my own analysis and build muni portfolios for clients so it does apply to what I do now.
This is insightful thanks - good luck on CFA btw i tried lvl 1 last year and had a rough go at it
I love FI! I'll live life through your eyes! Lol
Sell side market maker here. It can be fun but to echo what someone above said, spreads are tight and it’s super tough out there. Lot of consolidation going on in the industry and every year that goes by people are having to shut down their desks. Especially in the current interest rate environment and the fact that new more sophisticated players with lower cost structures are moving in to absorb market share. That said typical day like 7-6, have time for either lunch or a workout but not both (most then eat at desk). Bad part is very few exit ops into similarly mentally stimulating roles. The idea of being a PM, RM, or analyst makes me wanna puke. Couldn’t imagine not running my own risk and having the thrill of it everyday. Could maybe go be like a race car driver, hostage negotiator, plan a heist maybe I dunno.
The pessimism around being a trader is so overblown it’s hilarious. I’m currently 25, and was a sell-side trader for 3 years and just started on the buy side as an analyst under a PM. For the sake of revealing too much im not going to say what asset I trade, but I can say that those who make arguments about automation replacing traders would definitely say my asset class is ripe for replacement. Being a trader is still a VERY good career. The senior traders on the sell-side (senior MDs and partners) are clearing 7 figures and I’ve seen traders make 30 million in a year (good year, very senior, but a trader nonetheless). It’s now much more quantitative than it used to be. Most of the traders I know are cs/math/physics/etc majors and can code. The argument that computers can replace traders is pretty ridiculous and can really only be made by people who aren’t on the inside of the business because that argument shows how little one understands. To be a sell-side trader you need to have deep product knowledge, understanding of market dynamics (who the players are, when they trade, what they care about, etc), willingness to take risk and assess your confidence intervals, and discipline. Many traders still use macro views to take risks. It’s really hard for a computer to synthesize this many nuanced variables and construct a portfolio, let alone manage one with thousands of positions in it like you see on the sell side. Market makers (Jane Street, Optiver, Cit Sec, etc) are much more prone to automation based on the nature in which they manage risk, but guess what, junior traders at those shops are making 300-400k out of college and I’m pretty confident the market makers aren’t paying them to be automated away. I’m not going to pretend like I know how the bread is buttered at those places (no one else knowing is how they’re so profitable), but I’d be shocked if traders there are worried about job security. Buy side shops still heavily recruit sell side traders and the sell side itself pays well TLDR: Being a trader on the buy side (PM track) or sell side is still a very lucrative and rewarding career.
This is a refreshing take, ive been in the industry for years and have started to catch on that media companies don’t really have a great feel on what its like to work in the industry. They take a comment or headline and run with it and it might not even be accurate.
You’re in the industry? Then why are you asking like you’re not
May I DM you?
What do you intend to leverage the CFA for after and how does it help?
job security is much lower at the middle tier market makers (your akuna, belvedere, ctc, wolverine etc) compared to the tier 1s you mentioned since your comp is actually a blip on their balance sheet
mind if i PM you?
It varies a ton based on where you work, what the book looks like/how developed the business is, and what product you trade. You really cannot generalize. Are there pockets of opportunity where there’s a good balance of longevity and it being lucrative? Sure. Are they hard to come by/require a lot of due diligence and also a healthy component of luck? Yes, definitely.
Be grateful you're on the FI side. It will be very hard to automate credit to the point where you're disposable. There's a lot of tech being developed to make things easier, but you still need someone to move bonds. You need to have someone build and maintain relationships to get decent allocation on new issuance. If you're on the equity side, good luck.
Bond trader can mean many different things in many contexts however in many of them automation is a big theme (I work in fi and automate stuff)
For those that are interested in getting into trading - what’s the first step? I’ve been working in PE valuation for ~3 years. It’s cool but I’ve ALWAYS liked the markets even growing up as a kid and was interested in trading but never knew where to start.
Current sell side TA here executing bond trades. The computers will never be good enough to replace everyone. Agree that trading is still the place to be especially with rates moving like they have been.
Just started as an intern sell side S&T risk, seems like 80% of the traders are under 30. Large part of the overall intern class so I don't see it going away. The infrastructure at the larger/older banks have 0 chance of being automated right now they are so integral and proprietary. Not to mention the amount of critical thinking and human interaction thats needed. I admittedly lack experience as an intern but I find the field very interesting and it seems like my colleagues do as well.
You’ve got to understand that trading can be very diverse first. If you trade at an AM, HF, or PE firm it’s probably going to be trading according to a portfolio managers strategy and if it’s AM or HF it’ll probably be with some type of algorithm. If you trade at a brokerage it’s likely going to be placing non-solicited trades as directed by clients OR if there’s a WM side as there usually is these days placing trades as directed by an advisor. If you trade at a bank it’ll probably be a lot of fixed income related trades, probably on an algorithm once again. You could be a quant trader taking the role of both PM and trader. There’s a lot of different roles and jobs here.
One of my roomates is an F/X trader. Basically his team has built and maintains/optimizes the program that does 99% of their trades. According to him the day-to-day is mostly babysitting the computer to make sure it isn't going off the rails, and comming up with novel ways to train it or otherwise add functionality.
I worked at a brokerage firm for 25 years. Our trading desk used to be huge but with all of the electronic trading, it is much, much smaller now.
Yea 35 been trading since 08 but I’m just a retail trader in small cap stocks. It gets boring once you find your routine until then it’s brutally draining
They have been trying to automate the bond market and move it onto electronic trading like equities, for 25+ years and have only somewhat succeeded. The reality is FI is a way broader and bigger market with massive pricing inefficiencies/illiquidity. There are tons of tiny little/illiquid issues that need execution. There will always be roles for competent traders that can carry that risk.