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Ask HN: What skills are needed to be a Quant?
16 points by jason_slack 3 months ago | hide | past | web | favorite | 37 comments
What skills are needed to be a Quant?

For example: 1. I love math

2. I can code in C/C++

3. I love going through data sets and finding patterns, etc.

What financial background must one have? What other subject should one study by reading books?




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.)


How do I get in the door someplace?

Thank you for writing this post. Motivational and insightful.


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/

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

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


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.


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.


Thank you for thw book recommendation.


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

A Man For All Markets by Edward O. Thorp

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"


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


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!


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


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!


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


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...


Ideas on where one can get viable data?


I've heard good things about Quandl, especially if you're willing to foot the bill for some of their premium datasets.

https://www.quandl.com/


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


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


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


Thanks. I don't see an e-mail in your profile, but mine is in my profile. If you want to continue this conversation, hit me up.


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


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)


and if it becomes an HFT situation?


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


Isn't this data the same one can get from Yahoo Finance?


Not anymore, the yahoo finance is unfortunately broken...


I have it working pulling historical data based on symbol


Sure, but there are maybe over 10000 companies including non existing ones and you need them all for your back testing to be valid...


I see your point. Scripting this and running on cron could help.


Make sure the delisted companies are included...


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.


Thank you for the reply.

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


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


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

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-...


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.


Closest I know of is https://www.enigma.co/#catalyst. Which is built on top of Quantopians Zipline


napoleonx.ai


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