Traders at Investment Banks?
- Thread starter ndlarryj
- Start date
Waggie is absolutely right, Susqhanna and other hedge funds are really into the "quant" guys right now. It is the same in London as well...I was on the phone with two London based hedge funds and they "only" want people with the "quant" skills. Another thing - recently I have been getting a lot of resumes from "former" Susqhanna traders...at our firm that is a instant interview feature. We have a high degree of respect for Susqhanna's training and traders...I've heard that to get on their is extremely competitive.
rttrader1 -
It's funny, I heard Susquehanna and all their quant guys lost 1 billion dollars in 2002 trading.
I don't think that's the point. the point is you've gotta have a solid background in that at the least, especially if you're going to be trading derivatives.
It's because the quant guys make money, regardless of rumors or hearsay BS. http://ljsavage.wharton.upenn.edu/~cengiz/Finance/jim_simons.pdf
According to the standard, the Sharpe Ratio, Jim Simons is the best, the standard, and the future.
Why do these supposedly great firms still believe that academics make a great trader?
Quite frankly, I am at a loss as to why there are people on this thread like Mecro, Maverick, and Canuck who have such an "ignorant" disdain for traders that have "quant" backgrounds.
Do you guys just think that the traders at the equity derivatives desk of an investment bank simply wake-up the morning of options expiration, let alone "triple-witch" and shoot from the hip?
Do you really think that these desks that are in the business of "facilitating" trade ( that means taking the other side of an order ) with customers are carrying positions that are anything but COMPLEX???
Wake-up.
Quite frankly, I am at a loss as to why there are people on this thread like Mecro, Maverick, and Canuck who have such an "ignorant" disdain for traders that have "quant" backgrounds.
Do you guys just think that the traders at the equity derivatives desk of an investment bank simply wake-up the morning of options expiration, let alone "triple-witch" and shoot from the hip?
Do you really think that these desks that are in the business of "facilitating" trade ( that means taking the other side of an order ) with customers are carrying positions that are anything but COMPLEX???
Wake-up.
Waggie, I think great traders come from all sorts of backgrounds. In fact I believe there is no "type". Which is why I find it funny that people try to group quant traders into a goup that is supposed to be the right "type".
Let me say this, if you take 1,000 quant guys and put them in a room to trade you will get the same normal distribution of success and failure as if you took 1000 high school drops outs in a room and let them trade. In other words, out of 1,000, maybe 10 from each group will find a way to make money consistently. You could do the same with doctors, lawyers, teachers, garbage men.
So any time someone goes on and on rambling about quant this and quant that, I get a big chuckle out of that. Because I know better. I've said this before and I will say it again, what separates the boys from the men is discipline. And the reason why 95% of the active trading population fails is because they have no discipline. In most lines of work, lack of discipline will not get your fired, in fact, in many cases its a plus. That is what makes trading so hard. Your income is completely derived from a trait that most people are programmed not to have. It's the same reason why 60% of our country is overweight, why people can't quit smoking, or why married men cheat on their wives. A quant trader with no discipline is as bad a trader as anybody else with no discipline. It's not the quant part that makes them successful.
The overwhelming problem that quants do have however, is that they tend to ignore discipline and common sense for the sake of their mathematical models. After all, if you are going to trade off a model, you have to be faithful to it or what good does it do to have a model. Well, I believe that ignoring discipline for the sake of a model is a very dangerous activity that will eventually lead to a blowup of some sort.
However having said that, I believe their success rate in trading will be the same as those in the field of dentistry who try to trade. A disciplined dentist will make a great trader!
I understand what you are trying to say.
However, I think that many people on this board are FAILING to make a very important DISTINCTION between quants that are "model-driven" and quants that are on equity-derivative desks at major investment banks who use the "deltas, gammas, thetas, vegas, and rhos" in order to understand the basket of risk that they are handling and how best to manage that risk.
