Markets Careers
Quantitative Trading Firms
Quantitative finance is where maths and models rule the markets, not people.
That description is a little reductive; after all, it is people who are creating and finetuning these models and trading systems. But, letting a computer do the trading does have many benefits:
- Computers can make decisions and spot patterns at timescales (down to nanoseconds) that humans cannot
- Computers can handle a lot more information simultaneously than humans can
- Computers can conduct many more trades simultaneously than humans can
- Computers are purely rational and do not have bias
Of course, this is a tradeoff: computers do not have situational judgement and can fail spectacularly in market conditions they are not trained for, and they are unable to assess qualitative factors such as hype or the personality of a company's CEO. Yet, quantitative trading firms have managed to optimise their systems to levels of wild success: Jane Street makes the most profit per employee of any mid-to-large company in the world.
Quantitative finance is a broad industry, from proprietary trading firms to hedge funds, with focuses on strategies spanning from nanoseconds to years. It's highly technical, highly competitive and highly lucrative, with a focus on three main roles.
Trading
Traders put quantitative strategies into action.
What do they do?
As a quantitative trader, your main role is to make sure the strategies you're responsible for are making money. This involves fine-tuning them for market conditions, watching their progress throughout the day, and making tweaks to the strategy as necessary. At many firms, trading also has a research component: you can take charge of the entire process, from ideating to designing, backtesting and implementing a strategy. Other firms have a stronger division between trading and research roles. All in all, this is a technical job where relationship skills aren't a huge component, although you do need to be able to work with your colleagues effectively.
Compensation can be huge, ranging up to $500k for first-year traders and $70k just for a 2-3 month internship, but your performance has to match in order to remain in the industry for long.
A day in the life
The day's structure is very similar to IB trading, with the important distinction that quantitative traders don't execute any trades themselves; instead, they manage the automated systems that conduct trades for them. Quants come into the office 1-2 hours before market open to prep for the day and go through any preparatory meetings. During market hours, quantitative traders have to keep a watchful eye on market conditions and their strategies' performance, so that they can step in at the first sign of any issues. If all is going well, they can focus more on the research side of the job, experimenting with and backtesting tweaks and new strategies. After market close, it's time for a review of the day and any further meetings and backtesting that couldn't be completed during market hours.
You’ll be suited for this role if
- You're highly technical
- You want an intense, action-packed and implementation-focused role
- You're resilient: there will be days where you lose money, and difficult moments where previously successful strategies break
- You like the idea of having a direct measure of your performance and being solely responsible for your success
- You're happy to work in a role with a smaller relationships component
- You want to be in the most important role of the business (along with research)