switching from front office quant to sell-side
Hi everyone,
I am looking for a advice. I have a PhD in math from a known university. Currently I have 7 years of experience in front office quant position in one of the major investment banks. I support manual Rates and Credit traders with pricing, risk, etc. My salary stayed in low 200s for the last 3 years. And I also feel that the work is no longer exciting and the set of instruments I cover is ever shrinking.
It is time to make a change and I also feel it is a good opportunity to change the field. I feel there is a lot more potential on a buy side. I only had one job so it is hard for me to compare what other quants would do. I would like to do some learning and book reading if that's needed but my main concern is my background. I do have a handful of years but most of the hedge funds might not appreciate this experience. I can brush up the math but perhaps I also need to pickup the latest books on Statistics/Machine Learning, etc. I can definitely get my technical skillset to a better level. I also feel that the AI/ETrading is growing rapidly and I want to make sure I jump on that train before it is too late and my skillset is completely outdated(think stochastic calculus, numerical methods, monte carlo).
P.S. Perhaps this is not supposed to be part of the resume profile but to complete the picture I should mention I am a female and I have small kids(no more planned), so I do want a good work-life balance and hours something along 8-5. I also have good communication skills so I would be a good fit where you need to talk to clients, etc.
The buy side can be better but has its own problems. You can see the recent thread on quant fund career progression here. Unless you have your own strategy with a live track record, your experience won't be very useful, and you will often be barred from accessing code or other information to make you easily replaceable. ML/stats is important but is mainstream and well established now, and you don't need much math for applied ML work (I say that despite having a math background too).
No, I definitely don't have a trading strategies record. Unfortunately, most of my experience was "supporting" traders. Yes, I do have a good understanding of pricing models for most of the credit/IR instruments but I assume this is not very relevant for the buy side. Setting aside what I already know, what should I know to even get an interview? I definitely want to make a change before it is too late as I feel that my skills set loses value as the number of instruments I need to cover simply is shrinking every year.
Another way to be in a more relevant field is perhaps to switch to etrading? It will be a bit of a challenge but perhaps having some experience in it will help me to build up a more attractive resume.
You should be spending your free research time trying to come up with active alpha trading strategies. Nobody will do this for you...learn technical analysis, study chaos theory (study of feedback systems) and then try to find ways to automate and test those theories, etc...pricing, while necessary for a market maker, is no longer alpha producing....you want to learn how to produce alpha...that is what makes you valuable...and that is where the big bucks come.
Many people will say "its not possible to predict the market" but that's not what alpha research is about...you are looking for patterns that repeat with some frequency...and then something like 70% of the time, when we identify this pattern, the next move is xyz, and if zbc happens then the model is wrong and gets stopped. You will lose money when you are wrong...make money when you are right...but so long as you make more than you lose over a statistically significant sample, you then have a winning strategy.
This is not about calculating a formula with a precise answer...this is more like satellite tracking traversing unknown gravity fields and random thrusters going off...sometimes pulling the satellite off course...how would you deal with that, etc..
Are most of the jobs on buy side about generating trading strategies? What if I am not interested in doing so? I bet not everyone likes that. Unfortunately, I only know what typical front office quant does on a daily basis so it is hard for me to understand a range of opportunities on a buy side. But even if it is not a buy side exactly, the quant field is definitely evolving and I would like to switch to another quant field that has a potential to grow. Is it all about quant developer generating strategies? Are there quants who don't code as much and perhaps are more client oriented? I would like to get an idea of what sorts of things I could be doing. I am not running after money to be honest but I want to make sure I stay in a relevant field as very soon classic Credit quant will not be having much of a value in my view.
I think you need to talk to headhunters to get a better feel for your market
The problem with headhunters as they are not very interested as to what I want. They primarily match me with people who are looking for my experience which means exact same role but in a different bank. This is what I observe, people like me just keep moving around banks without changing the actual work they do.
The buy side is all about coming up with investment ideas that improve risk-adjusted returns. There are client-facing jobs (client portfolio management) that involve some technical work like reporting portfolio risk and attribution, but they are not frontline roles and I don't think the pay is that great. Some quant funds also work on studying transaction costs and market impact across all strategies. As a quant, if you want to be valuable (to both your firm and other firms), you have to be directly involved in the investment and trading process. However, at this point many smaller successful quant funds don't need or want to hire anyone, and the big, corporate funds who hire frequently tend to view the staff as expendable and deny them access to anything important so they can be paid less and fired easily. Maybe a credit fund (typically not a quant one) would value some general knowledge of those products.
Can you define "trading"? Is this etrading mostly? Writing algorithms? Is that taking positions in a broad range of instruments? Why is it called "quant trading" and are the quantitative skills that are required? I assume if I want to become a quant on a buy side strong C++ is a must? What else should I be good at? I would like to make a plan what I need to improve if I go to the interviews especially since I have a number of years of experience.
Buy side quants work on improving algorithms for entry/exit signals and portfolio allocation in mostly liquid instruments like equities, futures or options. C++ is used only in HFT shops for the most part. Python, R or Matlab are more common in quant hedge funds and asset managers, although some have legacy code in C or Perl. If you don't have a strategy, the interviews tend to be about programming (leetcode) and basic statistics/probability/ML, but you end up competing with fresh graduates since those skills are common today.
I think every bank also have an etrading team, is that any closer as to what folks on buy side do? Would it give me some leverage to apply to to other roles outside for the big banks?
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