Trading dying a slow death
- Thread starter sputdr
- Start date
Hello:
This happens often, and is part of the cyclical nature of the markets. Retail traders go under first, because they have not been able to find an edge, and the account has finally hit a level from which it is psychologically too difficult to recover. Next the prop traders. These folks are the former retail traders who thought that there might be some magic protection to obtaining "proprietary" licenses. Usually they have gone to prop houses where the promotor could care less about training. They are cannon fodder. As soon as they stop generating commish fees they are washed out too. Finally, on both sides the retail and prop traders who found an edge, but that edge was based on historical tendency. As soon as the character of the market changes, they get flushed out because they are unable to figure it out and adapt. A great example of that is seen in the complaining about the way the ER contract has "changed", and when summer hits, another wave will get washed out as seasonal volatility changes hit the S&P (and the equity side).
What you have left are the folks who have a decent background and the intelligence (or luck) to figure it out.
Markets have been this way since day one.
Good luck to you.
Steve
This happens often, and is part of the cyclical nature of the markets. Retail traders go under first, because they have not been able to find an edge, and the account has finally hit a level from which it is psychologically too difficult to recover. Next the prop traders. These folks are the former retail traders who thought that there might be some magic protection to obtaining "proprietary" licenses. Usually they have gone to prop houses where the promotor could care less about training. They are cannon fodder. As soon as they stop generating commish fees they are washed out too. Finally, on both sides the retail and prop traders who found an edge, but that edge was based on historical tendency. As soon as the character of the market changes, they get flushed out because they are unable to figure it out and adapt. A great example of that is seen in the complaining about the way the ER contract has "changed", and when summer hits, another wave will get washed out as seasonal volatility changes hit the S&P (and the equity side).
What you have left are the folks who have a decent background and the intelligence (or luck) to figure it out.
Markets have been this way since day one.
Good luck to you.
Steve
I agree
What is disturbing is that I"ve been seeing veteran market makers and sales traders who were previously making 7 figure incomes now dying for a job that pays 100k.
The last time the mkt traded like this it took the spanish bombings to wake it up.
I just wonder how long it can stay like this.
What is disturbing is that I"ve been seeing veteran market makers and sales traders who were previously making 7 figure incomes now dying for a job that pays 100k.
The last time the mkt traded like this it took the spanish bombings to wake it up.
I just wonder how long it can stay like this.
Traders having access to global markets shouldn't be complaining... surely there'll always be some market in the world which is trending at any point of time.
Besides, the Trader P/L thread confirms that smart prop traders in the USA are making good money even in present circumstances.
So there's no reason to be overly negative.
just my 2p ofcourse.
Besides, the Trader P/L thread confirms that smart prop traders in the USA are making good money even in present circumstances.
So there's no reason to be overly negative.
just my 2p ofcourse.
Prop guys in my group (myself included) are making between 20k-50k a month lately so I dont see the same things you are. Sure, the market could be a lot better but there is certainly good money to be made.
its fine for us swing traders. nice ranges. the last thing i would want to see is the market take off and run to new highs without stopping.
Where next for equities traders?
By Sarah Butcher
20 Sep 2005
This isnât a great time to be working as an equities trader. In the past four months, both Goldman Sachs and UBS have slashed US equity trading teams by up to 10%. Recruiters warn of more cuts to come, and lower bonuses.
âThere will be further redundancies for equities traders before December,â predicts Joe McCann, chief executive officer of McCann & Company, a New York-based executive search firm with a finance specialty. âWhen banks like Goldman and UBS make cuts everyone else has to sit up and take notice,â he adds. âBy some accounts, thereâs a 30% surplus of people trading equities right now: too many people have time to look at screen savers and chit chat about taking holidaysâ
Paul DeLucia, a partner at the Options Group in New York, is equally downbeat: âIf youâre talking about pure execution traders who are responsible for making prices, instead of product development, thereâll be a definite decrease in the need for them,â he agrees. âItâs increasingly hard for these people to add value.â
Ineluctable march of the machines
Equity tradersâ travails are symptomatic of changes afoot in the broking industry. Commissions are falling as mutual funds, hedge funds, and other institutional clients squeeze fees. At the same time, automated trading systems are allowing these clients to bypass traditional brokers and execute trades directly. And according to industry pundits, mergers such as those between the New York Stock Exchange and Archipelago, Nasdaq and Instinet, are likely to hasten the spread of automated trading still further by boosting the power of electronic exchanges.
Gavin Little Gill, a senior analyst at TowerGroup, a US market research firm, and author of a report on the spread of electronic trading, says growth is inevitable given the cost savings on offer: âWeâre looking at the difference between a penny-a-trade under automated systems compared to upwards of five cents at trade under traditional systems,â he says.
To date, publicity surrounding redundancies has largely focused on the US market. But equities traders are also being let go on this side of the Atlantic. Seven traders were made redundant from Merrill Lynch in February 2005; Mark Horlock, a consultant at recruiter Alexander Mann in London describes it as a harbinger of things to come: âCustomers increasingly want a low touch execution service with minimal human interaction.â
According to recruiters, low bonuses will be an important mechanism for lopping surplus equities traders: by paying less than last year banks will aim to communicate that the timeâs come to move on. âThe bonus norm for equities traders will be 10-15% down in 2006 compared to 2005,â says McCann. âThe people who banks want to leave will receive zero or minimal bonuses this year,â forecasts Horlock.
