What is Prop Trading and Is it possible for undergraduate students to develop a career in the Prop Trading Field?
Proprietary Trading refers to traders buy & sell securities using the firm’s own money to make a profit. So it's fundamentally different from Hedge Funds and S&T. As an undergraduate students, it’s not impossible for you to break into Prop Trading. Let’s take a look: 🔺How is it different from Hedge Funds? - HFs raise capital from outside investors (Limited Partners), PT firms do not - Usually, HFs bet on security prices going up or down, PT firms exploit small pricing inefficiencies (market-making) -PT partners take higher % of profits -PT: Extremely high annual returns due to much smaller capital base -PT: more independent, operate in smaller, niche market 🔺How is it different from S&T? While Prop Traders buy and sell securities using the firm’s own money to make a profit, S&T serves clients of the bank and executes trades on their behalf. 🔺Roles available at Prop trading -Trader: buys, sells securities; manages risk based on model, software, judgment -Quant Researcher: comes up with mathematical models for trading algorithms and strategies -Developer: implements researchers’ models; writes and maintains the code to assist with traders’ work -Back office and support functions 🔺Prospects? -Most credit-based industry in finance -Hierarchy: “clerk”/assistant trader -> junior trader -> senior trader -> partner -Compensation may seem not as high as IB, but faster progression and everything you earn is in cash -Automated trading exists but deployed to a certain degree. Humans are required to tweak algorithmic parameters, manage risk and hedges, and find new opportunities. -Extent of using technology to trade varies between firms - as influenced by their strategies and markets -Exit opportunities are not so great since the industry is very specialised 🔺How to get into Prop trading? -Degree in Math, Physics, Stats, Computer Science, Engineering - solid technical programme is most common -Possible for fresh grads with little-to-no experience in FT Trading work, but with internships in Trading, Asset Management - relevant to the public markets -Qualities: think quickly, work under pressure, networking skills -Preparation: learn C/C++, Python; mental math, probability, programming would be tested in interviews, network with prop trading firms professionals --------- As you might notice that most investment banks have kicked off their recruitments for 2021 summer analyst / placement programs. If you're determined to break into iBanking, it's time now to start planning your career and do the applications. If you’d like to know more about our IB Career Program, helping university students like you to get into Investment Banking, you may click the link to WhatsApp us for more information: wa.me/85252321226 or send email to info@ibankcoaching.com Download link: https://bit.ly/IBCPropTrade Wanna develop a career in the Prop Trading Field? Learn more here: https://bit.ly/IBCPropTrade (expires on 9/9) If you’d like to know more about our IB Career Program, helping university students like you to get into Investment Banking, you may click the link to WhatsApp us for more information: wa.me/85252321226 or send email to info@ibankcoaching.com "How to crack mental math questions during an MBB and S&T Interview?" https://www.caseinterview.com/mental-math
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