Quant funds

Farm_Boy's picture
Rank: Monkey | 39

When I look at all the types of hedge fund jobs listed, I see very little exit opportunity for quantitative/algorithmic traders. In the same vein, when I look at the top hedge fund managers, I cant for the life of me find someone who came out of a quant shop.

I'm going to be in quantitative strategies in DRW
( as an undergrad, not as a full fledged quant) and wanted to know what good exit opps would be. So far as I can tell, I either:

a) Move to another quant fund later (Citadel, D.E. Shaw, QVT , Two Sigma etc)
This is pretty hard, and there's no guarantee it would be a bump in pay.

b) Try getting into a prop desk on a BB.
Which would probably be a drop in pay.

c) Go to business school in a few years , and reboot into another type of fund.

d) Transition into another desk on DRW, and take it from there.

So, my question for the senior people on this board is .... What would be the best thing to shoot for? And .. am I needlessly worried? Quant funds seem to be hard to find, is that just because they don't grab the big headlines (Besides Renaissance), or have I really put myself into a small niche market?

Apologies if this sounds really neurotic. These shitty economic headlines are making me worried.

Comments (18)

Jun 27, 2008

I don't understand the question. What exactly do you want to do? Since quant trading is so lucrative why would you need or want an "exit"? In this business there's only a couple scenarios

a. you're good at what you do, make a lot of money, start your own fund
b. you're decent at what you do, make good money, keep your job
c. you suck at trading and eventually find a different career

There are lots of hedge fund opportunities for ex quants, but don't plan on getting very far without a PhD. And I wouldn't even waste my time trying to get into places like Citadel or DE Shaw at this point in time.

Jun 27, 2008

A part of my question is - where would I go in quant trading without a Phd? ISn't 5-6 years of working in the field enough to advance forward even without a Doctorate?
(I do NOT like CS or Math enough to do a PhD in them)

I did get into Citadel's FTAP program, but chose not to go partly because of Citadel's ultra stressful lifestyle and partly because in a shaky economy - why would you go to a place where the axe swings left and right anyway.

Jun 28, 2008

I'm not exactly sure what all goes down at the quant dept at DRW but most of the quant shops I know hire PhDs because of the significant programming and math skills required. Now I suppose one could bypass the education by being a top performer, making a reputation and connections. If you're really concerned about this, talk it over with your supervisor(s) or co-workers to learn more about future career prospects/alternatives and the requirements for upward mobility. A masters in finance is always a good option in my opinion.

I would not worry about the economy. I know guys who pee their pants every year worried about losing their jobs and generally lead miserable lives. You can't worry about tailoring a career around the market (it wont work). And if you hit a road block, you have that Stanford degree and decent work experience already. So, youre ahead of the game. At this point most of your job switching opportunities will come from contacts/coworkers/friends. Thats my 2 cents.

Jul 25, 2008

So , any of you suck ER.. I mean investors got $500 mil to spare?

Jul 26, 2008

not sure what you mean, i see job postings for quant guys all the time, other side is much more competitive

Jul 26, 2008

Only for PHD's full fledged quants. I don't want to do a PHD , and don't want to get pigeonholed into quantitative trading just because I have a quantitative major. But I'll revisit this question after a few years in the business.

Jul 30, 2008

If math and comp sci doesn't interest you enough to want to get a grad degree in those subjects, then you probably wont enjoy a career in quant trading. You may (or may not) make a ton of cash but it's not a "sexy" job...at all.

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Aug 4, 2008
Schumacher:

If math and comp sci doesn't interest you enough to want to get a grad degree in those subjects, then you probably wont enjoy a career in quant trading. You may (or may not) make a ton of cash but it's not a "sexy" job...at all.

as a quant, expect the back of your head to get abused by coke bottles, telephones, staplers, and footballs. you are the four-eyed, pale-skinned nerd that the traders picked on in elementary, middle school, high school, and college. don't expect other people to look at the model you spent 4 months working on and gasp in awe. expect them to look down on you as an inferior species regardless of how smart you are, and how much time you spend working. the glory of true quanthood is reserved for the few that can hold a conversation about the latest football match (both kinds) for over 30 seconds.

alas, the quant hotshot is a myth.

Aug 4, 2008

While I would agree with you, the quant hotshot IS a myth, I would argue that 90% of desk traders today are a bunch of nerds. Therefore, I would even further by saying that the "hotshot trader" is now becoming a myth. My friend once made a comment to me "Y'know, the phrase rogue trader really isn't as badass as you wall street guys want it to sound"

The "nerdening" of finance really took off after the fall of Drexel; banks and hedge funds got the wacky idea that intellect had something to do with P&L. So far I'm not convinced...

