Going to IB/Prop Firm/Hedgefund as career start?

M

mizhael

Hi all,

I need your advice. I am graduating with a PhD degree from a reputable school. My PhD is in Econ/Finance and I have quantitative and fin-math masters.

Most naturally, I was considered to be a fit for quantitative analyst or trading positions, for example, the Prop Firms and Hedge Funds I contacted all wanted me to do statistical arbitrage or high frequency algorithm trading, although I am also interested in doing fundamental based or global macro based trading. On the IB side, the flow traders don't like me because they generally don't hire PhDs, unless probably if I get my PhD degree at age of 23 and am young...

I want to ask which place is better for a career start, the sell side of IB, the prop-trading side of IB, or the big Prop Firms, or the big Hedge Funds? Which career path has more upside potential? What skillset do I gain in a Prop Firm? Will it help me to become a fund manager myself and a successful investor in the future? I guess I am mostly unsure about which direction to pursue, quantitative/high frequency trading or fundamental/global macro trading? What might be the upside/uplimit for a high frequency trading position?

Thanks a lot!
 
Quote from mizhael:

Hi all,

I need your advice. I am graduating with a PhD degree from a reputable school. My PhD is in Econ/Finance and I have quantitative and fin-math masters.

Most naturally, I was considered to be a fit for quantitative analyst or trading positions, for example, the Prop Firms and Hedge Funds I contacted all wanted me to do statistical arbitrage or high frequency algorithm trading, although I am also interested in doing fundamental based or global macro based trading. On the IB side, the flow traders don't like me because they generally don't hire PhDs, unless probably if I get my PhD degree at age of 23 and am young...

I want to ask which place is better for a career start, the sell side of IB, the prop-trading side of IB, or the big Prop Firms, or the big Hedge Funds? Which career path has more upside potential? What skillset do I gain in a Prop Firm? Will it help me to become a fund manager myself and a successful investor in the future? I guess I am mostly unsure about which direction to pursue, quantitative/high frequency trading or fundamental/global macro trading? What might be the upside/uplimit for a high frequency trading position?

Thanks a lot!
More...

Again on the IB side, the Prop Traders don't like me either. They are PhDs and one of them (an EE PhD) told me I wasted my time by switching from EE to Econ/Finance (my undergraduate was in EE). He said my school path didn't make sense to him. I guess he doesn't think doing Econ/Finance for trading is necessary.

On the Prop-Trading side, I got extremely high score on the numeric test of Optiver. They still don't like me because I am a PhD, although I am fast in math, multi-tasking, quick in thinking and probabilistic in thinking due to my background.

The StatArb and HighFreq groups expressed some interests in me. Yet I am not sure what skills I will accumulate in the long run and whether it will leverage on my interests about Econ/Finance/Fundamentals/GlobalMacro, etc.

I haven't got a chance to talk with fundamental shops, because the recruiters almost unanimously all route me to the Quant side.
 
You have some pretty terrible timing! I'm not in the business, but I am an EE. There is/are going to be a hellofa lot of quant-types looking for just a few jobs. And, really, what did they do for the 1000s of HFs and trading desks going out of business right now?

What's wrong with being an EE? I've never had to look for a job in 25 years. I'm only pulling in 6 figs, but how much does one need? And I don't have to live in an expensive hell hole like NYC. There will aways be good jobs for engineers.
 
Quote from Wayne Gibbous:

You have some pretty terrible timing! I'm not in the business, but I am an EE. There is/are going to be a hellofa lot of quant-types looking for just a few jobs. And, really, what did they do for the 1000s of HFs and trading desks going out of business right now?

What's wrong with being an EE? I've never had to look for a job in 25 years. I'm only pulling in 6 figs, but how much does one need? And I don't have to live in an expensive hell hole like NYC. There will aways be good jobs for engineers.
More...

Nothing wrong with EE. I just desire to be an economist/financier more than being an engineer. It's not all about money. Btw, to save everybody's time, let's don't drag this thread to stray away to discuss EE vs. Finance.

Also, I am asking about choosing a good direction for myself. Bad timing is there, but once one figured out the best direction, there are always opportunities.
 
I'm a PhD EE dropout (only got the MSEE). Took a bunch of Fin. Eng. classes during my PhD pursuit and then decided to start out on my own. Regarding the IB/Prop. Form/HF route, you’re better off asking the questions you asked on wilmott.com. The group on ET is largely an uneducated, make trading a hobby type. You’ll find more people with similar backgrounds as yourself on the Wilmott forums.

In any case, my suggestion would be to trade on your own as soon as you can afford it. If you're worth anything intellectually, you'll be able to figure out (with some effort) what these funds/firms do to make money and design your own models. Remember, your ideas are what matter, not where you work…

There's a catch/tradeoff in working with good funds - your ideas become their ideas and vice versa. The con: If you have good ideas, you're only going to make a fraction of what those ideas are potentially worth... the pro: you'll get paid salary regardless. Trading on your own is an "eat what you kill" business, so if your ideas suck, you lose. Some people are not willing to take that risk.

If you can get there, the rewards to running your own fund are substantial in terms of personal freedom and money. You’re going to need a few years track record and some contacts (keep your alumni contacts), and most of all, good ideas… again, ask yourself how smart you really are, and, take the risk while your still young and can emotionally afford a failure or two.

Going the IB career route is the safe way and very lucrative from the start, but your potential is limited in many aspects.

Mike
 
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