
Ask HN: What skills are needed to be a Quant? - jason_slack
What skills are needed to be a Quant?<p>For example:
1. I love math<p>2. I can code in C&#x2F;C++<p>3. I love going through data sets and finding patterns, etc.<p>What financial background must one have? What other subject should one study by reading books?
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brw12
From many people I have seen succeed and fail at being quants (in the high
frequency trading realm, which is different in many ways than the derivatives
analysis world), you don't really need any Financial background, besides being
a thoughtful and reflective thinker who has naturally wondered and thought
about how Finance works on the national, business, and personal level.

In fact, I don't think you necessarily need to have background knowledge of
anything in particular. What you do need, absolutely, is the ability and
interest to learn complex concepts and areas of expertise in a diligent and
meaningfully insightful way. That is, you need to be something of a Feynman-
type thinker, learning statistics and programming and the math of data
analysis and algorithmic analysis truly from the inside out, so that if you
taught any of it to other people you would be a phenomenal teacher.

If you're not quite sure what that means, consider teaching a statistics class
by having the students work their way chapter by chapter through a statistics
textbook. Now say that you randomly insert 10 errors in to the textbook: you
switch one word for another, you misuse Bayes' theorem in an example, you
forget to adjust sample standard deviation to student sample standard
deviation, you leave out a crucial paragraph of explanation in a lecture,
etcetera. And you don't tell students to anticipate this and point it out.

How many students at a place like Stanford would catch most of these errors or
omissions and speak up about their confusion? How many students would already
be putting in the consistent, focused, diligent effort so that they could be
reasonably confident the problem wasn't just in their laziness or inattention?
How many would care so much more about understanding the material than about
potentially embarrassing themselves to interrupt you in class?

If you taught that class 10 semesters in a row, in all that time I doubt there
would be more than a handful of students who met that standard. If you took
those students, with no particular background in finance, math, computer
science, or statistics, and put them to work as a quant, it's highly likely
they would succeed.

Whereas if you took students who never would have raised a question about any
of those errors or omissions and gave them years of experience in all those
areas, it's highly likely they would not succeed as a quant.

(Background: I worked as an algorithm developer at a major high frequency
trading company for 6 years. Some of the most valuable employees, who
generated tens of millions of dollars of value for the company, started with
only spotty knowledge of finance, statistics or computer science.)

~~~
jason_slack
How do I get in the door someplace?

Thank you for writing this post. Motivational and insightful.

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chatmasta
A degree from a top school certainly helps. A masters or PhD in something like
math or physics would be even better. I wouldn't say those are prerequisites
but they would at least guarantee you an interview. If you don't have that, I
would focus some effort on push based networking through any existing contacts
you have. Get coffee with friends or friends-of-friends in similar positions
and ask them about their job, if they're hiring, etc.

For interviewing, my experience in college was similar to @neerkumar's -- math
and specifically statistics is going to be the most important. I applied to a
Jump Trading internship just to see what the process was like. I was asked to
solve 3-5 short puzzles, mostly based on probability and game theory. That was
enough for me to know this isn't the field for me. ;)

I'm terrible at math so didn't get much further than that! I'm not sure what
the coding components would be like, but it definitely depends on what
position you're applying for. Some, like DevOps positions, probably don't even
rely on the math, but you would get to work with really cool tech in low
latency trading systems.

Wall St Oasis [0] is the go-to forum for this sort of subject, you might want
to check it out. A quick google brought up this forum post [1].

In terms of companies to look at, you should be searching for "prop trading
firms". Here's a nice list. [3]

[0] [https://www.wallstreetoasis.com/](https://www.wallstreetoasis.com/)

[1] [https://www.wallstreetoasis.com/forums/the-road-to-
becoming-...](https://www.wallstreetoasis.com/forums/the-road-to-becoming-a-
quant)

[3]
[http://www.traderslog.com/proprietarytradingfirms](http://www.traderslog.com/proprietarytradingfirms)

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neerkumar
I have never worked as a quant, but I have got a couple of job offers a few
years ago when interviewing at the end of grad school.

Things might have changed in the last 5 years or so, no idea. But back then,
in my experience, you didn't need any financial background or knowledge. The
core of the interview was puzzles (way harder than what tech companies used to
ask) and algorithms in whichever language you wanted (a bit easier than tech).
Theoretical knowledge of statistics was also required to pass the interview.

To be honest, I hope by now they changed the interview format. I doubt that
structure would actually help them identify the best candidates.

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SirLJ
I think you do have the skills already. I was like you and started building
stock trading robots long time ago (today generating a lot more money than my
"real" job)... One exception: I don't love math (actually I did before
starting primary school) :-)

The books I would recommend are more for motivation and inspiration:

More Money Than God: Hedge Funds and the Making of a New Elite by Sebastian
Mallaby

[https://en.wikipedia.org/wiki/More_Money_Than_God](https://en.wikipedia.org/wiki/More_Money_Than_God)

A Man For All Markets by Edward O. Thorp

[http://www.edwardothorp.com/books/a-man-for-all-
markets/](http://www.edwardothorp.com/books/a-man-for-all-markets/)

If you are asking about finding a "Wall Street job", than it is completely
different matter and the degree from prestigious school would be the most
important "skill"

~~~
jason_slack
I don't need the "Wall Street" job. I just want to use my skills to solve
challenging problems and do some interesting work.

~~~
SirLJ
This is actually great... You do not need a formal education to be great at
this... I am a bit nostalgic and envy you for what is in front of you: a great
challenge, but well worth it in the end...

Having FY money is the greatest freedom one can ask for!

