<p>It seems that i-banking captivates everyone, yet trading seems to make much more money. What exactly is the difference between the two and why are so many people more interested in I-banking?</p>
<p>Well it really depends on what kind of trading you are talking about. If you are trader on the floor of the NYSE then you don't make TONS of money (although you still make a really good living), but if you are a trader for a huge firm like GS, Morgan Stanley, Merrill Lynch, etc. then it really is a type of investment banking. You basically use the firm's assets or assets of wealthy individuals (basically kinda like a hedge fund) and you have the same salary as most people but you can make large amounts in bonuses depending on your performance. This probably isn't as popular because it's even harder to get into than other areas of investment banking.</p>
<p>Ibanking captivates everyone because anyone can do the jobs an ibanker does at the analyst level. Traders are a different breed from ibankers. You have to be arrogant, and superconfident to make quick on the spot decisions. Thats why I love it. :) </p>
<p>BTW: 99% of the traders use people's money to trade. The best, the brightest, and the most successful are given the opportunity to trade the FIRM's assets (this is called propriety trading btw). Another fact, most of the revenues of the top ibanks (GS etc) are through their prop trading desks at least it was in 2003-2004.</p>
<p>Yeah, real ballers are traders. These are the guys who are in their late 20s, working about 12 hours day (always out of the office by 5pm), and pulling in seven figure salaries. You have to be confident in yourself and have really good instincts to do it. It's not easy, but if you're good at, you're checks will be fat. The head of Fixed Income (a division of sales & trading) at an investment bank, 9 times out of 10, is the most highly compensated person at the firm (even more than the CEO - Morgan Stanley's head of FI made $16.1m in 2003, compared to $15m that the Chairman & CEO made).</p>
<p>Truer words have not been said Caleb :).</p>
<p>indeed caleb</p>
<p>man my friend's aunt here at wharton is Zoe Cruz, Morgan Stanley's worldwide head of fixed income. I read that she is the 16th most powerful woman in the business world and is bringing in 18.2 million a year (2004) - same person caleb is talking about. The woman is so tough we were at dinner and she got a business call and handled it like a true baller. She just told the person to "don't waste my f<strong><em>ing dinner time...go balls out and do it." It was f</em></strong>ing hilarious.</p>
<p>bern you lucky bastard. lol you know what i would do to know the FI head at MS? bro you need to get on AIM sometime.</p>
<p>You're in Vegas, and down big money after a wild weekend. You're leaving the casino for the airport to go back home; as you're leaving you see a roulette wheel thats come up black for the last 5 times in a row. Do you: </p>
<p>a)Bet everything you have left on black..the trend is your friend. </p>
<p>b)Bet on red..its gotta be red sometime.</p>
<p>c)Don't bet at all, and leave for the airport...you've already lost way too money much this weekend. </p>
<p>d)Don't bet at all, but stand around and see what happens out of curiousity.</p>
<p>A or B, you're a trader, C or D, do investment banking.</p>
<p>This test is obviously not perfect, but it was given to me by a friend, and seems to reflect the personality types of people I know in these fields. </p>
<p>-NYU class of '00</p>
<p>Look the best traders in the world are born. George Soros, Steve Cohen, DE Shaw etc seem to have almost a natural my born instinct. As an example George Soros ofter took positions (and obviously was successful) by stuff such as backaces, headaches etc. Once he exitted a position because of a backache. Its almost like these folks have natural market instincts that are more often than not right.
Ibanking however, especially in the lower levels, require little or no natural skill and even a Chinese Confucian History major can be a ibanking analyst (nothing against Chinese Confucian History majors).
One this to note many of the best traders, Steve Cohen etc, were exceptional poker players and could calculate probabilities fast, on the spot. To note S&T interviews often contain more technical and brainteasers than ibanking interviews.</p>
<p>BTW I was talking about the zenieth of trading. Decent traders, who outstrip the compensation of their ibanking counterparts, can be made through practice.</p>
<p>Further to the point Maras2, I agree successful traders indeed have an instinct for reading markets (whether its innate or acquired through practice is not something I care for as long as its a success...thats for the behaviorial science folks to to find out). I'd also put Julian Robertson (Tiger Mgmt) on your list. </p>
<p>"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."