In other words, there is a big difference between funds like LTCM ( which many of you have used as a favorite example ) in which quants were "model-driven" and quants on equity-derivative desks at Susquehanna or Morgan Stanley or Deutsche Bank that utilize mathematics to help them with their risk management.
Believe me, I have been around a couple of the TOP equity-derivative traders on the Street, and one in particular had a huge background from Susquehanna. In 1998 during the Asian Currency Crisis, he made the equity-derivative trading desk of a large and very aggressive investment bank $45 million dollars.
He made this sum of money because he utilized his QUANT KNOWLEDGE during a time of tremendous volatility as Victor Niederhoffer's clearing firm was liquadating ( buying back ) a huge position of naked S&P futures puts that were totally underwater to the tune of roughly $100 million.
It was a pure "Vulture Trade".
But I would strongly disagree with anyone on this board that is was not possible without a complete understanding of option volatility and pricing.
However, I think that many people on this board are FAILING to make a very important DISTINCTION between quants that are "model-driven" and quants that are on equity-derivative desks at major investment banks who use the "deltas, gammas, thetas, vegas, and rhos" in order to understand the basket of risk that they are handling and how best to manage that risk.
In other words, there is a big difference between funds like LTCM ( which many of you have used as a favorite example ) in which quants were "model-driven" and quants on equity-derivative desks at Susquehanna or Morgan Stanley or Deutsche Bank that utilize mathematics to help them with their risk management.
Believe me, I have been around a couple of the TOP equity-derivative traders on the Street, and one in particular had a huge background from Susquehanna. In 1998 during the Asian Currency Crisis, he made the equity-derivative trading desk of a large and very aggressive investment bank $45 million dollars.
He made this sum of money because he utilized his QUANT KNOWLEDGE during a time of tremendous volatility as Victor Niederhoffer's clearing firm was liquadating ( buying back ) a huge position of naked S&P futures puts that were totally underwater to the tune of roughly $100 million.
It was a pure "Vulture Trade".
But I would strongly disagree with anyone on this board that is was not possible without a complete understanding of option volatility and pricing.
Quote from waggie945:
I understand what you are trying to say.
However, I think that many people on this board are FAILING to make a very important DISTINCTION between quants that are "model-driven" and quants that are on equity-derivative desks at major investment banks who use the "deltas, gammas, thetas, vegas, and rhos" in order to understand the basket of risk that they are handling and how best to manage that risk.
In other words, there is a big difference between funds like LTCM ( which many of you have used as a favorite example ) in which quants were "model-driven" and quants on equity-derivative desks at Susquehanna or Morgan Stanley or Deutsche Bank that utilize mathematics to help them with their risk management.
Believe me, I have been around a couple of the TOP equity-derivative traders on the Street, and one in particular had a huge background from Susquehanna. In 1998 during the Asian Currency Crisis, he made the equity-derivative trading desk of a large and very aggressive investment bank $45 million dollars.
He made this sum of money because he utilized his QUANT KNOWLEDGE during a time of tremendous volatility as Victor Niederhoffer's clearing firm was liquadating ( buying back ) a huge position of naked S&P futures puts that were totally underwater to the tune of roughly $100 million.
It was a pure "Vulture Trade".
But I would strongly disagree with anyone on this board that is was not possible without a complete understanding of option volatility and pricing.
Waggie, maybe you should define quant a little better. I know the option greeks inside out. I could probably write a book on options trading. However, I would not call myself a quant just because I know all the greeks inside and out. In fact, I would argue that at the very least, it's hard if not impossible to trade options without a full understanding of all the greeks.
I like to think of quants as someone who makes 100% of their decisions from statistical analysis of some sort. In other words, they never deviate from the data and let their own ideas or opinions influence their decision. So by this definition, I would include a lot of the TA guys on this board who are systematic traders in that group.
Also, for every guy that you show me on a equity derivatives desk that made a killing during the crash of 87 or the asian crisis in 98, I'll show you an S&P local who made a killing in the spoos pit with a high school education. See where I'm going with this?