Is it Becoming Harder to Make Money in Algo Trading?
With the increased focus on quantitative methods by all market participants, how much harder is it becoming to make money with HFT or algorithmic trading in general?
Also, I feel that salaries at major tech companies are reaching levels that were once only possible in finance. The average software engineer in silicon valley now makes over 100k. I know for a fact that MSFT, Facebook, Oracle, Apple, Google, Palantir and many others offer starting salaries of 95k+ often with a sizable equity package and even annual cash bonuses.
Considering all this, is it still financially worthwhile to work in quant trading vs a tech company? I know that at the top (Getco, JSC, etc ... ) you can still make a boatload if you're good but I'm more concerned with the average quant trader.
Not all quant strategies rely on milliseconds response and all that craziness. So I think there's still some viable strategies out there.
The silicon valley techies have it pretty good. Much more stable than working on a trading floor, good hours, less stress, and still make 100k+. Join the right company pre-IPO and you can become a millionaire. I recommend that you give tech jobs a much better look.
MSFT in 2011 was offering exactly 80k + 10k(moving + signing). Facebook was 70k.
I have never heard of anyone getting 95K salary starting out of undergrad out of a single one of these places unless it was a very special case in which you were talented enough to go into a senior developer roll right away or had significant iPhone or Android experience. The highest paying places are the VC funded start-ups, not the big dogs.
I know a guy that graduated from UMich Dearborn with a degree in electrical engineering and computer science and he's making over 100k all in designing sensors for cars so they automatically avoid collisions. My one friend also knows another guy from UMich Dearborn who is making 125k programming for some company... forgot the name. Not as much upside as trading, but it's still pretty damn good... I don't know how or why, but it happened (they are both very smart though, could have gotten into Ann Arbor or name-a-better school, but I guess they didn't see the point)... Some engineering grad from here in Ann Arbor got lucky and joined a startup that got big and is now pretty much set for life (well, I'm sure there's more but I've only heard of one so far). As a CS student, I hope this trend continues even though trading is still extremely tempting.
http://www.cmu.edu/career/salaries-and-destinations/2013-survey/pdfs-one-pagers/SCS%20Post%20Grad%20Handout%202013.pdf
See: median
(edit, sorry, I didn't see that someone necro'd this thread)
But you hit the nail on the head mass_marines, the big firms in silicon valley do NOT pay nearly as much as many people think.
If I moved to the bay area as a developer, it would be at a start-up. It is too late to join the big boys, unless you want to be a code monkey in one specific product line. The saying goes, if you work at Google for more than two years, you are doing something wrong.
Algo trading in equities have become extremely crowded, and it's gotten a lot tougher to make money consistently. However, there is a lot of opportunities in currencies and commodities; guys at my firm who wrote algos for those products are killing it right now.
How is this even a question? Very few get rich off of yearly comp in tech.
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