1/11/14

I've seen a lot of posts and private messages asking about proprietary trading firm interviews. So I figured I'd just make it easier for everyone and post what I think are some basic things you'll need to know to be as prepared as you can be for these questions. Certainly, different firms have different interview methods and types of questions, but I'll try my best to be general in a way that'll hopefully be helpful no matter which top prop shop you have an interview with.

Mental Math

Mental math is pretty important on a lot of these interviews, whether it's direct mental math questions (What's 27 x 29?) or if you're required to use mental math as a part of a bigger question. I found that www.tradertest.org was the best way to practice all types of mental math. As an added bonus, the site also has a sequence test, which sometimes comes up in interviews as well.

On top of general mental math, here are a few mental math tricks/concepts worth knowing:

  • 27 x 29 = 27 x 30 - 27 = 810 - 27 = 783
  • 39 x 39 = 40 * 40 - 40 - 39 = 1600 - 79 = 1521
  • 19 x 21 = (20 - 1)(20 + 1) = 400 - 1 = 399
  • Summing a sequence of consecutive numbers
  • Estimating square roots
  • Calculating expected values (i.e. EV of a die is 3.5)
  • Probabilities of rolling sums of two dice (i.e. 2 = 1/36, 3 = 2/36, 4 = 3/36, etc.)
  • Squares up to 20
  • I could go on but I think you get the general idea by now

Types of Questions

In addition to direct mental math problems, there are many types of questions that could appear in proprietary trading firm interviews:

  • Dice/probability: A lot of firms use simple dice questions to test the waters in first round interviews, but it's possible to see these questions in later rounds too. They may also ask you to value a "game" played with dice.
  • Conditional probability: Memorize and understand Baye's Theorem.
  • Market making: They will ask you a question and ask you to quote a bid and offer on your answer. Often then they will hit or lift your market (because you're usually wrong) and you'll have to react to this new information to solve the problem.
  • Confidence/betting: Same as above except you might be asked to bet or state your confidence % for your solution.
  • Non-math brain teasers: These are rarer but some firms will still use them to see how you think. Just search online.

If you want examples of questions, just go on Glassdoor and look at the interview questions for companies such as Jane Street and SIG (since people tend to post more for those firms). The questions generally apply to other firms as well.

Problem Solving Process

In the end, the problem solving process is probably more important than the answer itself, because interviewers are curious about how you approach and solve hard problems, as well as how you articulate your thought process (since you'll have to explain your idea in a team setting at many prop shops). So remember:

  • Talk everything out
  • Don't be nervous if you don't know what's going on
  • Don't be overly sensitive/defensive if you're stumped on something
  • Stay humble
  • Ask Intelligent questions

Ok that's all I've got for now, but feel free to ask questions if you have any!

Comments (86)

1/6/14

Nice write up!

1/6/14

What resources are available on preparing for probability or market making questions?

1/6/14

jose_c:

What resources are available on preparing for probability or market making questions?

Glassdoor probably has more than you'll go through. You can try practicing with other people who know the answer for market making type questions.

1/6/14

That's really useful thanks! Do you have any prop shop specific advice?

1/6/14

meadows36:

That's really useful thanks! Do you have any prop shop specific advice?

I can't promise anything, but PM me if you want.

1/6/14

i feel like mental maths abilities are something you're either born with or you're not..

What gets me is that I've spoken to traders who have worked at prop firms and they say all of this is bullshit, its just a way to weed out people.

alpha currency trader wanna-be

1/6/14

This is all good stuff, I'd give you an SB if I had one. Especially the middle three bullets in the last section, these are key. Staying humble is very important. They see tons of smart guys, they can afford to weed out the genius who seems like a douche.

Also, expect to be stumped. Many firms will just keep upping the difficulty level until you just can't answer, they want to find your level and see how you react when something you can't handle appears.

1/6/14

Does algorithmic design and implementation or general coding usually appear in an interview? Also, what is the difference between a quantitative researcher position vs a trader position vs a developer position and how does it affect the interview.

1/7/14

jose_c:

Does algorithmic design and implementation or general coding usually appear in an interview?

Usually not for entry-level interviews, but maybe a little bit. But definitely if you're looking to move laterally in the algorithmic trading industry.

jose_c:

Also, what is the difference between a quantitative researcher position vs a trader position vs a developer position and how does it affect the interview.

This really depends on the firm. At some places, they're more or less interchangeable and at other firms their roles are very silo'd.

1/6/14

Mathemagics app to brush up on math tricks.