Re-skill or regret it
So whatâs a simple equities trader to do? The answer is, re-skill, and soon - no one can say they didnât see this one coming. âAt the end of the day, what was once a relationship game is becoming a quant game,â says Little Gill. âEquities traders are being replaced by people with strong quant backgrounds who can build algorithmic models.â
Not everyone will need a maths PhD, however. While quantitative models take over so-called âlow-touchâ trades requiring minimal human intervention, âhigh-touchâ trades which are complex and high value, will still need a human somewhere in the mix. But recruiters say the traders who keep their jobs will be a different breed to their predecessors.
âThe new generation are multi-asset class aware and customer-facing,â says Horlock in London. âCustomers like hedge funds are increasingly interested in talking to traders directly â unlike old-fashioned market makers, the new breed needs to be eloquent and presentable in front of clients.â
McCann advises actively seeking exposure to equity derivatives. âIf youâre an equities trader and you donât have exposure to derivative products, make sure you get it,â he says, âThe folks who remain on will be the ones who raised their hands and said Iâd like to migrate to a derivatives desk.â
At a push, De Lucia says equities traders who are good relationship builders and salespeople could join the salesforce for quant trading models used by electronic trading systems. He says another alternative could be moving into fundamental research or execution trading on the buy-side.
Some recruiters are pessimistic, however. âAt the end of the day itâs going to be a real catch for some people,â said one. âIf you donât have the educational background and mental aptitude to re-skill, the future could look pretty bleak.â
By Sarah Butcher
20 Sep 2005
This isnât a great time to be working as an equities trader. In the past four months, both Goldman Sachs and UBS have slashed US equity trading teams by up to 10%. Recruiters warn of more cuts to come, and lower bonuses.
âThere will be further redundancies for equities traders before December,â predicts Joe McCann, chief executive officer of McCann & Company, a New York-based executive search firm with a finance specialty. âWhen banks like Goldman and UBS make cuts everyone else has to sit up and take notice,â he adds. âBy some accounts, thereâs a 30% surplus of people trading equities right now: too many people have time to look at screen savers and chit chat about taking holidaysâ
Paul DeLucia, a partner at the Options Group in New York, is equally downbeat: âIf youâre talking about pure execution traders who are responsible for making prices, instead of product development, thereâll be a definite decrease in the need for them,â he agrees. âItâs increasingly hard for these people to add value.â
Ineluctable march of the machines
Equity tradersâ travails are symptomatic of changes afoot in the broking industry. Commissions are falling as mutual funds, hedge funds, and other institutional clients squeeze fees. At the same time, automated trading systems are allowing these clients to bypass traditional brokers and execute trades directly. And according to industry pundits, mergers such as those between the New York Stock Exchange and Archipelago, Nasdaq and Instinet, are likely to hasten the spread of automated trading still further by boosting the power of electronic exchanges.
Gavin Little Gill, a senior analyst at TowerGroup, a US market research firm, and author of a report on the spread of electronic trading, says growth is inevitable given the cost savings on offer: âWeâre looking at the difference between a penny-a-trade under automated systems compared to upwards of five cents at trade under traditional systems,â he says.
To date, publicity surrounding redundancies has largely focused on the US market. But equities traders are also being let go on this side of the Atlantic. Seven traders were made redundant from Merrill Lynch in February 2005; Mark Horlock, a consultant at recruiter Alexander Mann in London describes it as a harbinger of things to come: âCustomers increasingly want a low touch execution service with minimal human interaction.â
According to recruiters, low bonuses will be an important mechanism for lopping surplus equities traders: by paying less than last year banks will aim to communicate that the timeâs come to move on. âThe bonus norm for equities traders will be 10-15% down in 2006 compared to 2005,â says McCann. âThe people who banks want to leave will receive zero or minimal bonuses this year,â forecasts Horlock.
Re-skill or regret it
So whatâs a simple equities trader to do? The answer is, re-skill, and soon - no one can say they didnât see this one coming. âAt the end of the day, what was once a relationship game is becoming a quant game,â says Little Gill. âEquities traders are being replaced by people with strong quant backgrounds who can build algorithmic models.â
Not everyone will need a maths PhD, however. While quantitative models take over so-called âlow-touchâ trades requiring minimal human intervention, âhigh-touchâ trades which are complex and high value, will still need a human somewhere in the mix. But recruiters say the traders who keep their jobs will be a different breed to their predecessors.
âThe new generation are multi-asset class aware and customer-facing,â says Horlock in London. âCustomers like hedge funds are increasingly interested in talking to traders directly â unlike old-fashioned market makers, the new breed needs to be eloquent and presentable in front of clients.â
McCann advises actively seeking exposure to equity derivatives. âIf youâre an equities trader and you donât have exposure to derivative products, make sure you get it,â he says, âThe folks who remain on will be the ones who raised their hands and said Iâd like to migrate to a derivatives desk.â
At a push, De Lucia says equities traders who are good relationship builders and salespeople could join the salesforce for quant trading models used by electronic trading systems. He says another alternative could be moving into fundamental research or execution trading on the buy-side.
Some recruiters are pessimistic, however. âAt the end of the day itâs going to be a real catch for some people,â said one. âIf you donât have the educational background and mental aptitude to re-skill, the future could look pretty bleak.â
I congratulate you are extracting money from b*tchy us stock indexes as I am a swing/position trader too and i haven't seen many opportunities since july, because the market has been basically doing nothing but coiling, apart from a few one or two day wonders.
the money right now is elsewhere, bonds, the nikkei, oil gold... unless you've been range trading the YM, or been writing options.