I was emailed yesterday with an interesting career question about working in High Frequency Trading (HFT). The question posed was "Is it possible to get a HFT-related job in a big company without a formal degree?". The short answer is that yes, it is possible. The longer answer is that it is going to be difficult and this article will explain why.
I am going to make an assumption here that by "High Frequency Trading" the individual is referring to mili/micro-second frequency trading. This is the sort of trading that was popularised by Michael Lewis in his (in)famous book Flash Boys. Trading intraday at the hourly or five-minutely frequency does not constitute "high frequency" as regards this post.
The question is really asking whether it is possible to compete for the limited job roles that are on offer from HFT quant funds. This involves ascertaining the sorts of skills that such firms are after, attaining those skills outside of formal study and - most importantly - convincing the firms (or their HR departments) that you possess these skills despite not having academic qualifications. Thus there are three aspects to the question and we will take a look at all of them in turn.
HFT is largely about reducing latency of trading orders reaching an exchange and/or knowing about what other orders are out there (or likely to be out there). Hence there is a substantial focus on techniques and skills from the realms of computer science and electronic engineering. Both of these are advanced academic disciplines with extremely healthy research communities.
Thus the skills required to work at an HFT firm largely encompass computational and electronic expertise. Here is a very broad overview of what certain HFT firms will be looking for:
This is not an exhaustive list, nor is it deep. However it does give you a "flavour" of what a typical HFT firm will be looking for.
If you wish to apply to an HFT firm you will need to ask yourself whether you already possess a large fraction of these skills. If not, you need to be honest with yourself about whether you intend to put in the work to obtain these skills via self-study.
Undoubtedly the "easiest" way to obtain some of the above skills is to either partake in formal study for a research-level qualification in a computational science or electronic engineering discipline and/or to be employed via a firm that makes use of such mission-critical technologies outside of high finance. Such industries would include subsectors of energy, aerospace and telecoms/IT.
However, if neither of these options are appealing, or impossible for you to consider, then you will need to teach yourself these skills via directed self-study over a long time period. As I have emphasised on multiple occasions on this site, such time periods can be on the order of years. You will be competing directly with individuals who have gained formal qualifications over a period of 8-10 years, with directed full-time academic study. As such, you should be willing to put in an equivalent amount of time if you wish to be a strong candidate.
Depending upon your preferred mechanism of study, perhaps the best way to start learning these skills is to obtain a syllabus from one of the top universities (e.g. MIT, Princeton, Harvard, Stanford, Cambridge, Imperial, Oxford, UCL etc) for either their computer science and/or electronic engineering courses and begin to work through the suggested textbooks and examples. This is a long road, and requires substantial time and discipline, but can be very effective if you enjoy directed self-study.
An alternative for those who are more "hands on" is to begin tinkering away with code related to the sorts of systems that will be considered. For instance, you can try implementing low-level drivers for specific hardware in order to find out how they work. You can attempt to simulate a limit order book as a standalone "server" and then send "trades" to it from another system. You could obtain a book on FPGAs and start tinkering away building your own FPGA-related code. After a few years, and subsequent projects, you will start to become quite adept at low-level systems architecture and design.
A third mechanism is to actually try carrying out HFT yourself. This is not for the faint of heart, nor for those with small account sizes. There is a good example of a publicly available tale of a retail trader who carried out HFT rather successfully, which you can read here. The likelihood is that this will initially be an unprofitable exercise. You should expect to lose money for some time before you figure out a successful approach. Remember that in HFT you are directly competing against large firms with substantial budgets and expertise. You have to truly believe that you have an edge that they do not, which can be exploited profitably over the (extensive) transaction costs.
Once you feel that you are confident enough in your skillset to begin applying for HFT jobs, you will need to convice either the firms themselves, their HR departments or the recruiters that work for them, that you have what it takes.
You will be facing an uphill battle here as recruiters and HR departments largely work on CV/resume "buzzwords" as a filtering mechanism. They will often ignore or reject any candidate that does not possess the "traditional" formal qualifications from a top university. As such, you will be need to provide alternative "credentials" in order to get a foot in the door. Remember that most of the roles will already be filled by graduates from top schools with a track record of independent research published in top journals. While this may seem "unfair", it is purely a risk management measure for these firms. It is much easier to "outsource" the assessment of candidates to other top-tier institutions and rely on credentialism and standardised grades, than it is to continually assess every CV provided without formal qualifications.
Despite the difficulty, there are paths in to such a job:
Perhaps the biggest takeaway from this article is that none of this will be easy. It will require a lot of dedication and consistent hard work over a number of years. However, nothing worthwhile in life is ever easy! Everyone that you're competing against for one of these roles will likely have put in a staggering number of hours to build up their skills.
However, it is possible and if you are sufficiently motivated you will find such directed self-study to be extremely rewarding. Even if you don't initially make it into your dream HFT role, it will certainly bring up many other lucrative and enjoyable career avenues that you can explore.
If you have any further questions about HFT careers, or otherwise, please feel free to email the team at email@example.com and we will get back to you as soon as possible.comments powered by Disqus
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