1/6/14

Thanks a lot for this, very helpful.

"When you stop striving for perfection, you might as well be dead."

1/7/14

Peyo, thanks a lot for the writeup.

1/7/14

This is really helpful. Thanks!

1/8/14

This is some good advice! Now.. how to get the interview in the first place, that's the tricky part!

1/11/14

Thanks for posting.

1/22/14

Thank you. To build off of the third tip (19*21 = 20*20 - 1), you can apply this to any two numbers as long as they are the same distance from a multiple of 10.

Just subtract the square of the difference from the closest multiple. (19*21 = 20*20 - 1^1)

For example, 18*22 is equal to 20*20 - 2^2
17 * 23 = 20*20 - 3^3
16*24 = 20*20 -4^4
etc

Works best for two digit multiplication, but can be applied to 3 digit and more as well.

1/7/16

your equations are wrong, it's subtracting the number^2. i.e. 1723=2020-3^2 and 1624=2020-4^2

12/13/15

These links below are all great for practicing mental math. This is especially important if you are applying to a firm that focuses on market making.

http://windhoff.net/mental_arithmetic/#Multiplication
http://arithmetic.zetamac.com/
http://www.calculationrankings.com/

1/7/16

If I remember correctly, the quantitative methods section. Really big on probability, and it explains as you work through. See Schweser notes.

"Cut the burger into thirds, place it on the fries, roll one up homey..." - Epic Meal Time

1/7/16

any more advice?

1/7/16

Hey I used to work for a prop trading firm (here in canuck-istan...commonly called Canada)

Basically prop interviews are always always always stamina interviews. They wanna see if you have some serious balls. They're going to try and work you up to the max. In my firm, they would mindfuck you during the interview by telling you that you were underqualified, didn't have what it takes, talked too much, etc. to see if you were swayed easily. Then they would ask to solve some insane brainteaser questions. Here's one:

There is a lilly in the pond. The lilly doubles every minute. At time 0 the pond is empty, after one hour, the pond is covered with lillies. At what time is the pond 76% covered with lillies.

The above question is not a math question, it's a prop trading mindfuck question...trust me. Prop trading is not for everyone, I've seen quite a few people break down/go bankrupt/become an addict because of the nature of the business.

1/7/16
mrcanuck:

Hey I used to work for a prop trading firm (here in canuck-istan...commonly called Canada)

Basically prop interviews are always always always stamina interviews. They wanna see if you have some serious balls. They're going to try and work you up to the max. In my firm, they would mindfuck you during the interview by telling you that you were underqualified, didn't have what it takes, talked too much, etc. to see if you were swayed easily. Then they would ask to solve some insane brainteaser questions. Here's one:

There is a lilly in the pond. The lilly doubles every minute. At time 0 the pond is empty, after one hour, the pond is covered with lillies. At what time is the pond 76% covered with lillies.

The above question is not a math question, it's a prop trading mindfuck question...trust me. Prop trading is not for everyone, I've seen quite a few people break down/go bankrupt/become an addict because of the nature of the business.

if it's discrete steps, it's instanteously at the one hour mark.

1/7/16

What's the answer? I'd guess somewhere around 55-57 minutes? Because it's exponential growth....?

1/7/16

Wouldn't it be at about 59.5 because at 59 the pond is half full, and it doubles to fill it at 60.

1/7/16

Bingo...you did well my Canuckistani brother...

1/7/16

I don't know if it is the way you phrased it or if it the nature of the question but there are a ton of things you have to ask before even attempting to answer that question:

You say there is a lilly in the pond but that at time 0 the pond is empty, do you mean empty except for that original lilly?

You say that the lilly doubles every minute, do the lilly offspring double as well or is it just the original lilly that does so?

Do the doubles all happen simultaneously on the minute?

When the pond is covered in lillies at the end of the hour, is there any overlap?

1/7/16

thank you for the example, but do you know where we can get more of those question for practice?

thanks.

1/7/16

anyone?

1/7/16

I came across...eskimos are great hunters how come they don't kill pinguins?

1/7/16
lukasstrycharz:

I came across...eskimos are great hunters how come they don't kill pinguins?

b/c eskimos live in the northern hemisphere.

