Proprietary Trading Firm Interview Tips
I've seen a lot of posts and private messages asking about proprietaryfirm 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 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. 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 : 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(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!