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I am just wondering, are these Wall Street traders smarter than an average techie working in Silicon Valley ? Are they so irreplaceable that they are offered so
by 31reasons 13y ago
I am just wondering, are these Wall Street traders smarter than an average techie working in Silicon Valley ? Are they so irreplaceable that they are offered so much salary and bonuses ? It just doesn't seem right. I am afraid to even ask for 150k salary in SV for the same amount of cerebral work.
- kooshball 13y agoIn my mind it's not so much that they're smarter but rather the value they add is more easily measurable. If the trades they make for a hedge fund creates a 10 millions dollars a year profit then it's easy to demand a million dollar bonus. The value of a startup engineer is much harder to determine in a year by year basis.
- 31reasons 13y agoI heard some estimate that each software engineer adds $1 million (not necessarily to a start up). But there should be a way to reward based on quantitative performance than evaluation by a manager who have no clue about software development.
- kooshball 13y agoThat $1mm/engineer estimate is sometimes used for the valuation of a startup, not a yearly rate.
- 31reasons 13y agoThats because most startups don't have revenues, so they use that as a heuristics instead of a revenue figure. But since revenues are yearly, the value of a developer is implied to be yearly.
- deleted 13y ago[deleted]
- bigbang 13y agoI was wondering the same. How hard is it to go from a programmer to a trader in a bank?
- 31reasons 13y agoExactly. I am not even a drug abuser, never even smoked in my life :) and why the trader's job is not outsourced to someone in indian and china yet ? looks like a very "protected" profession to me.
- mhb 13y agoWhy be a trader in a bank? Lease a commodities seat and trade for your own account. How hard could it be?
- bigbang 13y agoI'd rather be trading on someone else's money :) My question is about how to get foot into the door as a trader.
- nvarsj 13y agoNo, they're not. But that's the culture since the floor trading days. Even when most things are automated, traders still rake in huge bonuses. (Worked at a prop firm for 4 years).
- 31reasons 13y agoIs there too much competition to be a trader or anyone can become one ? If so, its seems much better idea to toil away to make millions than toil away at a remote chance to make a million in a startup.
- nvarsj 13y agoI think it's quite hard now. Lots of prop firms have closed down, regulation has increased significantly and is only getting worse. There's less easy money to be made. The majority of new traders are farmed from ivy league or top private engineering schools. I've seen some people join as devs and swap into trading. Ironically in these cases they were terrible devs, but increased their salary several times by becoming traders.
- bigbang 13y agoWhat is a typical path from dev->trader? Should one join a hedge fund as a programmer and then step up the ladder?
- joseph_cooney 13y agoA friend of mine works in a trading company. He said all the traders want to become devs, because it is the only skill that they've seen up close that translates outside of the mad-house of trading, and they (the traders) all know eventually their number will be up.
- bigbang 13y agoPerhaps, lack of understanding on my side, but what does "their number will be up" mean? From what I've heard, it's most often the case that developers want to move into trading.
- tikhonj 13y agoMy impression is that traders mainly have a much easier time quantifying their value. When you can say "look, I literally made $10,000 today and $8,000 yesterday", it's easy to negotiate for a significant chunk of that in compensation. Your leaving would have a very direct effect on the bottom line. As a software developer, the value you provide is not quantifiable like that. Everyone works on the product, sure, but everyone is insulated from the actual money being made. Who is to make how much? It's a difficult question, and it also lets companies get away with paying quite a lot less--especially to the top performers. This also makes salaries (and, more importantly, bonuses) far less variable in software.
- 31reasons 13y agoSo it seems you are better off working in a profession with a very clear quantifiable performance metrics. Software development is not one of them unless you work for your own company. I am curious about making a list of professions that have quantifiable performance metrics. 1.Sales and Marketing 2.SEO 3.Bloggers 4 ..
