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Career: Trader or Quant?

  1. Jul 27, 2010 #1
    Hi all,

    Started on these forums trying to help people with whatever homework, that wasn't mine, needed to be done. But coming across these threads I realised I actually had a question myself. I'm very grateful for all the information/replies on this topic already and even more so to any and all that can help me here.

    I'm about to start my penultimate year of a Physics Masters in London, and am considering one of two routes:
    -either becoming a trader after my Masters (hopefully from an internship next summer)
    -or doing a PhD and becoming some kind of quant.

    I was hoping for any kind of for/against arguments, but more specific questions I have between these two are:
    -is there any math in being a trader?
    -(starting and future) pay prospects
    -transition from one to the other possible?

    and possibly a bit off-topic:
    -what's the difference in being a buy side or sell side trader?
    -is there the same devision for quants? I've never heard so.

    I do enjoy Physics, and would possibly be interested in continuing it in some shape or form after a PhD, but that is (possibly) another decision to be made in the future.

    Again, thank you for any responses. Questions, discussions, criticism warmly welcomed.
    Last edited: Jul 27, 2010
  2. jcsd
  3. Jul 27, 2010 #2
    You may be overestimating your employment prospects.

    I too have a masters in physics, and, on top of that, some fairly interesting background in software engineering ... (let's just say that I wrote a piece of technology-heavy software that many of you have on your PCs.) I've been sending copies of my resume to prospective finance employers for the last couple of months, I hit up all major investment banks and a couple of recruiters. The response? Zilch, nada, zero. (This does not worry me too much because I think that I still have Microsoft as a fall-back option if/when my current job goes sour, but Microsoft does not pay nearly as well.) I'd started studying some quant textbooks, but I obviously can't put that into the resume, and, seeing as how the employers don't even acknowledge the receipt of my emails, I really don't see the point any more.

    My feeling is, you really need to have a masters in financial engineering to be able to get into the industry. Masters in physics does not cut it the way it used to 10 years ago. Besides, we're dealing with bureaucratic behemoths (GS, for example, has 40 thousand employees), those systems tend to demand conformance. Most job descriptions I saw required either a degree in finance, 2+ years of experience in finance, or both. If you don't conform, unless you have a man on the inside, not much you can do.

    But I'm sure that we have more knowledgeable people :wink: :wink: who can answer your questions from their perspectives.

    Here's my perspective though. Finance is not the only avenue for an intelligent person, nor is it the most intellectually rewarding one. People go into finance for the money. If you don't want to get into physics (as well you shouldn't, since you're not in China and you don't need a green card), and you want to do something that matters, look elsewhere. If you want to have a 40-foot boat, a maid, and a gardener, get a MFE, and do it while you're single and you don't have to support a wife and kids.
    Last edited: Jul 27, 2010
  4. Jul 27, 2010 #3
    Hi. Thanks very much for your reply, and sharing your experiences.
    Yes, I do agree I am assuming the hiring process to be straightforward.

    If I infer correctly however, I believe our circumstances differ slightly in that you were applying for quant jobs with a Masters (and work experience?), whereas I would be applying for only a trader position with a Masters.

    I disagree with you praise for MFE by the way. I find these are mainly money-spinner degrees, not entirely dissimilar to MBA's. And I would argue that as financial "hot" topics change so quickly, whatever is taught may well be out of date - it's not exactly set-in-stone "curriculum" material.
    But certainly, if this is what pleases the "laymen" in HR (who probably think studying physics makes you a physician), I can see why it has an advantage - shame really.
    Last edited: Jul 27, 2010
  5. Jul 27, 2010 #4
    My point was mostly that I was unable to elicit any response at all from big finance, given my background ... I believe that, if I fit a trader or C++ developer position, they would've responded regardless of the specific wording of the "objective" section in my resume.

    If you have an internship position for the next summer secured, that would certainly simplify things ... You might start at a lower salary than an outsider with MFE, because you wouldn't have an opportunity to choose between employers, but getting the first job is what matters.

    Well, I'm sure that 90% of what real traders/quants do is proprietary stuff and not quantitative finance 101. MFE demonstrates your seriousness and it is needed to get you past the bureaucrat in charge of hiring.

