Prop trading or Investment Bank

Hi all. Tis question may have come up before on the forums, but I could not find anything. Anyway, what is the best way to get into trading after qualifying from university. Would it be to go through a grad training programme through a large investment bank then then perhaps specialise in trading? Or is it to go specialist prop trading firms who train you direct to trader without going through all the other training IBs do? Also how easy is it if you were go to a prop firm then wanted to changeto anther area of financial services??

I am only 16 yet so this is a few years ahead, but it does not hurt to plan!!!

first question: why do you want to trade?

Ideally, you should set yourself up for either - different people will have different opinions, and most people don't want to do the same thing they thought when they were 16 (I know I don't, and I'm only 21). Get yourself into a good uni (pref oxbridge), get a first in a good subject, and get involved in any finance/investing societies you can. Also, try to get some internships over the summer holidays. At the same time, read up on trading, trade demo accounts, and if you're successful, try trading a bit of your own money.

All this combined should put you in a good position to get into a bank or prop firm (or almost anything else), and allows you to make a decision closer to the time.

As for transferring - apparently it is much easier to go from a bank to another job than from a prop firm.

Training - I think it is taken more seriously in the banks, who will also pay a salary while you are learning, which takes the pressure off.

Aside from having guy's in their offices called "traders", the roles are quite removed from one another; you should investigate which you would prefer before making any decisions.

anyway, your 16, and your using the internet for career advice?!. Maybe you should look into becoming and actuary, you'll fit right in

Do some work experience at both then decide.

Prop firms are easy to get into, Banks much harder. In a prop firm your all on your own, its very high risk very high reward, in a bank is practically no risk but much lower reward/compensation. Of course this is all in relative terms and you should expect to pull at least £xxx,xxx in both roles.

My cousin works in a Prop firm, I think this was because he failed to get into an investment bank grad programme. Another friend of mine works at UBS and he is the same age asmy cousin. He works from about 8 til 8 where as my cousin in prop house works much less. Is this normal?? I am aiming for cambride and have done my maths gcse a year early (A*) and started AS Level maths. I am interested in finance. I have been reading FT for about 2 years (i have put it off while i do my gcses) and I occasiaonally trade my dad's SB account. Mr Gecko in regards to your statement a careers analysis test we did at school reccomended actuary but I have done some experience in Lloyds of London and underwriting seems much better. Any other advice guys?

Don't touch insurance.

Concentrate on getting into Cambridge for now (doing a numerate course) and worry about things then...

Hours (and variation thereof) sound normal.

Given the choice i'd go for an investment bank any day. The hours are probably longer, you'll have to work harder and put up with some bureaucratic politics; but you'd be crazy to turn down Goldman Sachs (for example)

arabianights said:

Don't touch insurance.

Concentrate on getting into Cambridge for now (doing a numerate course) and worry about things then...

Hours (and variation thereof) sound normal.

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Sound advice re: Uni, but I'm not sure I agree that insurance isn't worth a look.

Insurance (I'm not talking sales or broking) can be very interesting indeed; if one has the right mindset, and isn't allured by the perceived glamour and excitement of trading, there are very good careers to be had (with salaries to match).

There are some very, very bright people behind these markets.

Would you say prop trading is the second choice for grads failing to get into I banks?

96pills said:

Would you say prop trading is the second choice for grads failing to get into I banks?

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I don't want to be too controversial - but for me it was a second choice. The requirements to work in a prop shop are less demanding than in the banks and I perceived there to be less competition/place as the prop places recruit numerous times a year - whereas banks usually only have the 1 intake.

So would you sayI should have my mind set on an investmetn bank graduate training programme then see what happens. If that fails then go to prop trading? BTW when u go on a grad training programme do they show you all the different aspects of the bank before you specialisein trading, or M&A etc?,....

If you want to "be a trader", perhaps so you can flash around a centurion aged 30, have a stable salary or bed vacuous bints at the merest hint as to your job title (and god knows there's nothing wrong with any of that) then prop is definitely a second choice. And I think most applicants to be a trader fall into this category.

If you really understand the difference between the two jobs then there are plenty of reasons to prefer prop over IB - primarily the freedom, unbeatable by pretty much any graduate job (Don't underestimate this. If I fancied it I could decide this very second to go to Hong Kong for a week and not have to provide any notice at all... only my enthusiasm for the markets and the fact I have to speak to a sheriff next week up in Scotland about a slight bit of damage my poor deceased jag did to a poorly lit bollard and itself are stopping me) and knowing you've earned your pay through your own actions and decisions being the primary ones.

