☰ Menu eFinancialCareers

EDITOR’S TAKE: Traders are ill-prepared to do much else

Proprietary traders are firmly out of fashion, as confirmed by JPMorgan’s decision to close its prop desk and eliminate some of the occupants.

What does a former prop trader do? Away from financial services, the options seem limited. Corporate financiers can reinvent themselves as strategy consultants, in-house M&A advisors, and accountants. But prop traders’ skills are arguably more suited to hanging out at William Hill.

In the downturn of 2001-03, redundant traders were able to take solace in ‘Mark2Market’, an outplacement provider run by a former trader purporting to cater for their very specific needs. In reality, it was rumoured to be a prop shop where traders disenfranchised from the large banks were reunited with Bloomberg and could trade their own accounts.

This time around, Mark2Market appears to have exited from the scene (at least we can’t find any trace of it). In its absence, it seems that traders from investment banks are still targeting proprietary trading houses. Danny Kessler, managing director of Met Traders, says he receives 1,500 CVs a month.

“The incentive for proprietary traders to stay at institutions has gone,” says Kessler. “Even if they make money, they won’t get a bonus. And if they lose money, they might get culled at the end of the year.”

Unfortunately, prop houses are no magic bullet: Met Traders employs 50 people and has taken on only 12 in the past three months.

The other obvious options are the trading desks of utilities (assuming you’re a commodities trader), or hedge funds. Citadel stripped at least six (and probably a lot more) traders from JPMorgan’s 75-person team. But with hedge funds predicted to make as many as 10,000 redundancies themselves, opportunities on the buy side aren’t likely to be huge, either.

Failing that, there’s trading from home, retiring, or waiting for things to come back. Kessler says people are going for the two latter options: “Most people have quit the City for good and are not even trading their own books.”

For traders who’ve made their money, Kessler says getting out can be a relief. For the rest, he says it’s a question of patience: “People are waiting to see if there are opportunities in distressed debt hedge funds in a year’s time.”

Comments (13)

  1. one of the best equities traders from the nineties at a top US house made his fortune by setting up a front office search boutique. Probably not the best option these days but may be worth considering for a William Hill-esque prop trader…

  2. Become a prop trader at an investment bank..accept the bank’s shilling….and commit career suicide.

  3. I thought banks/funds may be able to use real market experience on the risk/control side, but that is obviously not the case!

  4. Many of whom they call traders are just ‘executors’ of instructions to trade. When called upon to offer an opinion of the markets, they can’t offer anything more than what’s coming out of the TV. Shots on TV of guys surrounded by screens and screaming colleagues are usually brokerage houses. A bank of monitors does not a trader make.

  5. They can trade for themselves using a portion of the money they’ve amassed.

  6. and being a trader is it worth it…if you are fired from the bank in your mid 40s, not having amassed a fortune and not being able to something else ? what can you at that age?

  7. It really isnt all doom and gloom. I am hiring experienced prop traders here at Infinity Capital Markets. We have hired 15+ traders in the past few months and continue to look for talented people to join our team. We use our partnership capital to provide a fully-funded trading platform to the highest calibre proprietary traders in Europe.

  8. Traders work damn hard and get loads of stick.

  9. ref gashton roles…real salary or rent for desk and split the profits ??? i fear the latter

  10. well, split the profit is good. Make sure you don;t have to split the losses!

  11. re ex trader- what do you have to fear if you are good? if you lose i know for a fact that the company takes the loss so all you have is upside – obviously you have to know how to trade and that is what the problem has been at many banks/funds.

  12. If you are about to graduate from college please take my advice! Stay away from prop-shops style trading. It is true that if you are good you can make serious amounts of money. However, the fact is 90% of the prop-shop traders fail within 2 to 5 years. This is due to automated trading systems and large institutional traders. The best thing you can do is stick to the career that your degree is in. I have a degree in engineering and decided to take a trading job out of college with a very well respected Chicago shop. The first few years went very well for me; I was earning more that 3 times what I would have made in engineering. Eventually however, my profitability began to slip and I now find myself out in the cold with no options. Basically my decision to go into trading cost me 6 years of engineering experience. Prop-trading experience does not transfer into other careers….

  13. Good traders definately have transferable skills. Not only that, they can trade their own money. Their understanding of psychology also gives them the edge in picking up new trends.

    How closed minded people are.

The comment is under moderation. It will appear shortly.


Screen Name


Consult our community guidelines here