1/7/16

i've had two interviews with jane st capital, though the first couple were both phone interviews, and this was for a summer analyst position (assistant trader)

expect the why trading questions, why jane st cap questions, but those are mostly bullshit questions beacuse they don't care much at all... then it comes down to mental math 49.75/2, 100000-11.5...etc to help get you a bit flustered. finally if you happen to advance, they will ask you some challenging expected value and statistic questions (you will need to integrate various distributions, though they walk you through it if you somewhat forget what they look like). i assume you have a very quantitative background or else you wouldnt have been selected in teh first place; good luck

1/7/16

from what they've said, it seems like they are going to ask some fit/behavioral questions to see if you're the "trader type" and some brainteasers/mental math questions to see if you can handle calculations in your head.

1/7/16

probability, mental math, and brain teaser.

no such thing as prop trading ranking

1/7/16

It differs by firm, but most true prop firms have pretty similar interview structures. In no particular order...

You'll most likely be given at least one test that will have you do quick math and identify patterns such as 'what shape is next in the pattern'. Not much you can prepare for there.

They may ask some brain teasers/critical thinking questions.

You'll also have the actual interview(s) where they'll probably ask personality questions. Having a military background should be great here, as you'll almost surely be asked about times where you took risks or had to make a quick decision. Think of some times where you've failed and had to bounce back as well. Think of some stories before you go in.

Knowing a lot about the market/finance is obviously a plus, but most prop firms look for thinking ability and personality first.

Good luck!

1/7/16

Whether or not it works in your favor, the success of your interview will be based solely on how well you do on the prob/brain-teasers. That's the nature of the beast w/ prop shops. They might ask you some personality/fit ?'s, but at the end of the day, they will carry very little weight.....

1/7/16

^^ this is not true for all prop shops. It depends on product. Do you know what they trade? If so, that would help me give you some advice

1/7/16

PnL, the firm trades domestic/international equities, commodities, equity derivatives, FX.

1/7/16

Ok, so you are interviewing with FNY. Their interviews are not quantitative at all (if you are interviewing for the int./dom. equities division) Their commodities and eq. derivs groups are a lot more prob and brainteaser focused, but unless you have some sort of connect with these groups you will most likely be interviewing for the equities side. Know why you want to trade, why you want to be at FNY, have ideas for trades to put on and why, talk about the market, talk about a time that you failed, talk about a time you took a risk, talk about a time that you lost money and bounced back, etc. feel free to PM me if you have any specific questions...good luck.

1/7/16

Prop is all about idea generation. Be prepared with trade ideas.

What prop is it? fundamental micro (eq/credit) or macro? Be prepared that prop trading at BB (especially on the micro side) = very similar to research, except you actually trade on that view. Have examples that show your research/analytical ability.

1/7/16

Thanks for that, all I know is that its a credit prop desk

So im guessing that I need trade ideas based on that theme ie bonds, CDS etc

1/7/16

Can you do mental math quickly?

1/7/16

what company is the interview with ? different companies ask different questions and many users on here are familiar with the specific companies.

1/7/16
DeighTrader:

what company is the interview with ? different companies ask different questions and many users on here are familiar with the specific companies.

Very Very True...

Probably good to know: Mental Math comes in very handy

Fundamental: Learner, discipline, interest in the markets. Say that you're not afraid to pull the trigger. They always seem to like that. Be yourself.

1/7/16

Brush up on probability (bayes rule, picking objects with and without replacement, geometric/binomial distributions etc.)

1/7/16

Thanks for the advice guys, I really appreciate it. I'm interviewing with LYNX capital partners. Dora anyone know anything about them?

1/7/16

listen man, LYNX capital is what they call an arcade. it is not where you want to be working at. for one, they offer no salary, which is an immediate red flag. and the fact that they require you to put forth your own capital to start out is a waving red flag. these arcades profit from transaction fees ... they could care less about how well you trade. do yourself a favor and apply to shops that pay you a salary like a job should ... in nyc try fnys, Jane Street, trillium, chimera, group one, and other more legitimate shops. for real dude, im sorry to burst your bubble, but the interview at LYNX isnt worth the gas it will cost you to get to nyc.

1/7/16

Thanks for your honesty and advice. This is for an unpaid summer internship though... its not even worth it for that? It should be added that I'm already doing an unpaid internship in the city, so thats not an issue.

1/7/16

Arcades are not all bad, you just need to do some research first. What DeighTrader is talking about is completely true for a number of arcades, but there are also a number of legitimate shops that cater to experienced traders. Basically these arcades are setup as a way for the small business owner to cut back on costs while being able to leverage themselves and rent a desk at an arcade. I think arcades a dirty word, most shops are places where people can work for themselves if they have the means and ambition.