But be aware it's much easier to move from IB to prop than prop to IB...

P.s. Insurance is for people with Asserger's syndrome and Buddy Holly specs.

Also, i reckon most people who try prop trading fail

96pills said:

Would you say prop trading is the second choice for grads failing to get into I banks?

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I would say that for almost all successful prop traders, prop trading was the first choice, and that for most people that thrive in a career at a bank, banking was the first choice.

They are two very different environments and what Black-Star said about prop trading being high risk high reward is very true. The styles of trading are very different too.

The vast majority of people that start prop trading simply don't get good enough at it and move on to other jobs. However the ones that make it can work the hours they want, wear whatever clothes they want to to work and can make a lot more money than someone their age at a bank. On the flip side their is no salary and you will often (but hopefully not too often) have days or even months where after a hard slog you go home poorer than you started. You also need to bear in mind what a small proportion become successful and think about how you are going to afford to live until you do so.

In a bank you will get a very good steady sallary but you will have to live by the rules, brown nose the right people, get bossed around, and basicaly sell your soul for as many hours a day as they can get out of you.


But don't think that prop trading is going to be less hard work. You can make it less hard work if you want but then you won't get good at it. To get good enough to have a career from it you will have to work at least as hard and be even more dedicated than you would at a bank for at least the first year or two and you must do this in a more relaxed environment where you will need to push yourself that extra yard because other people aren't doing it for you.


Make sure you do an internship with a bank to get a feel for what that's like and also try to do a couple of weeks work experience at a prop firm as well. They really are very different jobs for different people.

As far as the CV is concerned the bank will definately be more impressive but the prop firm is by no means the killer some people like to make out. I know many many people (Too many!) that have left prop firms and gone into banks/ hedgefunds/ other good jobs. so don't worry too much about that.

Hope this helps,
Aspire

Oh, and by the way - All prop firms are not equal, only join a decent one (Search any names on here to see what people have to say on them)

arabianights said:

P.s. Insurance is for people with Asserger's syndrome and Buddy Holly specs.

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Of course, all prop traders are cool headed individuals with razer sharp minds. I can only sympathise with the unfortunate bollard, I imagine it was caught in the headlights of your pen!s enhancing sportscar...

...hhmmm.... cool headed... caught in the headlights...

... Mr. Jordan, I am reminded of a particular Canadian radio show that was brought to my attention:

CBC Radio | The Current | Whole Show Blow-by-Blow

April 23rd, part 3, from 1:20s onwards: "errr.... and.... you......"

Clearly the encounter with said bollard is not your first experience of a car crash. Cool headed indeed!

Kindest regards


p.s. come on, you didn't think you'd get away with it, did you?

p.p.s. I doubt it is necessary to clarify the details of the particular gestures you were subject to.

MrGecko said:

p.s. come on, you didn't think you'd get away with it, did you?

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Well, I won't be slagging off the insurance industry again

ok sorry guys this might sound like a bad question, but do prop trading companies just trade derivatives and not normal equities. Or does it totally dependend on thier statergies. or is it down to the individual trader? Because I know banks have different trading desks for bonds, equities etc.
Thank you guys for all the useful infomation posted as well, it has given me a mix of opinions. when i do my work experience at a prop trading company and a hedge fund in the summer I will also hopefully get more insight!!!

I think in America a few trade equities.

Vast majority in the UK trade derivatives afaik (and also mostly futures afaik).

normally prop houses trade liquid derivatives such as bund, bobl, schatz, euribor, short sterling, euroswiss, gilt, oil on ICE that sort of thing. sometimes they do index derivatives. in banks you tend to have pretty much 3 entities-you have treasury services which manage the banks lending/borrowing risks (hedges etc), the prop desks within a bank (they tend to market make too) and then you have the fund managers. these guys trade everything and I mean everything. obviously this framework is not set in stone and the list not exhaustive. you also have pension funds which I think are completely different to hedge funds. pension funds are all about preserving capital and tend to have a nicely balanced bond/stock/commodity portfolio. they are very heavily regulated and usually well hedged. hedge funds on the other hand are more like institutional prop shops for a comparable description. pretty much unregulated and trade highly leveraged they do what they want. obviously different hedge funds trade different products and strategies but they have much more breathing space.

again this is from my point of view and i'm sure others here will pull that apart