Obviously, the numbers vary a lot, but most top tier firms will start you at a minimum of 150-200k usd including bonus the first year. If I had to estimate the median salary growth from there on, I'd guess it to be around 50% a year, with the rate slowing down as you get to 750-1mm. After five years on the job, the median would be around 700k, with the top 10 percentile making more than 2-3mm. At that point, if you're good, you're probably leading a team (or are a senior quant in an all-star team), and your bonus depends almost entirely on performance.
An interesting downside to this, especially for young traders who get to the high numbers, is that they often begin to treat their bonuses as a given. Once you make seven figures, it becomes easy to assume that your smarts will ensure financial prosperity for the rest of your life. But bonuses in trading are very volatile - I think of mine like an NFL player's paycheck, rather than a software engineer's salary. Competition from different firms, financial regulation and shifts in market structure often come in the way of long term salary guarantees. Over the years, I've seen that those who survive through thick and thin (well, 'thin' in a strictly relative sense) are the ones genuinely passionate about the intellectual challenges of trading.
An average well-established seasoned trader might earn anywhere between 400k and 2m a year dependent on luck and skill and general company profitability - but in every given year, there are probably a few dozen traders in every top-10 investment bank who make 10 million plus (though they are generally heads of desks or the partners in charge anyway).
It is heavily bonus centric. In theory it is unlimited, based on how much you make the firm, which is why you could theoretically make millions any given year (rare).
My friends in quant finance made more than 200k guaranteed their first years (not including performance bonus), and they did not have graduate degrees. It went up to more than half a million in a few years (including bonus).
Traders at Optiver and other reputable firms are for sure making at least that much. Their pay is variable, but I think you generally hit 7 figure annual payouts really fast.
Even new grad software engineers make 350+ at Jane Street, HRT and Citadel. You can easily verify this through levels.fyi. I didn't believe the data until some people I personally know who work here said its true. And of course traders who take on all the risk should have a much higher upside so their pay should be significantly more than 350.
If your cutoff is $350k, I'd definitely say your NYC 5k headcout is way too low. By at least an order of magnitude. Even the smallest trading firm will have 5 tech people (devs/data scientist/quants) making that much after bonus.
Edit: maybe $350k is at the border for that 5 each estimate. But i still think you're of by an order of magnitude in nyc in general.
Not as a base salary, no. They would have a performance bonus (you’ll keep a percentage of your trading income done via firm), but even then making £300-400K/year is… challenging
> Nearly impossible. No financial firm is going to pay a 24-year-old that kind of salary, so it's only possible if he got it through bonus. Traders get bonuses based on P&L, usually around 10% if they're senior. Let's say 10%. Then he made 9 figures for his firm... but no firm is going to let a 24-year-old take enough risk to generate a 9-figure P&L.
I agree it's nearly impossible, which is why I make the post. I would like to point out I've been working here longer than my age implies.
> I'm calling bullshit.
A skeptical and reasonable position to have. If I weren't me, I'd also call fake.
> [Update: Well-executed, and he's clearly smart, but his story is incredible. No one hires a 24-year-old to start a desk. This is probably one of XO's finest.]
"Start a desk" really meant I was given a little capital to build out a quant-trading platform and maybe a bit to mess around with. It took a while to get lines and machines set up, set up data collection, etc. After that, the capital and risk limits I was given was on par with other junior traders.
Why didn't they hire an experienced quant trader right off the bat? My firm didn't have the right infrastructure to support quant trading, so any senior person would have asked for a big up-front bonus to be setting this stuff up. Management here was too cheap and risk-averse to pay this. They took the gamble on someone junior and technical.
As with most industries, it depends. But junior people typically make in the 200-500K range. Then as you gain experience, develop your own ideas/strategies and are able to manage risk appropriately, the sky is the limit. The closer you are to managing money that's being invested the more you make. If you can run a 1.5 - 2 Sharpe strategy and never dip below a ~5% drawdown, i.e. probably have substantial positive skew in returns, you can make in the millions or tens of millions at the right fund. Note that as the OP correctly alluded to, this is much more difficult to do live than in a backtest.
If you're talking about total compensation, 250k is on the low end. Base of $140-190k is common. Add to that $10-30k of cash bonus and $100k of stocks.
SWE will probably make between 250-500k. Quants who can come up with profitable trading strategies can make a lot more. Managers of trading teams can make over 1MM and sometime a lot over 1MM depending on how profitable their teams perform.
SWE who have deep subject matter experience are super valuable to these firms. Folks who understand how to write low latency code, FPGA work and other stuff like that. But the real money is in figuring how "how and what" to trade. Once that's done, the SWEs can bang out the code.
You're right, I misread the top end of that range. Top trading firms get close to that, (e.g. Jane Street), but $225k is probably pushing unlikely until your 3rd year.
This was me for about the first 5-6 years of my career, then I was able to double my salary twice in two years (and had some more modest raises/bonuses since).
Definitely valuable to know what you're actually worth on the market, I didn't learn that until I got involved in the NYC startup scene.
80k base, 130k last bonus. I'm 2 years into doing mostly Java, Python and C++ in a hedge fund. I left a small non-finance software firm where after a few years I was on 25k.
Note that this is not guaranteed or even expected at a prop shop or hedge fund either. I know of a very large hedge fund where pay is not as good as you think. I will just say that I have never seen a trader who makes $1 million per year claim that this is a good way of doing it.
You're probably better off as a SWE at Google than as a trader at this hedge fund.
I was hoping for a more specific answer. I currently work at an algorithmic trading firm making software that trades securities, but I didn't find a position like this at $250K/year.
An interesting downside to this, especially for young traders who get to the high numbers, is that they often begin to treat their bonuses as a given. Once you make seven figures, it becomes easy to assume that your smarts will ensure financial prosperity for the rest of your life. But bonuses in trading are very volatile - I think of mine like an NFL player's paycheck, rather than a software engineer's salary. Competition from different firms, financial regulation and shifts in market structure often come in the way of long term salary guarantees. Over the years, I've seen that those who survive through thick and thin (well, 'thin' in a strictly relative sense) are the ones genuinely passionate about the intellectual challenges of trading.
From Quora: https://www.quora.com/How-much-do-traders-at-big-quantitativ...
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