Exit Ops for Equity Stat Arb

Consider: quant trader position. Equity stat arb, holding period on the order of days. Mainly US and some international equities in the major overseas markets.

The job is to create, backtest and implement high Sharpe stratgies.

Checked the search function, couldn't find answers to these questions:

  1. How long is the learning period for a job like this? Ie, after X months, they kick you out if you don't come up with a winner. I'm guessing X = 6?
  2. What's compensation structure like? What % of the PnL should you get? If you are a fresh Ph.D., what salary should you expect?
  3. What are the exit ops? Unlike a BB flow desk it seems like you are training in a very narrow skillset and product set.

All opinions are welcomed but I am particularly interested in those of people working in the industry.

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Comments (5)

Apr 6, 2012 - 4:21am

Is this a real position, or just hypothetical? I don't think I would take an entry level job that makes you both a quant and a trader. Learn the ropes of one but not both, or you will definitely be a part of that "X" month plan. And your exit ops, will be getting a new job in a different field.

Apr 9, 2012 - 12:28pm

protectedclass doesn't seem to understand what equity stat arb means.

  1. 6 is a reasonable estimate. Varies by firm of course.
  2. At a top firm, 150k + a few %. If you're doing everything yourself from scratch then more.
  3. The idea is that, if you're good, you don't need exit ops. Exit ops are another firm doing the same thing, starting your own fund, doing something else trading or quant oriented, since you have experience in both. (BB flow desk is also a narrow skillset... how are you going to move to buyside if 90% of your pnl is commission dollars?)
Apr 11, 2012 - 5:19am

Thank you dabonobo. I am told that well over 90+% of quant traders end up not making any money at all in terms of generating profitable ideas. What happens to these guys? Are they completely finished in the industry?

This is where prop shop/flow desk seems to have the biggest divergence in career path. The clock runs longer and your value proposition is harder to pin down for an institutional flow desk. A prop shop's economics seem a lot more risky.

Apr 11, 2012 - 5:22pm
fermion:
Thank you dabonobo. I am told that well over 90+% of quant traders end up not making any money at all in terms of generating profitable ideas. What happens to these guys? Are they completely finished in the industry?

This is where prop shop/flow desk seems to have the biggest divergence in career path. The clock runs longer and your value proposition is harder to pin down for an institutional flow desk. A prop shop's economics seem a lot more risky.

I'm not sure if anyone knows the % of traders that make money. It's important to note that "quant trader" is an overloaded term, and could refer to someone who is doing execution or alpha capture. In no case is one "completely finished in the industry"; traders -- even those who have lost money in the past -- are surprisingly resilient career-wise.

Prop shops are not like flow desks; while they both trade, they make money (or lose it) in different ways.

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