Quantitative trading, or ‘quant trading’, uses quantitative analysis of historic and back-tested data, market conditions, and trade volume to devise profitable investment strategies.
Quant trading has become so popular in recent years due to the advancement in technology which eliminates human or emotional factors that can negatively impact investment strategies.
Instead, quant traders and coders use complex financial and pricing models to devise their trading strategies or modify existing ones with their programming expertise in C/C++, Python, MATLAB and/or R. This makes decision making less susceptible to biases and increases their chances of turning profitable.
At Aquis Search, we specialise in providing unparalleled guidance and recruitment solutions in the fields of quant trading and technology, backed by our extensive experience in Asia.
So, what does it take to be a quant trader and what are the keys to success in this career path? Read on to find out.
The Rigorous Journey to Becoming a Quant Trader
To join the ranks of quant traders in investment banks or hedge funds, candidates undergo a stringent interview process, involving intensive maths, statistics, and computer science questions, along with computer science fundamentals and complex puzzles. Successful candidates often come from either top-tier academic institutions or have substantial industry experience.
The market or region where the individual has gained his/her expertise plays a vital role, as some markets are more mature than the others, presenting more challenging scenarios which can expose the professionals from that region to a wealth of experience.
Below, we look at the desired skill sets required to enter in the quantitative trading space as a “Quant”. We will also discuss the possibilities of movement of talent from non-financial sectors and their chances of succeeding in quantitative trading.
5 Essential Skills for Quant Traders
Academic Background
At Aquis Search, we’ve seen that finance or engineering graduates from top tier institutes are very successful in getting through the recruitment process. An additional specialised degree or diploma in financial engineering, statistics, analytics or data science is also an advantage.
For employers, the challenge is availability of talent and so having an academic specialisation in the areas mentioned above increases any candidate’s chances of standing out at top tier firms. This especially holds true for graduates who have little to no professional experience yet.
Knowledge Of Financial Markets And Trading Strategies
The value of a quant trader is determined by the kind of financial market knowledge they possess, along with the trading strategies they have worked on or developed in the past.
A proven track record puts a trader in a commanding position as they are revenue generating from day one of joining a business.
However, in order to develop their portfolio, the trader must be constantly aware of the pulse of the market. They should be proficient in analysing the micro and macro-economic landscape of the world and leveraging their ability to analyse data to execute profitable trades.
Technology And Programming Skills
Programming is an integral part of quantitative trading. The information and insights derived from large data sets allow for the execution of more accurate trades through the use of precise coding.
The interview process for a quant professional will focus on assessing a candidate’s ability to code productively. While the role might require just 30% of an individual’s time coding, employers consider it essential to have detailed knowledge. As a result of this, candidates often will be evaluated as full-fledged coders.
Quant traders are required to know programming languages like C++ or Python to create and execute programmable scripts on the infrastructure created by the tech teams in a business.
Research And Analytical Skills
The strategies developed and executed can only be as strong as the research on the historical and market data conducted in the backend. Researchers and analysts are usually profiles that are taken up by graduates entrusted with the sole responsibility of gathering pertinent market information that can assist in formulating successful trading strategies.
This includes:
Ability To Work Under Pressure In A Competitive Setting
In the high-octane environment where decisions are made on the current market scenarios, delay in analysis can mean a considerable loss due to market volatility. This subsequently impacts the trade execution strategies leading to a missed opportunity.
Logical Thinking And Analytical Mentality
Most problems on their face value would seem unsolvable. However, a professional with a logical approach towards these problems will be able to break them down into smaller questions and approach them in a step-by-step manner. This kind of professional would be the best candidate for the quant role.
Again, in such scenarios, individuals should possess incredible attention to detail to ensure they don’t skip important pieces of information.
A Trader’s Mindset
In addition to being thorough with finance fundamentals and advanced theories, successful traders are also ingenious and inventive about their trading strategies. They might also have to think ‘out of the box’ and be unorthodox in their approaches. This requires them to be calm under pressure and persistent. When it comes to financial strategies they need to be comfortable with unchartered territories and have a risk-taking appetite that can yield results.
Hiring From Outside Of The Industry Vs Existing Experience Hires
The bar set for academic and professional excellence is considerably high when it comes to quantitative trading. The skills, knowledge and expertise required are proportionately compensated as this sector has one of the highest paying bonuses and fixed compensations. This makes it a sought-after job and attracts individuals who are outsiders to the world of quant trading.
The question is: Can individuals from outside of the industry build a successful career in quant trading?
The answer is a ‘yes’ but with conditions applied. Most of the skills required are transferable and hence gives a chance to the non-financial professionals to develop a career in quant trading.
