7 Questions to Ask Before Joining a Quant Trading Firm
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For newcomers aiming to develop a career in quantitative trading, selecting the right firm can be daunting. Consequently, they are prone to making mistakes when choosing their first job. Such errors can lead to leaving the industry, even if you are inherently well-suited for it and could have succeeded. While lack of experience makes mistakes easy, I offer this guidance to help you avoid common traps.
Below is a checklist of key structural questions you should understand before joining your first company. These questions will help you assess your ability to learn and grow within the firm. While continuous learning is vital throughout your career, it is especially critical during the early stages when your experience is most limited.
Ideally, the answer to all seven questions should be "No" from the prospective employer. If the answer is "Yes," you will face greater challenges in your career development. A "Yes" does not necessarily mean the job is bad, but it does imply higher risk. Additional context is provided below the list.
Are brain teasers, gambling, poker, or mental arithmetic used in interviews? If a company asks such questions, it may indicate that they value manual, non-automated intuition and decision-making over quantitative, algorithmic, and research-driven approaches. If your background is quantitative, you want a firm that prioritizes these skills. In trader-centric companies, quantitative analysts have less influence over trading strategies and more limited career prospects.
Do you have a non-compete period of two years (or longer)? Non-compete agreements are common for quantitative analysts in the trading industry, though their durations vary (the standard term is 18 months). These agreements aim to protect the intellectual property you are developing. However, 18 months should be sufficient to protect your work product. Sometimes, longer terms are not to protect the company but to restrict employee career mobility. Even if you join an excellent company, you might end up in a weaker team, under an inexperienced manager, with unfair compensation, or unable to integrate perfectly. If the non-compete period is two years, other companies may be less willing to hire you.
Will you be blocked from accessing any part of the source code? Some companies encrypt or password-protect parts of the source code. This is not just about taking adequate measures to protect proprietary assets, such as securing internal file systems from external intrusions or preventing employees from copying files from the corporate network—these companies even block their own full-time employees from viewing parts of the existing codebase. To those outside the industry, the concept of encryption might sound strange, and they wouldn't think to ask. However, this is quite common in quantitative trading firms. Blocking access to part of the source code limits your ability to learn, collaborate with colleagues, and make an impact.
As a researcher, will you be the primary on-call trader monitoring any live trading process? Companies that highly value research will have separate, dedicated operations and trading teams to handle the bulk of daily tasks involved in running and monitoring automated trading systems.
In some companies, often those rooted in floor traders or click traders, or those struggling to manage unstable operational processes, "quant traders" need to handle both research and operations. While this might sound exciting at first glance, monitoring live trading, checking system health, and ensuring system stability is a full-time job that severely reduces the time you can dedicate to high-quality research.
Will you be blocked from viewing the P&L (revenue) of any strategy leveraging your research? One of the biggest attractions of trading work is the rapid feedback loop of research outcomes. You can conceive an idea, put it into practice, and see results within days. This tight feedback loop is superior to, say, physics, where verifying an idea might take years. However, some companies separate alpha signal researchers from strategy developers. If you are separated from the trading P&L, you cannot receive real-time feedback. Companies may do this to prevent confidential information from leaking easily, but many successful companies trust their employees and encourage loyalty through other means.
Are strategy parameters manually adjusted based on intraday judgment? If "click traders" adjust parameters, it is almost impossible to perform correct statistical analysis of your ideas based on historical data, as you cannot simulate human factors. Such companies are better suited for "click traders"—not quantitative analysts.
Are there other employees in the company directly competing with you? Okay, the final question! This question is important because some companies have direct competition among employees or teams to diversify revenue sources. However, for your career, you want the company to fully invest in you. If competing teams exist, you won't know whether the team you eventually join will win or lose. Your opportunities to learn from others will also decrease; you cannot benefit from broad collaboration with other quantitative analysts. Finally, this structure tends to foster a ruthless "zero-sum" culture.
I hope you receive clear "Yes" or "No" answers to these 7 questions from all future employers. If the answer is vague or indirect, treat it as "Yes." Do not be easily persuaded just because your current knowledge储备 is less than what you will have later in your career. Finally, it is always a good idea to double-check with friends or classmates currently working in the quantitative trading industry. With this advance warning, you can avoid the 7 issues I discovered based on friends' experiences and start tackling the fascinating problems in quantitative trading.