a UNSW Business Society official publication
Career Spotlight: Quantitative Trading
Written by Ethan Kwong
Date Published: 29/07/2020
Love to problem-solve? Love maths, computer science and finance?
Quant Trading is a career path that is ultimately rewarding for those who have a deep passion for mathematical analysis and trading. As technological innovations emerge and the abundance of data regarding financial markets becomes more apparent, there has been a rapid increase in demand for quant traders. Quants are specialists who have the ability to create and understand computational models in order to maximize profit and reduce risk on securities.
What is Quant Trading?
Quant trading involves trading securities based on quantitative analysis. Quants create programs which automate trading models so that they are based on the probability of making a profitable trade. These programs will look for certain patterns and behaviours- e.g. Volume spikes after significant price moves- and from these they are able to identify opportunities for traders to capitalize on.
Quant trading systems typically look for two types of data: Price and Volume
Price: Involves observing the movements of the price of a security over a given time period to determine when to trade.
Volume: Involves the buying and selling of a security over a given time period. In conjunction with other parameters, volume can be used to signal efficient trades when there are changes in buying activity, as volume typically increases when a trend continues and slows down when the trend begins to reverse.
Quant traders generally work within a team analysing large datasets for large institutional investors or hedge funds. Most firms look for at least a master’s degree - or preferably a PHD - in maths, engineering and financial modelling. Above this, a quant needs to possess the ability to think logically under long and pressure-filled hours whilst applying expansive trading concepts and programming skills (e.g. experience with data mining or automated trading systems).
If you are wondering whether or not you will enjoy the problem-solving aspect of quant, below is a typical interview question which assesses your logical reasoning and problem solving.
Standard interview question: is 1343 a prime number?
For more check out: https://interviewbrainteasers.com/quant-trading-interview-questions/
How do I start?
Quant trading is an extremely dynamic career as it requires both a vast knowledge of real-life events and technical abilities. As a basis, you will need a deep understanding of coding (C++, Java), statistics and world-wide economic events.
Above this, specific courses at UNSW, YouTube videos, virtual internships at InsideSherpa and courses on Skillshare can be utilized in conjunction as practical applications as a way to further your knowledge and experience. You will also need to acquire experience and develop trading skills by gaining a job in the financial industry and then from there obtaining specific education as per employer requirements (masters, PHD).
Programs such as SIG’s 10-week summer internship offer insight into what it is like to work as part of a quant team and also as a chance for you to improve your decision-making and skills on the trading floor.
Above all, as a quant you must be prepared to work long hours and enjoy solving problems in a logical manner.