-George Soros</p>
<p>One of my favorite quotes. I suggest the following list for ANY trader or trader enthusiast:</p>
<p>"Reminiscences of a Stock Operator" by Edwin Lef</p>
<p>Another great quote by another market great (not a trader however) John Bogle:</p>
<p>"If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks."</p>
<p>Make that 50% for forex and futures :).</p>
<p>Great book recs. Mahras....I've reade the Soros one. You know its funny, a friend of mine from college was a brilliant math major, and is now a very very successful trader on the NYMEX, and he's got to be worse poker player I've ever known. I do agree that lawyers and i-bankers make horrible poker players since they tend to overanalyze and are slower decision makers than traders (I know this since I used to be an investment banker). </p>
<p>Great quote from Bogle, though not a trader, he maket great. After all, it is possible, Warren Buffett's not a trader, but an investor, and I don't think anyone questions his market reading skills. </p>
<p>"Make that 50% for forex and futures"--HA, 50% is a low estimate....esp w/some of the futures out there, they are not for those who lack major cojones. Example, if you've ever traded Dow futures on tradesports.com.....the market is still small but getting bigger, but it provides a great example of how you can go from almost losing everything to more than doubling or tripling your money in a matter of minutes.</p>
<p>lol 50% is indeed small when you consider 90% blow up in months but I bet some people already ****ed in their pants after reading that ;). For people who may not know the insides of forex and futures: You usually leverage each position VERY highly in order to get the gains. A 1lot positions standard EURUSD position is leveraged to 100K USD dollars and is usually taken for 5K equity. This results a .0001 change to generate +or- 10 bucks. This is just considered to be conservatives. The big dogs play with 100 lot positions in futures and forex so you know what I mean by the psychology books. </p>
<p>Hmm I would say your friend probably doesnt try or use his math skills in poker. Thats very possible. But overall I think you got the point. No offense intended to the posters of CC but most will turn out to be ibankers instead of traders because I think its OBVIOUS that 99% of the CC posters like to overanalyze the smallest of info. :)</p>
<p>BTW jwblue are you in S&T now after your ibanking stint or at a PE/LBO shop?</p>
<p>Yeah, FOREX is not for the weak....there is normally a 100X leverage...so $1000, allows you a $100K position. You're either losing or making a TON of money (Soros made $1 billion in a day for his fund after shorting the pound).</p>
<p>My friend who I mentioned in the earlier post is just bad poker player, but an awesome trader. There is no question he has steller math skills, but poker has more of a human element (eg poker face, body language, interaction with others) than trading in front of a computer screen. But generally I agree with you, trading and poker playing have very similar skill sets, there just isn't a 100% correlation of success in the 2 endeavors. </p>
<p>Bankers and lawyers overanalyze because its really their job to do so. Though, law/ibankng are not as exciting as playing markets, they do provide a great outlet to learn to eventually do so. </p>
<p>After undergrad at NYU, I spent a couple years at a large investment bank, I was then at a small boutique, then I recently moved to a hedge fund, where I am currently. Basically, I've always loved markets, regardless of whats being traded (as long as there is profit opportunity)....friends will also tell you I'm a degenrate gambler. </p>
<p>How about yourself?</p>
<p>I am 16. I have been investing/trading stocks for the past three years. In the beginning the gains were more lucky than from skill but I have picked up ideas and advice from people and now would consider myself a good investor. Past 4 months worked on creating a stable and low risk forex trading strategy. Pretty much a scalper because I leverage pretty highly. Super unsuccessful at first becuase of the market psychology later began to trust my judgement and now draw in a steady flow of pips. Collaborating with another partner to create a automated trading system now. Starting a equity/fx fund very soon with, believe it or not, a poster on CC. And I play poker on a daily basis :).</p>
<p>Well the whole Soros phenomena was just that: a phenomena. I don't think anyone is ever going to get a chance to break the Bank of England (or any other bank for that matter) like Soros did with the pound. I think what goes widely unnoticed is that Soros also LOST billions of dollars. But I think S&T would be the most fun because of the intensity and the quantitative skills needed. However, you can't really go wrong with IB or S&T.</p>