    MBA is a totally different story, which is, I believe, not fit for this thread.
    Last edited: Jul 27, 2010
  6. Jul 27, 2010 #5
    I think its very hard to define how to really "fit" a trader position. They're so muddy in articulating what they "look for" in a candidate.
    Besides some personality traits and a sound academic track record, it could really just be how happy the person reading your resume/interviewing you is on that particular day.
    They barely specify degrees most of the time. But again coming back to my original post, it depends what type of trader we're talking about.... ?
    Ye, this is what I was asking. Whats the difference? Is one a computer geek and the other a glorified HR representative?
  7. Jul 27, 2010 #6
    That's all I know, let's wait for other responses.

    BTW, here's a job description for a "QUANT TRADER" from Wilmott:


    · Job Title: Quant Trader / Portfolio Manager - Futures.

    · Implement and trade existing strategy and scale it to new markets, particularly Asian futures & Japanese equities

    · Research, develop and Implement new high frequency strategies for trading futures. (Particularly within Asia but also US and European Exchanges).

    · Monitor the strategy, continually innovate.


    · Successful track record as a quant trader focusing on strategy research, implementation and trading.

    · Experience developing futures strategies / (high or mid freq)

    · Solid object oriented programming and computer science background.

    · Strong mathematical and research skills.


    You can become a quant trader, but you need successful track record as a quant trader ...
  8. Jul 28, 2010 #7
    Let me say, at the risk of offending people here, that (at least in the US), a M.S. in physics is seen as somewhat of a consolation prize. That is, students who make it through their classes with decent marks, but who can't pass the qualifying or candidacy exams are often given an M.S. degree, along with the boot, from grad school.

    I can't remember where I read this, but I seem to recall a colloquium given by a senior quant to some grad students. One grad students asked: "Can I get a quant job with an MS in Physics?" and the quant replied, "We prefer you to have succeeded at something else, before becoming a quant." The obvious implication is that the M.S. degree signifies a failure at getting a Ph.D.

    Now, whether this is fair or not is debatable. I certainly know several people who have CHOSEN to stop with an MS degree. Some of them went on to get other degrees, the ones who didn't are still out of work. The point is, for a lot of the roles that I'm seeing advertised, the companies really want someone who is a strong, independent thinker. This is something that most (but not all) Ph.D.s have. Otherwise, they want someone who will take the minimum amount of preparation, like someone with an MS in Financial Engineering.

    Again, I don't want to offend anyone here. But you must acknowledge that SOME people with M.S. degrees are failed Ph.D. students. Then it is in the recruiter's interest to weed out the people with M.S. degrees first, or (equivalently), consider their applications last. I will also say that coming from a not-top-ten Ph.D. program has the same effect, though it is not as bad. I am experiencing this effect currently :) The basic rule is that recruiters and HR people are lazy bastards, and they get a ton of resumes anyway. Then it is in their interest to cherry-pick the candidates that they KNOW will pay off---remember that recruiters ALWAYS work on commission, and they have a reputation.
  9. Jul 28, 2010 #8
    Hi, thanks very much for adding your discussion and experiences, I really value them.
    Wow, this is insane. Are there really Physics Masters flipping burgers? Or have they just not sold themselves? - maybe a bit off-topic.

    But yes, I would certainly imagine that it is indeed very difficult if not impossible to gain a quant role with just a masters. Maybe not so much the "failed PhD" reason, more just the huge gaping void of knowledge/theory and experience that a Masters student lacks in comparison to a PhD.

    Would you have anything to add on the trader vs quant disussion?
    In the UK, the campus recruitment schemes pretty much stipulate that they want a PhD for a quant role, whereas just a Bachelors (in pretty much anything) will do for a trading role.

    I'm just questioning whether traders are anything more than politicians, or is there actually some rigor/skill involved? I'm sure trading is exciting, but at what cost?
    Last edited: Jul 28, 2010
  10. Jul 28, 2010 #9
    They're not flipping burgers :) But my guess is that they haven't sold themselves. This is always a problem for physicists in general, but was never a problem for me. I was always good at the selling myself part.

    Again, I'm not speaking from a position inside the industry, but I think the reason IS because a lot of people with Master's degrees are failed Ph.D.s. It's a negative stereotype, it's not fair, and we do it all the time.

