<p>Hi, I'm interested in eventually becoming a prop trader at a hedge fund. Therefore, I'll probably try to get a job as a prop trader at an ibank after undergrad. I was wondering if in my case it would be better to try to be a prop trader in fixed income/currencies/commodities or in private equity. Normally I get the impression that fixed income is more prestigious, but are there a fair number of profitable fixed income hedge funds?</p>
<p>Also, when one is hired into one of the divisions of an ibank, is he told which desk (eg prop) he will work in before accepting the job offer?</p>
<p>Finally, would getting something like a Rhodes scholarship be of any benefit to an aspiring trader? Or is the only thing of importance how profitable someone is on the trading floor?</p>
<p>First of all hedge funds automatically imply prop trading (you won't be doing market making). So you never say "prop trading at a HF". </p>
<p>Now no one trades private equity. Private equity is financing of businesses. A company wants to sell it self so a private equity firm would buy it or finance it for a stake. It is different from trading at a HF for example (which is why bankers move onto private equity firms).</p>
<p>It depends on the bank. Typically you enter into the training class where you get oriented and then different desks might want to take you under their wing. </p>
<p>The only thing that matters is profitability. You can't squeeze your Rhodes scholarship to make it spit out money. Do a Rhodes because you want to, not because it will help you as a trader (why would it). </p>
<p>As you are heading off to Harvard you have a good shot at quite a few places. Don't worry there are plenty of trading firms and HFs recruiting at H (as many were started at or by people at Harvard).</p>
<p>Thanks again for the info mahras. My ignorance is slowly being dispeled. I'm amazed that you know so much about this before college. I thought that fixed income involved bond trading and private equity involved stock trading. Do ibanks even trade stocks?</p>
<p>Also, in ibanking there are a few firms (BB) that are considered to be more prestigious than the rest. Is there a relatively small number of HFs and trading firms that are analogously considered to be more prestigious (ie better pay and growth potential) than the rest?</p>
<p>Yes they do trade stocks (a lot of the flow trading (MM work) is automated but prop. desks and in-house hedge funds employ a variety of methods. </p>
<p>Yes. Assets are skewed towards the top (the top 20 hedge funds control a disproportionate amount of the 1 trillion dollars in the industry). Trading firms are also tiered as some firms have significantly more capital and capabilities than others. But pay really depends on profitability. The biggest compensation of course go to the folks who took the risk and founded a HF or joined a start up fund/trading firm.</p>
<p>I also hope to dispel my ignorance and limited knowledge in this area!!!</p>
<ol>
<li><p>Is trading all about gaining capital appreciation? </p></li>
<li><p>Do ibanks even trade stocks?</p></li>
<li><p>I know the names of many books about IB, but would you give me the list of good books about trading? </p></li>
</ol>
<p>For someone wanting to be a hedge fund trader, would economics not be a very good major? Should I try something a bit more quantitative, like a combination of econ and statistics?</p>
<p>Hedge funds can be of all types. Some are discretionary based on economic/financial analysis while others are highly quantitative and apply techniques from biology, physics, liguistics etc to trading. </p>
<p>For quant firms it really isn't that important to major in finance. Some actually prefer if you didn't know any finance before joining as it makes life a lot easier than to separate the good stuff from the bad taught at school. Renaissance probably the best quantitative fund (better track record than ANYONE) famously refuses to hire people with wall street experience and get people mostly from scientific research. </p>
<p>This would be a solid preparation academically:
Stats+any engineering would be a cool major.
If you can do Finance+Stats (with a sprinkling of programming classes) it would be great as well.</p>
<p>I appreciate the info again and I will take your advice mahras. I'm lucky to have encountered you on this board before signing up for courses! I thought that I was pretty much done with math after doing calc in high school but I guess I'm going to have to take the field very seriously.</p>
<p>BTW as you will be in Harvard you may want to talk to a firm in your area. I know of a solid place there (send me a PM and I will send you the firm's info...they were recently acquired so not much info on them exists anymore).</p>