Recruiting practices for Prop firms

Originally posted by IvyLeagueTrader
however, the truth is in the numbers. on average, traders with advanced degrees tend to be better traders. this is a time tested recipe proven to be successful by the most prestigious firms on wall street (gs, jp, merrill) as well as the firm i work at. of course the occassional high school dropout "superstar" story arises, but they happen very rarely. i've worked on a trading desk at merrill for 3 years before trading on my own. all 19 traders came from top 10 schools.
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Ivy:

Because "prestigious" firms tend to hire Ivy League graduates is in no way proof that they are more likely to be successful. Of the hundreds of traders I have dealt with over my institutional career, I would say 80% have been white males. 15% have been white females, and 5% include everything else. Am I to assume then that white males are the best traders since that's who Wall Street hires?

If you worked as a trader at Merrill then you know how the game is played. It's all about relationships and networking. Performance is secondary. If you graduate from an Ivy League school you probably have a good degree of intelligence, but it's also likely you have a good degree of wealth, and relationships. On the Floor of the NYSE when a new clerk starts, the joke is that you ask 'who do you know?', because most anyone down there will tell you who got them through the door.

Qwiktrade could be a great profitable trader with a proven track record of many years, but if he tried to get a job as a trader at Merrill I'll bet you anything that he would be rejected. That tells you that these firms are more interested in prestige than talent. How would the other Ivy Leaguers react if they did hire Qwik? What if he blew all of them away in performance? Would he be a hero? No, he would be hated, resented, and a threat to the 'Old Boy Network'.

Prop firms give everyone a chance. As Gene and Don mentioned above, they try to look for certain qualities, but only time will tell if a person has what it takes. If I have the desire and the money, should I be rejected because I didn't go to a top school? I would hate to see prop firms take that type of approach. The SEC is employing their own version of "weeding out" people. They have decided that if you have less than $25,000, they will save you the trouble of losing it all by not allowing you to daytrade. However, if I have $25,500, I suddenly have the necessary skills (and tools) to now daytrade profitably. Ridiculous.

Proprietary trading is the great equalizer. I can only rely on myself, and I can only blame myself. When I enter a trade I don't give an explanation with my order to the specialist or Market Maker. They don't care why I did something or where I went to school. I either make money or lose money. Even as an institutional trader, we always used to laugh on the desk about how nothing we learned in school was used in what we did (I never took one financial class in college). Everything I know today about trading came from experience. Now as an independent trader the same holds true. Most of the things I know about trading in the institutional world are useless to me. I've basically have had to start from the beginning again and learn how to trade from a different perspective. The hardest thing is unlearning what I thought I knew, but it gets easier with time...

DeeMan
 
Call me cynical, but hiring - like trading - is a game of statistics.

Generally, the more commitment and talent a candidate can prove (education is good for both) the higher the chance of hiring a good employee.

It's a simple as that I'm afraid :)
 
Well the nice thing about it is that I've made enough money trading that I could now go to college if I wanted to. I wonder if a 62 year old freshman could get in one of them Animal Houses?:D
 
A degree is a worthy achievement. It can be thought of as a symbol of effort and intelligence, proof to the holder and potential employer of ones ability. But, I can't see any reason that the same effort and innate intelligence can't be applied to trading. With trading, the symbol of ones effort and intelligence is not the degree, but the bank statement, which, arguably, is more meaningful, and the reason most people have for getting a degree in the first place.
 
Qwik and DeeMan,

Very well said.

One thing I like about trading is that you get to take money from those arrogant, self-righteous, silver spoon...er, um, I mean well-educated, gifted, thoroughbreds. No offense to those from the ivy league, I just think their priorities are messed up...as evidenced by the number of big time fund managers with fancy degrees who can't beat the S&P but can play a rollicking game of polo.

It doesn't matter where you went to school (or GED classes, lol) since you hardly learn anything there to help you become a successful trader. That's another great thing about trading. Its not a respecter of persons. It cares nothing about pedigree, color of skin, or how much money your "Daddy" has. Like true capitalism, the only thing that matters is your ability to play the game. "Dumb money" comes in all shapes and sizes, including ivy covered walls.

Did Ivy really say trading has been "bastardized" by "common folk"? Geez, you people make me want to puke! Come down from the ivory tower every now and then and take a look around...don't worry, we have indoor plumbing now.


One of the "common folk" (and proud of it) :),


Kirk
 
Yea, "bastardized" by "common folk". Eeeeoouw. He's either a bonified pompous ass or he's just joking around. Maybe he's royalty? I think I'll dub him "Baron of Graymatter".
 
Ivyleague trader, You really should get in touch with the real world.
The use of the term "Common Folk" has no place in a country that values the "bottom line". There are entertainers and sports people who are making millions with little or no formal education. May be we should hold their millions in a trust fund until they are able to add and subtract and put two coherent sentences together!
Calling qwiktrade an "aberration from the norm" borders on insult. Are you trying to imply that he slipped through the cracks when they were churning out "common folk" traders at the Bastard school of business?
 
OK guys, education may or may not be important to the individual. As far as how it applies to trading success, I can honestly share the facts... I see very little correlation to formal education. I have several MD's, LLB's, PhD's, MBA's, who have not proven to be that good as traders. I have had people with little formal education, and who worked menial jobs and then became a very successful trader.

Don't get caught up in the Ivory Tower (or Ivy Leage) attitude. Trading levels all playing fields as far as I am concerned.

I like to think that I am as comfortable in a bar room as I am in a board room, and when you realize that there is no one who knows more than the market, the subtle differences in education are not significant.

So trade well...
 
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