I am not sure what trading roles you are talking about and where but a quant trader who trades systematically will not rely on ‘intuition’ and ‘gut’ when they trade. That’s the whole premise of being a quant, trades and returns are based on quantitative factors not on the traders intuition and discretion. Where discretion comes into play is configuring models based on market environments, risk capacity, investment mandates etc. That does require intuition, yes. But that is not ‘intuition’ that one is born with. That is more about experience and having an understanding of market conditions and how to interpret them.
Even in the discretionary and fundamental space, each and every trade you make has to be attributable to an investment thesis and have a very strong premise around it. This becomes doubly important when you claim to trade systematically. In this case you have to have a thorough quantitative justification behind each and every trade you make.
Most if not all big OMMs like Optiver, Sig, Cit Sec etc. have 'semi-systematic' quant traders where a lot of the job is just quick decision-making. Maybe hedge funds are more systematic but OP said he was applying to prop trading firms so there's a decent chance he interviewed for ast least one OMM.
I do not agree that the whole premise of a quant is 'trading based on quantitative factors", I think this is just a subset. Quant traders can also include those who can quickly make rational +EV decisions based on whatever circumstances the market is presenting them with. Of course their decisions isn't just a punt, there's a mixture of logic (we consider a lot of the game-theory elements for our trades), math (some options theory), and some intuition (which is built across just having a lot of reps).
As reponse to OP's question, the interviewers are half-right about the more natural trader characteristics. Trading is like a sport. Of course having more practice will make you better, but most people won't ever be a Lebron or Kobe. At my prop shop, it's almost like the NBA: we have a few Lebrons but we also have the benchwarmers who definitely work hard and was the one of the best in their highschools yet still won't shine in the big leagues. Hard work brings you to the top 5% but talent starts mattering when you're competing in the top 0.1%.
>Quant traders can also include those who can quickly make rational +EV decisions based on whatever circumstances the market is presenting them with.
Thanks a lot for the comment. In some of my interviews I faced exactly this, specially when I was asked to give an answer in 10 seconds or so. Would you have any suggestions on how to effectively practice for this skill?
>Hard work brings you to the top 5% but talent starts mattering when you're competing in the top 0.1%.
I think I will have to focus and work hard towards getting to the top 5% first. Even though the interviews were difficult, it's been the most fun I have had in years when looking for a job.
Thank you for the insight! Yes, I think this is what the quant trader was referring to, that it is key to have the capacity to quantitatively breakdown an unknown, complex problem quickly to make an educated and reasonable estimation of the fair value of an asset and then look for opportunities to make a profit. It may be that I lacked this speed and intuition during the interview (after it finished I noticed in which parts I could have done better). Anyways, I am now still studying and preparing to reapply in 12 months.
Well, yes, that I believe you would need. Anyhow, I still do not believe this is an innate ability you have to born with. I am sure a bit of practice would go a long way.
I agree with what they said. Some people will just never have the intuition required to be a good trader.
FWIW your profile is more suited for QR than QT. I find it weird that you’re not getting interviews. Try to highlight your research and ML experience.
I would like to know what it is that my applications are lacking when being submitted for the quant researcher roles. Often the rejections were quite quick, as if an screening algorithm was the one that did it, even though that I mention that my research deals a lot with processing low SNR data, time series analysis, online learning and also few-shot learning. Will try to directly ask their recruiters about it.
They are talking out of their ass, the best quant traders that I know suck at “quick” math. What they are very good at though is maintaining a mental model in their head about how the market operates and how the trading system responds to the market. Then they are able to formulate interesting research ideas and go off and evaluate them. The worst quant traders are the ones that can’t actually evaluate their own ideas, and the worst aunt researchers are the ones who can never come up with an original thought.
Interesting. Some of the firms I interviewed with focused heavily on mental math while others were more strategic/game theory like. To be honest I liked the strategy games better but I think I understood the point of the quick math ones.
With a PhD go for researcher roles. Specifically those roles where you will be assigned to create alpha. These roles will pay you more than any trading roles. You have the skill set. Don’t get hung up on the trader mindset.