Aug 4, 2008
Schumacher:

While I would agree with you, the quant hotshot IS a myth, I would argue that 90% of desk traders today are a bunch of nerds. Therefore, I would even further by saying that the "hotshot trader" is now becoming a myth. My friend once made a comment to me "Y'know, the phrase rogue trader really isn't as badass as you wall street guys want it to sound"

The "nerdening" of finance really took off after the fall of Drexel; banks and hedge funds got the wacky idea that intellect had something to do with P&L. So far I'm not convinced...

somewhere along the way, the street began to realize that whatever MOST traders can do, computers can do it faster and better, hence the shift to towards algo trading and automated market making. sure, there are a few exceptional traders who can find ways to make money that other people haven't. but most traders aren't that smart and make money through getting flow edge alone, which can easily be replicated by a good programmer and a few dozen servers.

the one thing quants and computers can't do, however, is build a good relationship with brokers who usually provide the easiest free money. I think there will always be traders as long as there are brokers.

Aug 12, 2008

And the bulk of the people there were from MIT. A couple of them had Math degrees from princeton.

"Quants are pale skinny nerds and are picked on by traders blah blah blah football blah blah"

Jesus tittyfucking christ. What is this , "Mean Girls"? Do I , like , need to be , like , totally cool to sit with the traders? Like Oh My god! Will we still be friends on Monday?

Anyway, I think purely quantitative trading without any market knowledge or insight is a surefire recipe for disaster. Besides, I would love to see a prop-trading strategy in financial derivatives that DOESN'T have a highly quantitative element.

Aug 13, 2008

of course my earlier post was meant to be an exaggeration, but for those think that quant is a glamorous field like this guy http://www.espenhaug.com , you'll be disappointed.

Anyway, I think purely quantitative trading without any market knowledge or insight is a surefire recipe for disaster. Besides, I would love to see a prop-trading strategy in financial derivatives that DOESN'T have a highly quantitative element.

You'd be surprised.

Aug 17, 2008
aachimp:

of course my earlier post was meant to be an exaggeration, but for those think that quant is a glamorous field like this guy http://www.espenhaug.com , you'll be disappointed.

Anyway, I think purely quantitative trading without any market knowledge or insight is a surefire recipe for disaster. Besides, I would love to see a prop-trading strategy in financial derivatives that DOESN'T have a highly quantitative element.

You'd be surprised.

It really depends on where you are a quant. Sell-side quants tend to make less money and live less fun lives than buy-side quants. At a shope on the buy-side the traders are generally executation traders (or they become "strategists") and the quants are the guys who manage the money/research alpha models. On the sell-side, structurers still make very good money and often many top traders have pretty sophisticated quant backgrounds. Think of Ashok Varadhan, who's dad Shrini is a professor at NYU doing quant finance (and there are a bunch more like that).

I don't know where you work, but normally top traders in top money making desks are pretty quantitative.

RE: The initial post. I don't know what you're thinking, considering DRW and Citadel are both in Chicago and DRW is about five levels below Citadel. DRW's pretty much a prop-shop, whereas Citadel is a full-scale hedge fund. You might want to reconsider the QOL thing, or find a better shop with high quality of life.

Aug 17, 2008

My Citadel offer was for the FTAP program , which is more full-fledged quant and not so much trader. What do you mean by "reconsider the QOL thing"? I've spoken to lots of my friends at Citadel , and both quants and traders hate it there.

Aug 17, 2008
Farm_Boy:

My Citadel offer was for the FTAP program , which is more full-fledged quant and not so much trader. What do you mean by "reconsider the QOL thing"? I've spoken to lots of my friends at Citadel , and both quants and traders hate it there.

Farm_Boy, you definitely made the right choice. I spoke to new hire at Citadel, and apparently only top 20% of the FTAP class ends up going into quant strategies which is the prestigious group. Around another 60-70% go into IT and other shit jobs, while the bottom 10-20% get cut.

If I were in the FTAP class and had even the slightest clue that I wasn't gonna make it into the quant group, I'd find another job before they change my title to "Systems Engineer" or something like that.

and DRW is by no means 5 levels below Citadel. Sure, Citadel is more recognizable, but within market-making business, DRW is in the top-tier. and whereas Citadel is a sweatshop for entry-level hires, DRW, like most other trading firms, has hours of 6-5 and even less as you move up.

Aug 17, 2008

Sorry, I didn't see FTAP. My "experience" is with ITAP, which has a solid reputation and has a lot more top-notch jobs than quant strategies. If you had gotten an offer for ITAP, I would have suggested you reconsider the quality of life consideration in favor of a top-notch job, but that's a decision you have to make (and yes, I know of Citadel's reputation as a gulag type shop).

Still, in terms of trading shops, DRW is just like every other market making shop (no insult to them, if that's what you want to do)--especially now that the value of exchange membership had diminished.

Aug 18, 2008

Its more of a mixed picture. There are a lot of stereotypical pit traders in my incoming class. But on my desk , the quant desk - The guys I know personally and interviewed with all have degrees from Stan/MIT (I'm not exaggerating , ALL - without exception). Plus the interview questions I went through here were way harder than Citadel. (Hard to believe but true)

To GKA - my options on the buyside as an undergrad were SEVERELY limited in the Sep/Oct 2007 recruiting season, these were literally the 2 best offers on the table. I'm sure with 2-3 years in the game the buyside opens up dramatically.

Feb 11, 2010
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