    This is a good question, and I think it depends on the place you work. You might PM twofish-quant and ask him what he thinks. My impression is that some traders are discretionary and some are non-discretionary traders. I know, for example, a buddy of mine works for a hedge fund building models. His models are coded up by the software guys, and they are automated. The traders he works with are more or less there to unplug the computers if things go to hell. (This is from his mouth, so I trust this assessment.)

    But this is obviously not how all places work. In a lof of investment banks, for example, things are the other way around (as far as I can tell). The traders tell the quants what to do, and ultimately make the decisions about where the money goes.

    And as you might have guessed, determining where the money goes usually nets you a good percentage of it.

    So, I'd say, if the role you're looking at is in an automated trading outfit, then you'll probably be pushing buttons while some Ph.D. dudes do the model building. This is not to say that the job won't be lucrative, or difficult, or that you could move into the other type of job in the future.
  11. Jul 28, 2010 #10
    Does this stereotype apply to all professions or is it just the physicists who get the brunt of it? And from what I can tell, this really seems limited to the US. Or am I mistaken?
  12. Jul 28, 2010 #11
    I think it should depend on circumstances. It's one thing if you see a guy with a M.S. followed by X years of employment (though in this case employment can be a redeeming factor). It's different if it is a 24-year-old who just got his M.S. and he's already applying for jobs. It's something else entirely if it's someone who got his M.S. in physics in 2007-09 and his M.S. in financial engineering in 2009-10.

    It's obviously very hard to land an interview for a quant position if you're a 24 year old whose CV is blank except for the master's degree. Ph.D. in physics should prove you somewhat more capable of "achieving" things, but it does not give you any knowledge or virtually any relevant experience.

    In software engineering, people with Ph.D.'s are often viewed unfavorably, because they spent a lot of time doing irrelevant stuff instead of learning practical skills, and therefore ended up unable to write decent code. I've seen one too many distinguished Ph.D.s in CS who seemed to barely know C++.
    Last edited: Jul 28, 2010
  13. Jul 28, 2010 #12
    I agree with you, it SHOULD depend on circumstances...but I don't think HR people/recruiters see it the same way. At the end of the day, those guys work on commission, and they're lazy. When you have a stack of CVs from Ph.D.s and a stack of CVs from guys with M.S. degrees, and you can only interview 10 people, my guess is that the stack of resumes from guys with M.S. degrees is the last thing they HR people look at. It's just a numbers game, and it sucks, but it is a game.

    The exception, as you pointed out, is if you have an MS in physics and an MS in financial math.

    Like I said, I could be wrong. Maybe twofish will say something different---he's actually in the field, and (judging by his comments here) he's actually been the one sifting through applications before.
  14. Jul 28, 2010 #13
    What if there's also a stack of CVs from guys with B.S. degrees from places like Romania and such?
  15. Jul 29, 2010 #14
    Try applying *after* you've worked in Microsoft a few years. If you apply directly after getting a masters in computer science, your chances of getting a job in finance is low. If you get a masters in computer science and *then* work as a software developer for three years, then you become a hot commodity. If you work on the internals of something like Microsoft Excel, people are going to come looking for you.

    Also the going rate at Microsoft is somewhat less than a developer at a bank once you consider the high cost of living in NYC, but Microsoft pays good money.

    Nope. MFE's are a total waste of time, IMHO.

    I don't think that Masters of physics has ever been a major route in. Ph.D.'s in physics are different.

    Sure, but that's true for any large company. Too much conformance and you kill creativity. Too little, and you have anarchy. Trying to maintain the right balance is pretty tough.

    Or you can have someone on the inside tell you how to get in. There are a number of ways of getting in. Since this "geek board", people here are probably going to be more interested in getting in by being a hot shot C++ programmer than by doing an MBA or going to law school.

    Sure, but that's not the only reason.

    What ever happened to curiosity and the wonder of learning something new?

    IMHO, MFE's are a waste. Also most people in finance *do not* make mega-mega bucks. The people at the top do, but the founders of google and Microsoft also are loaded.
  16. Jul 29, 2010 #15
    There is a difference. People with MBA's to get hired for their MBA's. I don't know of a single person with an MFE that would not have gotten hired without the MFE. The term "placebo degree" comes to mind.

