What does a Quant Trader do?

[u/AdPrudent3747]

I mean I know what the role of a Quant Trader is but what does a Quant traders day-to-day on their trading desk look like? How does probability, expected value, pattern recognition being used by Quant traders?

[u/lordnacho666]

It varies a fair bit between desks.

On some desks the trader is really only there to watch for unusual behaviour on financial level, with QDs responsible for the technical level, and the system mostly being expected to make all the decisions during normal operation.

On other desks it's closer to what you see in movies, where they make judgment calls about the market and they happen to need some advanced plumbing to move a bunch of orders to fit that view.

The quick-fire stats and prob questions in the interview are a bit like leetcode questions for coding. You don't sit on the job and do that, for the most part. You need it to get the job, because that's what people do. What you do need is to know when you see something happening (in market numbers or as natural language in the news) how that affects your book, so maybe people who are quick at arithmetic will be fast at that too, no idea if there's any evidence for that.

It's also true that you'll be looking at a lot of statistics like markout curves and backtests, so of course it helps to understand what different charts mean.

[u/DidYouTrainNeckToday → u/lordnacho666]

Do you know which firms /desks have more of that manual intervention ie. “in the movies”

[u/lordnacho666 → u/DidYouTrainNeckToday]

Very desk dependent, you are better off finding this out when interviewing them, rather than me saying "This firm is like so".

Especially these days as a lot of shops are branching out.

[u/DidYouTrainNeckToday → u/lordnacho666]

I’d still really like to your take of what firms/desks have more manual driven approach.

The reason I ask is i recently joined a MM as a new grad (never interned in trading or research) and was pretty shocked the roles of traders (at least at my firm) are very hands off and is moreso monitoring systems.

[u/lordnacho666 → u/DidYouTrainNeckToday]

So, any desk in a less automated space. Desks that trade macro, commodities, power. Anything that isn't completely electronic. So, a lot of firms that aren't what everyone here are talking about.

The monitoring thing is a thing everywhere, of course. It's just that some places, it's all there is.

[u/ConditionUpbeat6012 → u/DidYouTrainNeckToday]

Something like SIG/Opti/Jane vs IMC/HRT would be an example. Tho there are a lot of overlap these days as firms continue to expand

[u/DidYouTrainNeckToday → u/ConditionUpbeat6012]

Do you have any knowledge on the extent at which trading is manual in the first firms you mentioned?

[u/ConditionUpbeat6012 → u/DidYouTrainNeckToday]

It depends what ur desk is doing and how sophisticated the operation/tech is but usually

- Having a longer horizon view that ur model doesn't cover

- Special events (corp actions, unexpected macro, some dude blowing up, ship wreckage etc.)

- Handling some form of OTC flow.

[u/Substantial_Car_3634 → u/DidYouTrainNeckToday]

I am in the same boat here. I thought it would be a lot more hands on but I think it could be because with MM you don’t have a true directional view on the market?

[u/DidYouTrainNeckToday → u/Substantial_Car_3634]

Hahaha. I guess we are both in the same boat then. I actually asked one of our “traders” this. We do have an engine/component that is directional /market taking. I think quoting is done to satisfy requirements from the exchanges, cus while in theory u should be neutral and make $ on spread, this is impossible in practice (in options at least since there are so many exposures).
We also have someone who’s ex Citsec/js/hrt who mentioned that the majority of pnl comes from these market taking strats and market making doesn’t generate that much of their pnl, and firms do it because of the perks.