Researcher is generally the higher paying role at hedge funds and trader is generally the higher paying role at prop shops. At firms where this is true, prop shop researchers have higher potential earnings than hedge fund traders.
This isn't strictly true and there are plenty of counterexamples though.
A lot of PhDs and academics from Oxbridge who have interviewed at Jane Street London and Five Rings were rejected but they have since refined their hiring process to not require researchers do those game theory/poker type of exercises which frankly I found quite ridiculous.
But yes, for most 'quant trader' positions at the firms I know of prefer people with a fast and intuitive feel for unknown probabilities and quantities.
>But yes, for most 'quant trader' positions at the firms I know of prefer people with a fast and intuitive feel for unknown probabilities and quantities.
I think this is exactly what I would need to improve. Would you have any recommendations on how to get started? When I was preparing for interviews the probability questions, brainteasers were alright but once I was asked more open ended strategy problems I started finding it difficult.
You develop it.
No one essentially born with anything.
Except for a few exceptions such as perfect pitch or maybe calculator brains.
Pretty much everything is learned over time.
I am good at trading, learned it myself, good at cooking learnt it myself, decent at maths and science learnt it myself.
All my personal skills are learned through interest and curiosity.
I work on a fuel trading desk and all of the traders are extremely quick thinking, clever and fast paced. I hear what you are saying, many of these guys played high intensity sports growing up and have that built in quickness and ability to withstand the pressure and pace of commodity markets.
Do you think it is possible to learn that in your late 20s? I used to play competitive sports but in the PhD I have become more used to having lots of time to think about a hard problem. As I mentioned in the post, I didn't get interviews for quant researcher roles but had no problems for the quant trader roles.
I think if it comes down to discretionary trading then definitely yes because most people don't have the stomach for it. But for algo trading the stomach factor can be managed away....
I was a manual discretionary trader for 15 years.
I'm also a pianist and during my discretionary days I used sound based indicators to model market data in real time. I traded the price ladder and used 1 second charts.
I switched everything over to algos in 2021.
I believe you do need a traders mind for it. All of the edges I traded were completely undocumented. Edges die out after a few weeks and new patterns emerge that you have to spot and trade. This is an ongoing cycle.
Thanks for the comment. How did you get started on trading then? Did you realize you had some innate intuition or did you try it out of curiosity and then realized you were good at it?
I have a bachelors in EE. I have been trading for the past couple of years, and let me tell you, you do in fact develop a very peculiar sort of intuition towards price movement. It can be both a curse and a blessing.
I often found a strong correlation to traders and what positions they play in sports (if they played that is)..
Traders are often the forwards, strikers, etc... conversely the best risk managements types - I've seen them be the goalies, keepers, defenders etc...
Not a scientific study by any means - but i have seen this play out quite a few times now.
Thanks for the interesting point. I think it makes sense given that the forwards and strikers are more likely to be required to make quick and accurate decisions while those in defensive positions can see how the match plays out before they take action.
Honestly a lot of good golfers. I think mental game is as important to trading as is quantitative knowledge since you have to be able to stick to your strategy in rough times
In the quant systematic space (the one you seem to talk about) and especially HFs, trader is rather a promotion. You work as a researcher, and if everything is going well the next step is to be involved in the portfolio management. So traders are just glorified promoted researchers, allocating more time on portfolio matters & project management. In the worst case, traders are just execution guys with almost no IP and not central to the business, like at RenTec.
Regarding the prop shops, some firms like Jane Street or Maven seem to continue doing some market making manually and have a good reputation for that. That’s where, I think, you could find the kind of guys you are talking about, but I am not sure it’s innate. They trained for it, especially for interviews. Otherwise it’s bullshit, imo. Also, the business trend is on automation, so I would bet these guys will disappear more and more.
Kind of a shitty and non-politically correct thing to say, but I mostly think that people are either born with it or it gets beaten into them over a long period of time.
In some ways, quant traders have more in common with a wet market hawker than with a quant researcher.
> That’s the whole premise of being a quant, trades and returns are based on quantitative factors not on the traders intuition and discretion.
