Quant Trader Brainteasers
Background: I'm a senior engineering student at a Public Ivy. I've been losing interest in engineering recently and have begun to look around at other math heavy fields, and one that really caught my attention was quant trading. I've gotten As in all my math classes (SAT Math: 790, SAT II Math: 800 for reference) and am planning on getting a math minor next year, so I thought I would be in decent shape as it looks like the amount of finance knowledge I'll need is minimal.
I've been looking at what I need to do to prepare, and it seems like Stochastic Calculus, Time Series, Bayesian Stats, R/Python are the big subject I need to know. On top of that, I need to practice my mental math. But what really gets me are the brainteasers.
I've taken a look at a Practical Guide to Quantitative Finance Interviews, and I'm sort of shocked. Do people really know how to solve these without looking at the answers first? Do these quant firms reuse the same kinds of problems with different wording/context? I can understand how familiarizing yourself with the problems will help with that, but are people actually able to solve some of these brainteasers on their first try?
I just wanted to ask you guys because I've always thought that success was a function of effort and that you can overcome intelligence just by trying harder, but looking at these brainteasers makes me feel really discouraged. I couldn't even answer one without looking at the answers. Is quant finance just not for me then?
Nah, you'd just need to practice. Some people get a lot of exposure to problem solving elsewhere and it's a lot easier for them but it doesn't mean you can't learn.
You should probably prep at least some, though if you're not strong in probability/stats/programming then improving that may be higher ROI as "traditional" brainteasers are kind of becoming less common. And they're certainly less relevant to doing well at the actual job.
I will give you a data point. I am a VP trader in a well known bulge bracket. I make around 250K. My classsmate who worked in Netflix now make 500K So tech paying more. Choose your career wisely.
Your making 250k, assuming total comp, as a VP trader at a BB? I hope you're either in a smaller city or more execution focussed because otherwise, you're underpaid.
what was your personal P&L last year?
$250k all in as a VP is very bad, must have been a bad year for your firm (or you personally). Using that as a data point is a bad exercise. I work in HF and in “quant” type space and my comp was multiples of that. I think $250 at a VP level is an outlier on the low side.
@sawes42315
250k for a VP on a BB trading desk = close to zero PnL (assuming base 200k for a VP)
if you made 10mm trading, i would expect minimum 400k (4%) bonus for 600k total comp
if you only made 2.5mm trading...4% =100k bonus if your base was 150k...then 150+100 = 250k
so...the truth must be inbetween these numbers somewhere.
what product do you trade...and what was your P&L last year?
No reasonable person knows how to solve those brain teasers at first glance. The majority of the time it's you've seen it before or you haven't.
Just practice and they'll come.
For mental math I like to practice with the websites mathtrainer.org, arithmetic.zetamac.com and tradermaths.com. Plus another one for sequences which has been shut-down a few months ago, unfortunately. Some people also like this site calculationrankings.com
Honestly, I wouldn't worry too much about it. Obviously try to solve the problems without looking at the answers first, but as long as you understand the principles behind the problems it should be fine. I was a math major at Princeton/MIT/Caltech so my experience in math may be different than yours. Honestly, the math level on the SAT is a joke, so I wouldn't use that as a metric. In my experience, if you are talking about prop shops, the questions are mostly on expected value/probability. However, some places like DRW seem to ask more traditional math questions as well so I would brush up on linear algebra.
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