They are not necessarily great for new guys to get into unless you do your research and find one that has a strong training program. You're internship should be fine, just make sure they teach you some things and don't just have you running around the desk doing nonsense.

It also helps if they pay a little salary ;-)

1/7/16

What firm? It varies quite a bit in style and in difficulty.

1/7/16

You should do a search. Most prop trading firms have a mix of fit questions, brainteasers, and mental math in the first round.

Reality hits you hard, bro...

1/7/16

So prop trading firms don't typical follow the first round behavioral, second round technical format? I'm thinking the best way for me to prepare is just be up to date on recent market events and run over some behavioral questions....it's seems futile to try and prepare for brain teasers or mental math questions...

1/7/16
bigparth53:

So prop trading firms don't typical follow the first round behavioral, second round technical format? I'm thinking the best way for me to prepare is just be up to date on recent market events and run over some behavioral questions....it's seems futile to try and prepare for brain teasers or mental math questions...

It ranges from behavioral -> technical to 100% technical. The style of interview will really depend on the firm.

1/7/16

just had one with one of the better firms---know brainteasers----mental math---markets (be able to speak about them)----do u know what the angle is when the clock is 4:25?

IVY for Life

1/7/16

PM me for details on my experience recruiting with prop shops in Chicago.

1/7/16

don't be a complete dork. don't say you know programming when you don't. know mental math. have a good memory for details.

1/7/16

I'm a graduating physics major currently practicing brain teasers, mental math, and programming for interviews in Chicago. I've been recommended an array of different "how to get a job as a quant" interview books. Beny23, are you still on WSO?

1/7/16

what kind of products does the firm/position trade? I would expect alot of brainteaser type questions to see how you will react under pressure and how you can logically think through a difficult situation.

1/7/16

@gctrader Great, that is what the first round was like and it went very well.

1/7/16

The Jane Street interviews are all technical/make a market around your answer type questions. The final round is also like that but they look for fit as well. I know a lot of people make it to the final round who don't get the offer because of fit.

1/7/16

Go to a local book store and pick up "50 challenging questions in probability" by fredrich mosteller, as welll as "my best mathematical and logic problems" by martin gardner (both are small paperbacks that cost around $5). I've found that a lot of the top quantitative shops (JSC included) asked questions that were directly from these texts. When I say this, I mean literally verbatim, there were a few that I skipped over when reading and was kicking myself when I was asked the question. Memorizing how to do all ~110 problems combined is probably not the best idea, but the thought process you'll develop is key. Since you only have a week it might be tough to get through all of them, but if you set aside 2-3 hours to go through 10 problems from each book you'll do well. If you've gotten this far, it probably won't take you that long to work through the problems, just do you best solve a problem without looking at the solution.

I never made it to the final round, but a friend of mine had the super day and said the culture was very very nerdy (and this is coming from a CS major from one of the top engineering schools), and because of this he ended up declining the offer.

1/7/16

Tell them you like to be the asshole who puts in a sweep order to take out the bids, so we can tank the stock and take their money.

1/7/16

mswoonc-.:

Tell them you like to be the asshole who puts in a sweep order to take out the bids, so we can tank the stock and take their money.


lol somebody couldn't break into any of the good shops...

@OP: generally when they ask this question they're asking why trading in general - a good answer is that you like to make quick decisions and are a competitive person. In terms of why market making, if they press on it, you can say you are really analytically/quantitatively-minded, as market making is really just an exercise in risk management.

1/7/16

I'm pretty sure you have never worked in your life.

1/7/16

I'm pretty sure you are wrong.

1/7/16

As long as you don't bullshit about how adding liquidity gives you a hard-on, any honest response combining competition and risk-taking/management will be okay.

@mswoonc-. : Maybe if your firm was legitimate enough to have a real data feed you wouldn't complain about a few blips in market microstructure ruining trades.

1/7/16

Cause what I stated earlier was directed at me? You never even traded in your life, let alone bought a single god damn share. Don't go around giving advice if you can't even get a fucking job working in this industry.

1/7/16

Don't go around giving advice if you can't even get a fucking job working in this industry.

This insult would be a lot better if it were true.
1/7/16

I have significant interview experience and work experience with top market making firms. Don't spread misinformation about market making firms when your expertise lies in a chop shop where you measure risk with moving averages.

1/7/16

You do know many algorithms measure their trades based on these averages dumbass. Name one firm you worked for. Cause you're full of shit. Euroazn why do you even talk, go find something to do kid.

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