I have been working as a quant researcher for about 6 years. One problem I see on the systematic trading side is that there is less flexibility than on the discretionary side. A discretionary trader can run quant strats, but usually a quant is not really allowed to do discretionary trading. Also I found that career progression and financial rewards can be better for discretionary traders, even though they maybe have a higher risk of getting fired if things don't work out. If a quant strategy is successful I feel this is often attributed more to the systems and infrastructure of the fund than to the skills and efforts of the researcher.
Has anybody here seen a successful transition from quant to discretionary trader? In my asset class it is certainly possible to merge those two approaches and a lot of discretionary traders employ heavily model based approaches anyway. So this would be something for me to move into. The fund I currently work for both has quant and discretionary traders and there is some form of collaboration, but I don't think I would have any credibility if I ask my bosses to be allowed to make discretionary calls as well. Since I have been in a pure quant role for quite a while I think people might be reluctant to let me do anything else. I think I have a very good understanding of my markets and would be able to manage a discretionary overlay of my quant strategies, but how can I get into a position to prove this?
Is there a way for me to make this transition?
It has to be an internal organic transition sponsored by a senior discretionary professional who would teach you the ropes (or authorized by management).
I 100% agree w/ your observations about discretionary traders being rewarded first and it's frustrating to me as a quant b/c my comp is just their passthrough. (I work for discretionary PMs, so believe me, I know the pain).
At my place, a senior quant researcher has worked for a PM for 4 years and recently transitioned to becoming a trader under that PM, so the PM is actively teaching him about the market. The key here is that they have worked together for years and the quant has turned out reliable signals; the PM has assessed that the quant would be a good fit for his desk and made the opening/sponsored the quant. Same thing happened at my old bank where phd quants worked on vol models for a couple of years before being sponsored into a trader role for the desk that he supported. At a multi-manager, a quant PM took a demotion/pay cut to learn under a discretionary PM for a few years, hence my point about sponsorship.
If you want to do an external hire, it'll be very difficult unless you have connections/one hell of a recruiter. It's not much different from a new grad; very few places will let you come externally from a non-risk taking role into a risk-taking role.
If your mandate is purely systematic/no exposure to fundamental analysts, then you gotta switch jobs. I was recently advertised roles at multi-managers where essentially you go from quant -> trader under a discretionary PM.
The organic way to do this is by first asking for leeway on portfolio construction. I.e. discretionary risk sizing a systematic strategy.
If the strategy outputs 500 buys and 500 sells in a given day, you can allocate more risk to the ones you deem in the top/bottom decile in strength. Build the PM's trust that way. Then, start removing risk allocation from the majority of the signals as well. Eventually you end up in a situation where you're fully discretionary within a quant framework.
I'd push back somewhat on your flexibility point. Quants in general have much more flexiblity to trade and expand to different asset classes, assuming they are performing well in their core asset class. E.g. you are a systematic equity trader but want to expand to futures or credit - quantitative business lines are much more tolerant of these expansions. Conversely as a discretionary trader, you are usually pigeonholed into a particular asset class or inefficiency. Maybe you are a rates trader and you can hire some rates quants, but they will never let you trade cash equities.
Certainly, there are discretionary traders running quant strategies. That said, are you really going to want to run a fully discretionary strategy? The best discretionary traders (and traders in general) all run some sort of system, whether it's fully systematic or semi-systematic. Trying to forecast one off/ idiosyncratic events are not exactly where consistent money is made. If you have a particular inefficiency you are trying to exploit it shouldn't matter whether it is "discretionary" or "systematic", these are always in some sense systematic.
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