Quote from ezbentley:
I appreciate everyone's comment here, and maybe I should clarify my motivation for asking this question by posting some job descriptions that seem interesting to me.
Quant Trader/PM - High Frequency Equities
Required Qualifications include 2+ years high frequency and intraday trading strategies with equities, a proven track record, solid hands-on technical skills and an advanced degree (PhD, MS).
Statistical Arbitrage Trader / Quant Researcher
Candidates should have experience building strategies from scratch. ...... Candidates should have strong statistics or computer science backgrounds and understand what it takes to build up a stat arb strategy.
While it's very obvious to me that most of these high-frequency, stat-arb, quant trading jobs require advanced degrees in physics, math, or CS, it is not obvious to me how those majors are relevant to building actual strategies. Understanding the hardcore math and modeling doesn't necessarily translate into a profitable strategy. Or are the practical skills learned after entering the industry?
That era was an important one in terms of the stategies and how the final fallout occurred. You can see by the exquisite example provided (of using a 5 minute chart and doing 7 trades a year to make 25 bucks) is what comes out of this pipeline of the financial industry.
A person can go through training and apply the training under the constraints of the business. Here in this thread you are interested in investing in yourself to be prepared to do tasks in a business sector.
Unfortunately the financial industry can't make use of trained talented people; they simply have not come to understand how to task the opportunity. Have you examined why the contributors to this thread have no understanding of the market's offer? Why the financial industry is not focussed on the opportunity that markets represent?
Try to read some of the books by the people who went in one door and out the other. It is probably safe to assume some of these people are intelligent but what is going on in their collective heads that prevent them from getting any understandings?
If I were to hire a person, I would do two things: task him and pay for him.
Using 400,000 as his cost, then I just trade (I'll use a 5 min chart and 100 milliseconds as dimensions) 10 contracts daily of ES to make the 400,000 annual cost. (8,000 a week).
Wouldn't any retail person just skip the education and just trade 50 contracts daily and let it go at that?
The retail profitable strategy deals with 10 contracts at 500 dollars margin per contract or tying up 5K per employee. The daily take is 1600 bucks or 32 points for 10 contracts or 3.2 points per contract.
The daily opening range is a multiple of 3,2 points. Do you think a PhD or MS or BS in anything could design an algorithm to trade the market until 3,2 points net is reached every day? This is, at best a local commuity college problem or a junior high school problem.
So lets say an educated person is being hired and paid four times the 400K. It is still just a 20K capitalization problem using the same 3.2 points per day collected from the opening range in so many minutes.
I attached an example at this level of margin. The time in the market covers about 9 days salary @ 4 x 400K per annum.
The quant era is over, I would say.
It's an open research problem I'm working on, and have a journal for. I post on ET hoping someone will tell me I'm horribly wrong every now and then so I can go revisit what I've looked over, but so far people seem to agree.