    The problem with the MFE is that it's a little bit of everything, and not enough of one thing. Most teams in finance are teams of experts. You have a hot shot C++ programmer together with a hot shot salesman with a hot shot manager with a hot shot numerical modeler. The trouble with MFE's is that you don't become an expert at anything.

    In most financial companies, HR has very little influence in hiring decisions. They'll do background checks, they may ask a few personality questions, and they'll shuffle papers, but the people making the hiring decisions are technical people. At my interview, I got grilled with questions in numerical relativity.

    One of the reason I went into finance was that I like working in a place where the people four levels above me are geeks.
  17. Jul 29, 2010 #16
    This is intruiging and seems to me like very good news. I have worked for large companies before, and I have often been left feeling frustrated that managers and above don't understand the work that I have been doing. It makes things like career progression difficult to discuss, and left me feeling generally disorganised about my role and future. Thank you again for more interesting comments.
  18. Jul 29, 2010 #17
    I guess I wasn't clear? I already have a masters and three years of experience as a software developer (more than three, really). I did get a voice mail from a recruiter yesterday (after I sent a salvo of CVs for "quant developer" positions) so it does not look like a totally lost cause any more. But enough about me.

    order of 100k before bonuses, if Glassdoor is to be trusted. I'd call that decent but not particularly good. 100-120k is fairly typical for software engineers with more than 5 years of experience.
    I did the numbers some time ago. If you're a software engineer, your chances of winning seven digits in an IPO lottery over your lifetime are something like one or two per cent. The remaining 98% can usually manage decent comfortable living, but can't afford 40-foot boats. Most people who make lots of money in IT (google and microsoft aren't very good examples) are not numbers people at all, they are extroverted MBAs and JDs who happen to wander into the field. As you yourself mentioned a while back, there's a sort of a glass ceiling in IT that you can't easily get through unless you seriously go managerial.
    Last edited: Jul 29, 2010
  19. Jul 29, 2010 #18
    If you are passionate about physics, you should look at PhDs anyway - in case there is something that sounds magical to you. I am mid-way through my PhD in the UK just now - well, another year or so to go - and I am considering a job in finance afterwards. I have thoroughly enjoyed my time in academia - but I just feel that finance is where my interests lie, and I love the kind of problems I have encountered in it so far.

    If you did decide to do a PhD, remember that success with that is the first thing you need to focus on. The job in finance you would want aftewards would be a long way off - but if you take a position with plenty of coding it looks as though you will give yourself many options come the end of it anyway.

    I would only take the PhD if you are sure you can enjoy spending that amount of time intensively reading about a single subject. It is a very stressful time, and you will often feel extremely frustrated - so make sure it is what you want to do, and don't imagine it as a stepping stone to a finance job.

    I know I have not answered your questions directly, but I hope I can give some help seeing as I am in a similar position to you, albeit a bit further along the line.


  20. Jul 29, 2010 #19
    Thank you to all for your replies, they are hugely valued by myself and many more, I am sure.
    Yes I agree fully, and I could imagine this to be the case. And yes, I think it's always dangerous to do anything (a PhD or even banking!) without actually enjoying it, but clearly this is still difficult in practice. The amount I enjoy my current studies, I'm not too worried about not enjoying a PhD - but ask me again in a few years ^^

    Forgive me if I am reeling this discussion off its course, but I would like to raise my original question again:

    Is there any advantage to being a trader over a quant?

    It seems (or I am lead to believe) that you have to choose which you want;
    - the thrill of the chase (trading roles) or
    - studying, learning and trying to understand (quant roles)
    Is it really so black and white?
    Last edited: Jul 29, 2010
  21. Jul 29, 2010 #20
    I'd estimate that your chances of getting a seven-digit salary in finance is about 5%-10% starting from a technical physics position.

    Neither can most people that work in investment banks. One problem with media portrayals of Wall Street is that they tend to focus on the executive suite, where people make insane amounts of money, neglecting the fact that most executives in large companies make insane amounts of money. If you look at the average job, the pay is good, even great, but it's not buy a yacht, have a mansion great.

    And technical people that make a lot of money in finance tend to be extroverted physics geeks that wandered into the field. If I thought that I had any realistic chance of being a professor at a major research university, I would have done that. But it was pretty obvious to me that I didn't have any chance of doing that, so I found the job that was the closest thing.

    There's also a glass ceiling in finance, but it tends to be higher.
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