Prop Trading v HF for Quant Traders
Hi all,
A bit of a more niche topic for this forum but I’ve been a trader at a top quant market making firm on a desk that is a mix of pure market making and position taking. Was wondering if anyone has any clarity on how common it is for quant traders to move from a market making firm to a HF that uses quant strategies or vice versa.
My firm has a few people from other firms that do market making but no guys from HFS so didn’t know if anyone ever moves the other way or if the money is better in one of the two sides of the field.
My sense is that it is rare but does happen occasionally in both directions. I don't know if comp is consistently better in quant prop trading versus quant hedge funds but most trading shops have seen three very good years in a row which has not consistently been the case for hedge funds which means recent increases in trading pay have likely been larger than increases in hedge fund pay.
There's tendency to stay with one strategy but I do see people move one way or another. Important to recognize the labor market dynamics are nuanced because the market for elite prop (JS, Optiver, IMC, HRT) is different than non-elite prop and when referring to quants at HFs I really mean multi manager / multi-strategy. The dynamic has changed a bunch over time I think. Awhile back the market making quant firms were crushing it, so had higher comp probably. Then multis now have passthrough fees which inflated comp, which others quickly responded to. I think the comp levels at junior levels (years 1-4) is higher in elite prop ($300-450K, with a lot from signing bonus). I think that most people will level out somewhere between $750K-1.5M but not go much higher. You sort of lack bargaining power to command extremely high comp beyond that at a prop fund. Multis have a higher ceiling if you become a PM. If you join with reasonable experience and you made $1-1.5M at a prop fund, I suspect you will take a paycut, but if you were making like $750K at the prop fund, the multi-manager will probably match. It sort of depends on where you are at, level of experience, etc.
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