- JDulin 13y agoAs always, there's an old and insightful pg essay on these economics: http://www.paulgraham.com/wealth.html http://www.paulgraham.com/wealth.html The trivial conclusion is that starting your own company is how to be accurately rewarded for your work. But that assumes there's no way to better measure employee performance. It seems like measuring it for engineers and programmers is an impossibly hard problem (At least, that's implied from all of the well-run organizations that have given up or failed miserably on quantizing performance over the years.). However, I would like to see some creative attempts at making teams better at this.
- 31reasons 13y agoI am sure if there was profit to be made from these kind of performance metrics for Programming, you would see entire industry spring up to solve that problem.
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- mcphilip 13y agoI have a brother high up in a quant lab that accounts for up to 5% of the daily volume on the NYSE. The short answer, from our experience, is definitely a no. The biggest differentiator that we've seen is that "quants" often have PHDs in fields loosely related to finance. However, at the end of the day, it's just about finding useful abstractions over a large set of structured data -- a skill that many programmers have in spades.
- debergalis 13y agoIt's pretty simple. Work at a pizza shop, get a lot of free pizza. Work w/ people's money, ...
- deleted 13y ago[deleted]
- kamaal 13y ago>>Are they so irreplaceable that they are offered so much salary and bonuses ? They are doing it to us, as we do to many professions. This whole thing of 'Some professions just can't benefit from economics of scale' come to my mind. Just like how the guy flipping burgers makes minimal economic impact compared to you and I, we make a minimal financial impact compared to these guys. But there are a lot of areas where you could disrupt this theme of work. Profitable side projects, start up's, bootstrapping and stuff like that can help us out here. But the point is most geeks and nerds are to a great extent very naive when it comes to money matters. We are poor in negotiating skills and we buy into this loyalty thing too easily. I don't know of one single VP/exec/CEO who wouldn't leave their job for a bigger bonus/paycheck/options, yet if an engineer did it- You would have see these people shouting 'greed' from top of the buildings.
- geezer 13y agoI agree with the point that traders can easily quantify their value, but there is a more fundamental reason at play here. First, trading is a very scalable profession. The more you can bet, the more you can win (or lose). The fact is that how much a trader can bet has been increasing in leaps and bounds, especially during the last 30 years. That's owed partly to changing structure of the global economy and partly to changes in rules and regulation. Consider, for example, the the repeal of Glass-Steagall act. Just by repeal of this one regulation, the bankers were able to bet many times more money, dramatically increasing short-term profits at the expense of making the system more fragile.
- hfttrader 13y agoTraders are not necessarily smarter than the average software engineer. (There are many very smart people in both fields) However, they are fairly irreplaceable. This is because to be good at finance you need to be both smart and experienced. The only way to get experience is to work in finance for several years, and as a result, the supply of traders is fairly limited. (compared to the demand) Generally, someone who starts finance will not make their firm any money for the first year, but after five years they will be earning their firm a lot of money. The supply of good traders is a lot smaller than the supply of smart people. A second reason why they are compensated so highly is that they are working in a highly leveraged job where the labor cannot be easily be divided between multiple people. This is similar to how CEO's make a lot of money, because being a good CEO produces a lot of value for the company and the position cannot be split between multiple people. (I'm not trying to imply that traders produce as much value to society as CEO's do) Being a marginally better trader will make your firm millions more per year. Good hedge funds have 100-1000 million of assets under management per front-office employee. (For example, D.E. Shaw or Bridgewater Associates)
- wikwocket 13y agoIt should be very clear from a cursory walk through life that peoples' compensation is on the whole not directly correlated with their cerebral work or their physical labor. Compensation is tied more to the generation of "value," which is vague, and which can be generated using different types and amounts of effort. There are many types of value that can be produced using automation and skill instead of hard labor. This does not diminish the value. So, don't feel bad asking for $XXX,000, especially if that is the range for your profession, in your geolocale. That's that the market has decided this labor is worth, because of the type of value it creates. Do the research on the job market, and if you have valuable skills, exploit them, for fair compensation.
- fuddle 13y ago“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” - Warren Buffett