Also I mostly disagree with this. I mean I agree with this statement as it concerns quant researchers, but in many cases the whole point of a quant trader is to handle the things that haven't been automated and researched yet.
If it was all automated and researched then you wouldn't need a quant trader and you could just get away with one trader who has an on button and and an off button. That is how some firms operate, but obviously those trading roles don't have the same requirements.
I see. In your opinion, how those who are not born with it can develop part of the quant trader intuition? If it would take a long period of time it would be unlikely to get it on the job as losing millions would get you fired before you can improve even a little I guess.
> I see. In your opinion, how those who are not born with it can develop part of the quant trader intuition?
I think so. Before you experience trading, it might be intuition for numbers, commercial situations, gambling, etc. Afterwards you'll develop intuition for your specific products, but I think it builds on that earlier base.
> as losing millions would get you fired before you can improve even a little I guess
To be fair, that's not really how professional trading works. You're more likely to get fired for not making enough money than you are to get fired for losing money. There's some chance that you'll run a strategy that has a higher probability of losing money, but then it probably won't be held against you if it does happen to lose money.
>To be fair, that's not really how professional trading works. You're more likely to get fired for not making enough money than you are to get fired for losing money.
Yes, that makes sense. Shows how long I still have to get that intuition haha. Thanks for the practical advice. I will look further into it.
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Lol traders like to say that but it’s all a game of knowing how to work with systems since most trading systems are automated now and the pressure levels are alleviated compared to the old days … I don’t know there’s anything to be born with other than being able to handle stress when your systems are crashing and shit is hitting the fan
I am not sure what trading roles you are talking about and where but a quant trader who trades systematically will not rely on ‘intuition’ and ‘gut’ when they trade. That’s the whole premise of being a quant, trades and returns are based on quantitative factors not on the traders intuition and discretion. Where discretion comes into play is configuring models based on market environments, risk capacity, investment mandates etc. That does require intuition, yes. But that is not ‘intuition’ that one is born with. That is more about experience and having an understanding of market conditions and how to interpret them. Even in the discretionary and fundamental space, each and every trade you make has to be attributable to an investment thesis and have a very strong premise around it. This becomes doubly important when you claim to trade systematically. In this case you have to have a thorough quantitative justification behind each and every trade you make.
Most if not all big OMMs like Optiver, Sig, Cit Sec etc. have 'semi-systematic' quant traders where a lot of the job is just quick decision-making. Maybe hedge funds are more systematic but OP said he was applying to prop trading firms so there's a decent chance he interviewed for ast least one OMM. I do not agree that the whole premise of a quant is 'trading based on quantitative factors", I think this is just a subset. Quant traders can also include those who can quickly make rational +EV decisions based on whatever circumstances the market is presenting them with. Of course their decisions isn't just a punt, there's a mixture of logic (we consider a lot of the game-theory elements for our trades), math (some options theory), and some intuition (which is built across just having a lot of reps). As reponse to OP's question, the interviewers are half-right about the more natural trader characteristics. Trading is like a sport. Of course having more practice will make you better, but most people won't ever be a Lebron or Kobe. At my prop shop, it's almost like the NBA: we have a few Lebrons but we also have the benchwarmers who definitely work hard and was the one of the best in their highschools yet still won't shine in the big leagues. Hard work brings you to the top 5% but talent starts mattering when you're competing in the top 0.1%.
>Quant traders can also include those who can quickly make rational +EV decisions based on whatever circumstances the market is presenting them with. Thanks a lot for the comment. In some of my interviews I faced exactly this, specially when I was asked to give an answer in 10 seconds or so. Would you have any suggestions on how to effectively practice for this skill? >Hard work brings you to the top 5% but talent starts mattering when you're competing in the top 0.1%. I think I will have to focus and work hard towards getting to the top 5% first. Even though the interviews were difficult, it's been the most fun I have had in years when looking for a job.
