The execution trading trap

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So you want to make a packet working as a hedge fund trader? Just make sure you don't get stuck in an execution trading job.

Unbeknown to the uninitiated aspiring trader, there are two types of trading role: execution trading jobs and full-blown analyst-style fund manager trading jobs. While execution traders are effectively ops staff who place trades at the behest of other people, analyst traders have the power to make the decisions and place the trades.

Predictably, execution traders are paid less than analyst traders. Even worse, execution traders are often pigeon-holed for life.

"There's a pay ceiling for execution traders," says one unfortunate victim who's trying to escape the execution trap. "It's all about helping someone to do a job rather than creating value. Effectively it's a support function."

Even worse still, it's a stressful support function. "You're handling 100 orders at once, of which 10-20 are very important. Two or three fund managers are shouting at you to do their order," says our disillusioned practitioner. "The question is whether you want to go on until you die of a heart attack."

Headhunters weigh in against execution traders too. "They're seen as dimwits," says one.

Claude Schwab, a partner at Heidick & Struggles' US hedge fund practice, says median base pay for execution traders with one to two years' experience is $75k-$100k, with bonuses up to 100%. Base salaries for analyst-style traders are $70k-$200k, with bonuses up to 200%.