~~~
jason_slack
I dont even want "FY" money. I want to see my code make the "FY" money.

~~~
SirLJ
Exactly, this is the name of the game: the best lifestyle businesses with no
customers, employees or investors... host it in the cloud and you will be
truly location independent... personally I am checking the logs of my systems
once a week to make sure everything is working as designed + 3rd party
monitoring service to monitor the servers and the API responses and all is
set!

~~~
meri_dian
How would someone get started doing what you do with an automated trading
system?

~~~
SirLJ
get as much data as you can find and start back testing all trading ideas you
can come up with... sooner or later you'll find something that works for you,
the most important part of the back testing is to back test for at least 1
market cycle, the more market cycles, the more robust system you'll have...

After that it is easy to convert the code and build the trading robot, now
every discount broker is offering API for automated trading...

~~~
jason_slack
Ideas on where one can get viable data?

~~~
SirLJ
Cheapest I can find for 20+ years us stock market data, was on eBay for $100

~~~
jason_slack
I would have never thought of that. Do you have any info on making a trading
bot?

~~~
SirLJ
I am always on a look out for data... On how to build the bot, the best
documentation would be your discount broker API, here is IB for example...
From here the sky is the limit...

[https://www.interactivebrokers.com/en/index.php?f=5041](https://www.interactivebrokers.com/en/index.php?f=5041)

~~~
jason_slack
Can you share how much computing power is needed to have a bot (or several)
automating trading?

~~~
SirLJ
Not much to be frank, as this is not a HFT related, so basically any linux VPS
will do, (I have a few around the world for redundancy)

~~~
jason_slack
and if it becomes an HFT situation?

~~~
SirLJ
for HFT, you'll need millions for infrastructure, co locating servers in the
stock exchanges, etc... definitely not one man life style business...

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StriverGuy
You are on the right path. Quant is a bit of a catch all term for
risk/traders/developers that work with financial instruments. Learn about
different financial products and the different quant positions. Understand
that Quants at IBanks and Quants at hedge funds do drastically different
things (as an IBank quant myself - you don't want this job). And even those at
hedge funds vary based on the instruments they trade in and how the firm
operates (quant vs fundamental). Many quants are simply risk analysts. The
quant positions that make the most money are typically quant traders or PM's
that run a quant/hft book (see Jane Street/Two Sigma etc). Those positions
definitely require a PhD or masters in applied math/physics/comp sci.

I would recommend talking to recruiters (try contacting GQR) about positions
in the field.

~~~
jason_slack
Thank you for the reply.

Why physics? What does a physics degree bring to the table? Just extensive
math?

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dagw
Disclaimer. Never worked has a quant, but studied financial mathematics at
university and many of my friends became quants.

Math and coding is really all you need. You don't need much in the way of
finical background. Obviously should you know know what words like Options,
Futures, Put, Call, Long, Short etc. mean and you should at least know what
Black-Scholes is and how to use it, but beyond most places seem to prefer to
teach you the nuts and bolts on the job. All of my friends said that the first
few month on the job largely consisted of their colleagues laughing at their
naive 'academic' understanding of finance.

If you want a textbook Hull's Options, Futures, and Other Derivatives is
pretty much the standard. If you can at least understand everything covered in
that book you should be good to go on the finance side.

~~~
jason_slack
Thank you for thw book recommendation.

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d--b
There are 2 types of quants.

1\. Quant trader: designs and implements quantitative trading strategies.
Here, you'll need good econometrics / statistics skills and good understanding
of financial markets. R & Python are the main 2 technologies used in that
field.

2\. Quant analysts: produces models to price complex financial products. Here,
you'll need good stochastic calculus skills as well as solid CS knowledge
(C++, F# or Python usually).

In any case, you'll need some kind of university degree for anyone to trust
you with either roles.

With no prior financial experience, you may still find a job as a low level
analyst. Interviews will have some math-based brain teasers, pure maths, and
pure CS questions. It's not rare to see trained physicists and Math PHDs in
these roles.

Good luck

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indescions_2018
Quantopian hosts an excellent community where you will find many folks at a
similar skill level:

[https://www.quantopian.com/tutorials/getting-
started](https://www.quantopian.com/tutorials/getting-started)

You could also try getting in touch with Two Sigma:

WSJ Op-Ed by David Siegel: Investing and the Scientific Method

[https://www.twosigma.com/insights/wsj-op-ed-by-david-
siegel-...](https://www.twosigma.com/insights/wsj-op-ed-by-david-siegel-
investing-and-the-scientific-method)

~~~
newman8r
as a side-note, I wish there was a 'quantopian for cryptocurrencies' (maybe
there already is) - I know the lessons are universally applicable but I'd
rather be working with those datasets.

~~~
Tevunah
Closest I know of is
[https://www.enigma.co/#catalyst](https://www.enigma.co/#catalyst). Which is
built on top of Quantopians Zipline

------
IpV8
Use your skills and knowledge to do something beneficial for the world.