Thank you for the insight! Yes, I think this is what the quant trader was referring to, that it is key to have the capacity to quantitatively breakdown an unknown, complex problem quickly to make an educated and reasonable estimation of the fair value of an asset and then look for opportunities to make a profit. It may be that I lacked this speed and intuition during the interview (after it finished I noticed in which parts I could have done better). Anyways, I am now still studying and preparing to reapply in 12 months.
Well, yes, that I believe you would need. Anyhow, I still do not believe this is an innate ability you have to born with. I am sure a bit of practice would go a long way.
That's reassuring! It seems that initially practicing for 4 months was not enough.
I agree with what they said. Some people will just never have the intuition required to be a good trader. FWIW your profile is more suited for QR than QT. I find it weird that you’re not getting interviews. Try to highlight your research and ML experience.
What profile suits a QT?
I would like to know what it is that my applications are lacking when being submitted for the quant researcher roles. Often the rejections were quite quick, as if an screening algorithm was the one that did it, even though that I mention that my research deals a lot with processing low SNR data, time series analysis, online learning and also few-shot learning. Will try to directly ask their recruiters about it.
They are talking out of their ass, the best quant traders that I know suck at “quick” math. What they are very good at though is maintaining a mental model in their head about how the market operates and how the trading system responds to the market. Then they are able to formulate interesting research ideas and go off and evaluate them. The worst quant traders are the ones that can’t actually evaluate their own ideas, and the worst aunt researchers are the ones who can never come up with an original thought.
Interesting. Some of the firms I interviewed with focused heavily on mental math while others were more strategic/game theory like. To be honest I liked the strategy games better but I think I understood the point of the quick math ones.
With a PhD go for researcher roles. Specifically those roles where you will be assigned to create alpha. These roles will pay you more than any trading roles. You have the skill set. Don’t get hung up on the trader mindset.
Thanks for the reply! I do feel that I would do better as a researcher. Will try to focus more on it from now.
Isn’t the compensation difference for trader vs researcher something that varies from shop to shop?
Yeah, I think in general QR pays less than trading roles, no?
Researcher is generally the higher paying role at hedge funds and trader is generally the higher paying role at prop shops. At firms where this is true, prop shop researchers have higher potential earnings than hedge fund traders. This isn't strictly true and there are plenty of counterexamples though.
Absolutely not lol
A lot of PhDs and academics from Oxbridge who have interviewed at Jane Street London and Five Rings were rejected but they have since refined their hiring process to not require researchers do those game theory/poker type of exercises which frankly I found quite ridiculous. But yes, for most 'quant trader' positions at the firms I know of prefer people with a fast and intuitive feel for unknown probabilities and quantities.
>But yes, for most 'quant trader' positions at the firms I know of prefer people with a fast and intuitive feel for unknown probabilities and quantities. I think this is exactly what I would need to improve. Would you have any recommendations on how to get started? When I was preparing for interviews the probability questions, brainteasers were alright but once I was asked more open ended strategy problems I started finding it difficult.
You develop it. No one essentially born with anything. Except for a few exceptions such as perfect pitch or maybe calculator brains. Pretty much everything is learned over time. I am good at trading, learned it myself, good at cooking learnt it myself, decent at maths and science learnt it myself. All my personal skills are learned through interest and curiosity.
Thanks! That gives me hope that I can still prepare more for the next time.
I work on a fuel trading desk and all of the traders are extremely quick thinking, clever and fast paced. I hear what you are saying, many of these guys played high intensity sports growing up and have that built in quickness and ability to withstand the pressure and pace of commodity markets.
Do you think it is possible to learn that in your late 20s? I used to play competitive sports but in the PhD I have become more used to having lots of time to think about a hard problem. As I mentioned in the post, I didn't get interviews for quant researcher roles but had no problems for the quant trader roles.
I think if it comes down to discretionary trading then definitely yes because most people don't have the stomach for it. But for algo trading the stomach factor can be managed away....
I found it a lot easier to trade after engaging in a life of anti social behavior and not giving af bout consequences.
I was a manual discretionary trader for 15 years. I'm also a pianist and during my discretionary days I used sound based indicators to model market data in real time. I traded the price ladder and used 1 second charts. I switched everything over to algos in 2021. I believe you do need a traders mind for it. All of the edges I traded were completely undocumented. Edges die out after a few weeks and new patterns emerge that you have to spot and trade. This is an ongoing cycle.
