Hey Guys,I'll need your input on this. A friend of mine is having a problem making a decision and I don't think I can helpdue to my lack of experience. He just graduated with a masters degree in Electrical Engineering from and Ivy League School. However, he's said healways wanted to get into the financial sector , particularly sales and trading. He got some offers from the techdepartments of some big investment banks but didn't take them because he claims he feels most of those jobsare pretty boring after a while and not as rewarding in the long run. Here's his current situation. He got an offer from this small proprietary trading shop in NYC, they don't require him to put any money down, they said they'll let him trade with their money and his pay is gonna be based oncommison. They however said he shouldn't really expect to makemuch in the first three months since he's gonna be pretty much learning the business through intensive training. This prop shop trades NASDAQ and NYSE stocks. The thing is that, I don't know if I should advise him to go ahead and try out this offer. They're not asking him to putany money down (even though they asked others). I don't know if this is gonna be his one shot to actually trade.Of course the other alternative will be for him to keep trying the big banks, and hopefully eventually land an assitanttrader position. The downside of that though, is that most of those big banks will not let you trade till after years (like 5 years) of learning as an assistant.What are your opinions ? I don't want him to fall into any scam, and I also don't want him to loose any chance he gets to do what he would love.thanks guys.

Just to be clear, we are talking prop shop here and not hedge fund right? I am answering for prop vs institutional. Unless this prop shop is going to teach him how to trade successfully -- and they're not -- I don't see much value in being there. In fact, it will most likely dilute the current value of his academic credentials. My basic feeling is that career progression is part intelligence, part luck and part branding. By his education he will be given the benefit of the doubt with respect to intelligence, by taking an institutional position he will take his first step on branding, luck is well...luck. How he positions himself to avoid being perceived as back office is a different question. But I think the prop shop route has more liabilities than assets in that regard. Best of luck to him...

I'll go out on a limb and say that if the shop doesn't require him to risk his own money, and the guy wants to learn finance, then using that opportunity to get your ass smacked by the market first hand for a few months is probably a useful experience. Some people are limited to learning how to lose money in the markets by using their own money, which often limits how many different examples they can see, not to mention the cost of losing your own money. For a young person, time is more valuable than money, so what experiences will you learn from in those short years, and what more effective way than first hand. Someone who hasn't lost money in the market, and doesn't have good stories about how they learned the trade may not get far. It sounds like this role is neither secure nor reputable, but it may be worth the plunge...

QuoteThe downside of that though, is that most of those big banks will not let you trade till after years (like 5 years)I think that is the main point. It will look much worse in his cv to join the bank, be frustrated after 2 years, and then do the prop shop. It is usually not a bad thing to show some daring and interest in the markets while you're still young, and then enter as an assistant trader etc. I know a couple of people who got a much better job after doing something "silly" for 6-12 months - unless it's a proper scam of course. (there are excellent prop shops and arcades these days, with experienced coaches and all the mod cons..)

QuoteOriginally posted by: WedlerQuoteThe downside of that though, is that most of those big banks will not let you trade till after years (like 5 years)I think that is the main point. It will look much worse in his cv to join the bank, be frustrated after 2 years, and then do the prop shop. It is usually not a bad thing to show some daring and interest in the markets while you're still young, and then enter as an assistant trader etc. I know a couple of people who got a much better job after doing something "silly" for 6-12 months - unless it's a proper scam of course. (there are excellent prop shops and arcades these days, with experienced coaches and all the mod cons..)Could you please name some of these excellent prop shops and arcades? Most people tell me none of them are good and just a waste of time so it would be interresting to see wich ones are respected.

True, it'll be nice to know some of those excellent shops. I've also been hearing that many of those trading shops are a waste of time. Does anyone have any first hand experience of any success at any of those prop shops ?