If you are looking to hire a quant trader from outside of the industry, here are some skill sets you should look for in the right candidate:
Transferable Skill Sets to become a Quant Trader
Quant trading is a field where diverse skills from various industries can be valuable. Individuals considering a transition into quant trading often bring a unique set of transferable skills that can contribute to their success:
Advanced Mathematical and Statistical Analysis: Skills in advanced mathematics and statistics are crucial. Professionals from fields like engineering, physics, or computational sciences often have a strong foundation in these areas.
Programming and Coding Expertise: The ability to write and understand complex code is essential. This skill is often found in software developers, computer scientists, and individuals from IT backgrounds.
Problem-Solving Abilities: The capacity to tackle complex problems and find innovative solutions is highly valued. This can come from roles in research, engineering, or even complex project management.
Data Analysis and Interpretation: The skill to interpret large data sets and extract meaningful insights is critical. Professionals from data science, academic research, or even certain areas of healthcare and life sciences might excel here.
Risk Management: Understanding and managing risk is key in quant trading. Individuals from sectors like corporate finance, insurance, or even certain engineering disciplines may have relevant experience.
Attention to Detail: Precision is vital in this field. Careers that demand a high level of detail, like law, architecture, or even technical writing, can develop this skill.
Adaptability and Continuous Learning: The ability to adapt to new technologies and continuously learn is crucial in the ever-evolving field of quant trading. Professionals from fast-paced, tech-driven industries may be well-suited to this aspect.
Strong Communication Skills: The ability to articulate complex ideas clearly is important. This skill is often honed in consulting, academia, and roles that require regular presentation or reporting.
Strategic Thinking and Planning: Long-term strategic planning and effective decision-making are important, a skill often developed in business development, strategic consulting, and high-level project management roles.
But individuals looking to go into the quant trading industry should be prepared for a steep learning curve. In the next section, we give you some tips to become a successful quant trader.
Tips to become a successful quant trader
Quant trading is a field where timely and technology-driven execution of trades is paramount. Success hinges on the ability to analyse market data, trends, and historical patterns, transforming educated guesses into probable, profitable outcomes. Here are some essential tips to excel in this evolving field:
Embrace Technology: Stay abreast of technological advancements. The use of cloud computing, AI, and machine learning is revolutionising quant trading, making it more sophisticated.
Understand Data Deeply: Develop the ability to comprehend and capitalise on data insights. This includes recognizing patterns that others might miss, which is crucial for developing sustainable strategies.
Strong Academic Foundation: A background in engineering or an MBA from a top-tier university is beneficial, but understanding financial nuances is equally important.
Develop Mathematical and Analytical Skills: Excelling in mathematics and analytics is a core requirement. These skills are often transferable from other industries but need to be fine-tuned for financial applications.
Learn to Code Efficiently: Proficiency in coding languages relevant to quant trading is a must. The ability to translate complex financial data into code is a sought-after skill.
Adapt Quickly: For professionals outside the finance sector, adapting to the quant trading environment quickly is key. The learning curve can be steep, but mastering the necessary skills is essential.
Stay Informed and Flexible: The quant trading landscape is rapidly changing. Staying informed about industry trends and being flexible to adapt to new methods is crucial for long-term success.
In conclusion, becoming a successful quant trader requires a blend of technological savvy, deep understanding of financial data, strong analytical skills, and the ability to quickly adapt to new challenges. As the field continues to evolve, these skills will become increasingly important for those looking to make their mark in quant trading.
How can Aquis Search help?
At Aquis Search, our Quant Trading Team has identified strategic talent for some of the most successful high-frequency proprietary trading firms, quantitative hedge funds and asset managers across the globe. Our expertise spans across assisting multinational trading teams, hedge funds, and startups in establishing trading desks.
As trusted specialist recruiters in Quantitative Trading and Technology, we serve a global client base, bringing comprehensive knowledge of market conditions, recruitment challenges, and salary structures. We are pioneers in Quant Trading recruitment in Asia, which attests to the level of expertise we bring to both our clients and candidates.
Over the years, we have also built a proprietary database of highly qualified candidates from Ivy League, as well as the world’s biggest Hedge Funds and Trading firms. These candidates come with expertise in Computer Science, Mathematics, Statistics, Electronics, or Physics and extensive experience developing quantitative trading strategies across all the major asset classes including equities, futures, options, commodities for global markets, and cryptocurrencies.
Whether you’re a professional wishing to start or switch careers into quant trading, or you’re an organisation looking for a quant trading professional, reach out to me at [danielvaz@aquissearch.com] for a confidential chat.