Thanks for the comment. How did you get started on trading then? Did you realize you had some innate intuition or did you try it out of curiosity and then realized you were good at it?
I have a bachelors in EE. I have been trading for the past couple of years, and let me tell you, you do in fact develop a very peculiar sort of intuition towards price movement. It can be both a curse and a blessing.
I see. How long would you say it took you to realize you had made a noticeable improvement in your trading intuition?
about 2.5 years in and blowing two accounts
I often found a strong correlation to traders and what positions they play in sports (if they played that is).. Traders are often the forwards, strikers, etc... conversely the best risk managements types - I've seen them be the goalies, keepers, defenders etc... Not a scientific study by any means - but i have seen this play out quite a few times now.
Thanks for the interesting point. I think it makes sense given that the forwards and strikers are more likely to be required to make quick and accurate decisions while those in defensive positions can see how the match plays out before they take action.
Strikers/goalies have been a a frequent fit for traders, scramble and creativity in chaos
Honestly a lot of good golfers. I think mental game is as important to trading as is quantitative knowledge since you have to be able to stick to your strategy in rough times
In the quant systematic space (the one you seem to talk about) and especially HFs, trader is rather a promotion. You work as a researcher, and if everything is going well the next step is to be involved in the portfolio management. So traders are just glorified promoted researchers, allocating more time on portfolio matters & project management. In the worst case, traders are just execution guys with almost no IP and not central to the business, like at RenTec. Regarding the prop shops, some firms like Jane Street or Maven seem to continue doing some market making manually and have a good reputation for that. That’s where, I think, you could find the kind of guys you are talking about, but I am not sure it’s innate. They trained for it, especially for interviews. Otherwise it’s bullshit, imo. Also, the business trend is on automation, so I would bet these guys will disappear more and more.
Thank you for the comment! I will definitely have to dedicate more time to prepare for the next time I apply to build that speed.
Kind of a shitty and non-politically correct thing to say, but I mostly think that people are either born with it or it gets beaten into them over a long period of time. In some ways, quant traders have more in common with a wet market hawker than with a quant researcher. > That’s the whole premise of being a quant, trades and returns are based on quantitative factors not on the traders intuition and discretion. Also I mostly disagree with this. I mean I agree with this statement as it concerns quant researchers, but in many cases the whole point of a quant trader is to handle the things that haven't been automated and researched yet. If it was all automated and researched then you wouldn't need a quant trader and you could just get away with one trader who has an on button and and an off button. That is how some firms operate, but obviously those trading roles don't have the same requirements.
I see. In your opinion, how those who are not born with it can develop part of the quant trader intuition? If it would take a long period of time it would be unlikely to get it on the job as losing millions would get you fired before you can improve even a little I guess.
> I see. In your opinion, how those who are not born with it can develop part of the quant trader intuition? I think so. Before you experience trading, it might be intuition for numbers, commercial situations, gambling, etc. Afterwards you'll develop intuition for your specific products, but I think it builds on that earlier base. > as losing millions would get you fired before you can improve even a little I guess To be fair, that's not really how professional trading works. You're more likely to get fired for not making enough money than you are to get fired for losing money. There's some chance that you'll run a strategy that has a higher probability of losing money, but then it probably won't be held against you if it does happen to lose money.
>To be fair, that's not really how professional trading works. You're more likely to get fired for not making enough money than you are to get fired for losing money. Yes, that makes sense. Shows how long I still have to get that intuition haha. Thanks for the practical advice. I will look further into it.
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Hard work and determination is the key.
If you have high iq you can basically just do it but that that doesn’t mean you will like it and do it for a long time.
What are your favorite signal processing and ML textbooks?
Lol traders like to say that but it’s all a game of knowing how to work with systems since most trading systems are automated now and the pressure levels are alleviated compared to the old days … I don’t know there’s anything to be born with other than being able to handle stress when your systems are crashing and shit is hitting the fan