Is becoming a quant a waste of time?

Discussion in 'Professional Trading' started by fatrat, Aug 24, 2007.

  1. fatrat


    I need some help and guidance. I followed the advice on this forum about 3 years ago, and I've gotten myself much closer but not quite where I want to be.

    I've been working on Wall St. for some time now as a guy who develops a lot of the infrastructure for pulling in market data, cleansing it, homogenizing it and such for quantitative trading algorithms and traders. Some of it is automated, some isn't. I spent a great deal of time at an equity derivatives market maker.

    Prior to Wall St., I sat around designing computer hardware and writing very low level systems software. I eventually got paid a lot of money for developing high throughput systems for internet casinos. After Bush signed laws outlawing internet poker, I sold myself to Wall St., since I had experience designing very high-demand server systems. I'm very good at that. I've gotten offers for jobs from Investment Banks, but I turned them down when they were always more of the same -- there's only so much market-data system software I can write.

    My grades were decent as an undergraduate. Then when I applied to financial engineering programs, I got rejected. My competition had a better math background, I guess. However, I got admitted to some PhD programs and some masters programs for applied mathematics and statistics. I accepted, and I've been taking statistics classes.. I settled on Columbia University, so I could continue working on Wall St. while I'm taking courses at night.

    So now I'm in the Ivy League, getting a degree with value I'm uncertain about, and trying to figure out where to go from here. I'll graduate in 2-3 semesters, after which I'll have more exposure to time-series analysis and raw data analysis.

    Where can I go from here?

    My goal is to design automatic stock trading systems and have more insight into that. I don't care about derivatives -- I just want to win with efficient, slick automated mathematically driven strategies on NASDAQ and the NYSE. So many of these jobs I find are so tangential.

    How do I take my experience and knowledge and find some place where I can see people take a strategy from conception to implementation for stocks?

    Or do I just need to say, "I'm not going to get this from a job. I'm going to start doing my own research, develop my own systems, and do it on my own." ?
  2. Post the same thing at for more feedback.
  3. What exactly are you studying?

    Masters or PhD?

    If that's PhD it's ok for your career. If Masters - you should go for financial engineering I think.

    You can improve your chances when you go for CFA or (even better) for CAIA .

    The most important is, however, to work. You should apply to 100s of places and maybe at some point you'll find a job you are looking for.

  4. IT people at investment banks have very high value, such as UBS.

    But continuing to crank up the graduate programs is a waste of energy. You don't need a Post doc to earn big bucks. You need good communications, strong comp sci understanding, be a good project leader type, understand financial systems, etc.
  5. I don't think you need a degree. You just need market experience and access to good software.

    I found a prop firm that would back me with risk capital, and I met a trader on ET who has access to excellent custom software that lets me test out my ideas. In a year I know enough to design profitable algorithms and know how to come up with a steady stream of ideas for life. I don't think anything you'll learn at Columbia will help your trading... I may be biased because I've been trading since I first turned 18 but I'd suggest you find a prop firm to trade at that has people who work with automated systems and learn to trade first, then, if you're profitable or see patterns, test out your ideas. That's the only way to succed at making automated systems - having help from experienced traders will expedite the process, and if you can find someone, I recommend it.
  6. fatrat


    This part scares me.

    I am handicapped and have speech and motor control problems. The whole reason I am trying to make a living independently is because of my problems communicating. I have failed many times, because health care costs consume my earnings outside of a conventional job. I went down this career path hoping there would be more independence.

    It's almost a guarantee I will never become a manager anywhere. Computer science and math is not a problem. Despite what people say about being equal opportunity employers, they are absolutely frightened of me. This is why most employment I have obtained in the past has been 1099. I have done quite well as a contractor, but W2 positions are unusually oppressive and biased.

    In any case, I'm finding that other people are telling me to continue down the path of independent systems development. The job is just a necessary evil until I can bootstrap a reasonable trading operation.
  7. After looking at some of your posts...
    You have the PERFECT skill set to be a very successful Quant.

    Already. Right now.

    The problem is...
    The chaotic soup that is ET...
    Instills false beliefs into impressionable people...
    And false beliefs are deadly... very hard to de-program...
    And can derail you for many, many years.

    As someone with a Computer Science degree and 15 years full-time trading experience...
    I would estimate that > 90% of the material posted here is WORSE than worthless.

    Quant = Risk Arbitrageur = Relative Value Arbitrage

    Part #1 - Exploiting Market Spreads

    Study the way Specialists and Market Makers make money...
    That never changes... and is 50% of the ballgame.

    Part #2 - Finding and Exploiting Market Inefficiencies

    This is the part no one talks about...
    How to identify securities that are ** relatively mispriced ** versus another security or index.
    This is the other 50%.

    I'm certain you will eventually put it all together...
    But it often takes 5 or 10 years before you figure it out.

    One piece of advice:

    Become an obsessive hedger.
    Be market neutral for the rest of your life.
    Directional betting is a losers game... unless you are an insider.
    Never go long... without a corresponding short position hedge.

    Best of luck.
  8. Quantplus,

    you definitely hit some big points in your post and you sound like you know whereof you speak.

    Care to elaborate on those points for the benefit of the original poster, me and everyone else?

    By acting like a market maker I suppose you mean getting paid to be a liquidity provider by say enveloping stocks with bids and offers that either get hit within a certain time frame or else get cancelled?

    Are you in favor of news/value/momentum?

    What do you think about Goldman's Alpha Fund, AQR, DE Shaw and other quant funds getting walloped while certain other quant funds (only a couple of them) really made money during this market rout?

    I'm an independent trader and quant on training wheels, I read academic journals and attempt to convert that into strategies. So I'll gladly reciprocate if you post some thoughts.

    Did you hold up during this turmoil? Thanks in advance for any insights.

  9. it never changes, aye.....your kidding right??

    kinda like not having an assistant take your car to the shop??

    in all seriousness, to the OP-- get your PhD, nice going so far!

    best wishes,

  10. sunyata


    Another option would be to develop a trend-following system that utilizes backtesting software for optimization. Ref. Ed Seykota's website ( and the book Trend Following by Michael Covel. Good luck!
    #10     Aug 25, 2007