Ask HN: do I want to work at a trading firm?

[cbaudelaire]

I've worked as an early stage engineer at a string of startups since 1998. They were fun (for the first 18 months), but poor choices financially. As such, I'm a 34 year old guy without much savings (but hundreds of thousands of worthless stock & options.)

I feel the need to save up some money for at least few years and want to maximize my salary. I have a nascent interest in financial markets and an undergraduate degree in applied mathematics. My C++ is pretty good, although I haven't really had to use it in the past five years. I have the typical startup skills in Java, Python, Ruby, unix admin, staying up until 5 in the morning debugging network or database issues, and all that sort of thing.

I am located in NYC and there are a couple trading firms that look more interesting to me than most of the local startups. Namely Two Sigma investments and Jane Street Capital. I have a friend who thinks he could get me an interview at Jane Street and a recruiter acquaintance who claims to be able to get me an interview anywhere. I'm not totally convinced about the 2nd guy's connections, but we'll see.

I was wondering if anyone on HN works in this sector (proprietary trading) and if they actually like it, or if it's just a drudge. And also, I'm wondering if it really pays that well. I'm doing ok now salary-wise, but no bonus potential and am very bored.

Note that I'm usually someone else on HN but wanted to remain anonymous for this.

[jakarta]

I highly recommend Jane Street Capital, have a friend who worked there and absolutely loved it. Not only that, but that experience really gave him a leg up in terms of experience/applied knowledge for when he went on to work at a trading desk elsewhere.

[retube]

You've probably got the technical skills to work for one of these firms - but have you thought about in what capacity? When you interview you'll need to be pretty clued-up about what you want to do. Trading? Quant? Research? Strategy? And in what asset class(es)? To be a successful applicant you'll need to demonstrate a genuine enthusiasm and knowledge for trading/markets/pricing/modelling/risk (delete as appropriate).

Getting in to these places is not easy, and working for them is harder. You can do well, but those that do spectacularly well really make a lot of money for their employer. You don't get paid a million bucks just for putting in your 60 hours a week. You need to make 10 or 20 times this for your employee - and it's not easy. In fact it's very, very hard.

[cbaudelaire → retube]

To be honest, I don't think I have the right background to do any of the things you mentioned. I have a math degree, but it's just undergrad and I have barely used it for the past decade. However, both Jane Street and Two Sigma (moreso) advertise a number of purely development related positions. This is the sort of thing I think I'd be applying for.

Sadly, this is probably classified as "IT work", as derided by Wilmott.com forum users. I don't really care, it's the same sort of thing I do now. I just wonder if I could get paid more doing it for a prop firm vs. an "internet" company. I'd love to learn more and move into another role, but I would have to start with what I know.

[retube → cbaudelaire]

yeah you'll probably get paid better as a developer for hedge fund or bank than for an internet firm. But make sure you know what kind of developer position you'll be signing up for. Front Office is where you want to be, as you'll work closely with the "business" and it's generally a lot more exciting - plus you'll get to learn a lot about the markets. Typically this could involve building automated or algorithmic trading platforms (e.g HFT). Back Office could involve a lot of drudgerly and generally thankless toil - e.g accounting or settlements systems.

P.S Fuck what Wilmott.com users say. Needless to say, there are a lot of wankers and over-sized egos on trading desks.

[mad → retube]

It seems reasonable that the people optimizing code and writing the most efficient infrastructure are not the same folks who actually write trading algorithms. Now, supposedly a big part of trading firm's success is that its algorithms are faster than the competition's. So are the low-level infrastructure people paid as well as the algorithm folks?

[ig1 → mad]

No is the basic answer. Low-level optimization while a valuable skill is more of a commodity, algorithm development tends to require a combination of skills in maths, finance, programming and creativity which is a much rarer combination.

Saying that people who are good at low-level optimizations are still pretty well paid.

[babobear]

My roommate works for two sigma and he actually likes it a lot. He has a CS degree from CMU and used to work for GS, and like its much more than GS.

I don't think he works in the deep level programming group but rather product development, but he says he finds it stimulating and interesting - and is paid very decently for the level he is at. In fact, he won't leave the security of the job and pay for any startup no matter how I try to convince him ;).

He has also stated that the people who work there come from a diverse range of backgrounds and it's just a very chill and laid back environment unlike most finance shops.

[T_S_]

Those two firms are ok, from people I have spoken to there. There are a bunch of small prop shops around, throwing spaghetti at the wall, hoping something sticks. Like many other fields, if you can get in with a quality crew it can be a good experience. Otherwise not.

[pheon]

working in certain areas of finance can be very fun interesting and excellent money wise. its a very rare combination where technology collides with money in such a direct and measurable way. think of how sales guys performance is quantifiably measured but replace sales with coding. you wont find such a directly quantifiable measure in any other field... yes the quality of your code/product isnt that important for startups.

so if you think your code/models/you are top shit... then its really easy to get a reality check on your percived abilities. its what makes it fun. all the bullshit and hand waving in the world is FUD against your PnL

[ig1]

Firstly a huge number of developers are employed in a wide variety of roles in financial firms. Pretty much any development job possible from language engineering to ajax can be found in banking.

At smaller firms you'll have a smaller number of roles, typically they'll be back-office stuff (settlement, position reconciliation etc.), front-office stuff (stuff that directly makes money, algo trading, risk management, etc.) and a few bit and pieces in between (exchange connectivity, etc).

In general the money you get in banking is more than you'll get doing the same role outside of banking. The most money is in front-office and the least in back-office, although the difference in base salary isn't generally huge, the bonus can be depending on the firm.

Not everyone is suited to front-office though, for a front-office role you'll need the social skills to deal with the traders, quants, etc and the work can be more stresful. When you have a bad deadline in back-office it's typically "we need to get this work done by the end of the week for compliance reasons otherwise the regulator might give us a slap", for front office it can well be "we need to fix this right now as we're pissing money down the drain". Life in the back-office is generally more laid back with shorter hours (depends on firm though). Front-office is where the fun is generally though and tends to have lots of smart people.

In either case you're also generally expected to do a certain amount of out-of-hours support (if you're code is being used out-of-hours), but how much varies a lot. You should ask about this in the interview. Also you probably want to avoid any role that involves a large amount of legacy code (this is probably true in any sector).

Salarywise for an experienced senior dev in a front office role at a small hedge fund/prop shop I'd expect a total package (base+bonus) in the region of $200-$300k. Remember that small hedge funds do have a high failure rate, but that should be taken into account by the higher salary.

If you're solidly competent C++ or Java programmer you shouldn't have a problem getting a job in the financial sector, especially if you're good at things like multi-threading, etc.

There's a couple of books I'd recommend "So You Want To Be a Wall Street Programmer?" by Andrey Butov (a good overview but pretty light, you should be able to read it in a couple of hours) and "capital markets for quantitative professionals" by Alex Kuznetsov (a much heftier book but the first half is an introduction to financial markets and the second half is an introduction to the various bits of technology that you'd find in a bank).

[iworkforthem]

any jobs in the proprietary trading will definitely make $$$ sense, just look at the bonus they payout each year. look at it this way, it is a good time to build up your savings once again. while you are building up enough savings, you can always work on any ideas which you might have... think twitter, it's started as a side project too.

[retube → iworkforthem]

Sure - you get $$$ - if you make money :)

[rchi → iworkforthem]

how much do a second year trader make at these prop trading firms?

[AdamN]

What about some of the current crop of procedural languages - I've heard alot of trading firms use them.

[arthurdent]

email me, i'd be happy to provide some insight.