advice for first job choice

[ursus]

Hi,



I'm wondering if some more experienced people can give some feedback regarding the importance of one's first job in quantitative finance (specifically, the HFT field).



In particular, I'm graduating with a PhD from a well respected university doing computational work. I'm just now starting a job search and have a very promising lead at a HFT firm that is profitable but young and small.



I'm wondering the relative merits of joining such a firm versus a role at a more established and/or larger firm. I'm most concerned with how my first job will prepare me for my next job as an experienced hire.



I'm motivated to work long hours to learn as much as possible as I transition to a new field, and I have a name brand university on my resume, but will a first job at a small firm harm my chances of ever transitioning to a larger firm later, or would a smaller firm be a good place to start in HFT? What do firms look for in experienced hires? Skills and past performance or company pedigree?



If there are no PhDs at the firm, but lots of experienced and quantitative people, would that be a red flag?



At the smaller firm, I assume I'll get exposed to the entire workflow (code and strategy development, and actual trading) and my contributions will be more important to the overall bottom line. How important are these factors for career development and potential bonus?



I'd really appreciate any feedback or thoughts. Thanks!

[radikal]

It depends on your goals...



Your intuition regarding the increased exposure at a smaller firm is definitely true, and you'll likely be much more likely to participate in the upside if the strategies you help develop are highly profitable.



I'm a bit of a cynic regarding most of the larger firms; my take is that, if your main interest is participating in the upside, it's becoming increasingly difficult to do so at the larger places.



However, your exit out of a bigger name place is generally better; there are hundreds of tiny quant HFTs nobody has ever heard of outside of their niche.



PHDs are not that common at HFTs..if they have people with badass quantiative skills, I'd MUCH more highly value that.



Smaller firm:

- Lower guaranteed pay

- Worse exit opportunities

- Real "Equity" in Trades

- Potential for more skill growth

- Risk of "this firm doesn't make money"

- Less toys + infra usually

[MoreLiver]

If the smaller shop's people have backgrounds in the larger institutions, it could kind of help to bridge the reputational gap.



Reputation-wise, it is best to have worked for Goldman Sachs. The second-best is to be hired by ex-GS people who are running their own shop. At least you could then state on cover letters and face-to-face that perhaps you do not have the seal-of-approval from GS, but you have the approval from people who have gotten their GS-approval themselves. It is not the same, but at least it's something.



The worst is to be hired by a bunch of unknowns whose work will probably not be remembered - unless it becomes big and successful. Should the success find its way in a small unknown place, your possible payoff as a critical man / junior partner would be much better



There is a clear risk-reward trade-off here. I would also suggest that the minute you go for a small indie shop, your employability at larger institutions might drop permanently, as you are seen as a bigger flight-risk.

[ursus]

Thanks for your replies radikal and MoreLiver. Understood why the bigger firms would hesitate to take someone from a smaller place.



If the smaller firms are hit or miss, is it acceptable to ask for the firm's PnL, general strategies or markets they're involved in during the interview process? Would seem like joining a small firm is a bit of a random decision otherwise.

[NeroTulip]

Whether the firm is big or small, the interview is a two way process. It is as much about them hiring you as it is about you wanting to work there. Do you want to invest your human capital in this firm? Ask as many questions as you can.

[Aleph]

If you're speaking about what I'll call 'true' HFT, then I would be of a slightly different opinion than MoreLiver - although I think his analysis is broadly correct in that there's a clear risk/return tradeoff. Particularly I wouldn't hold GS up to be the place to be from *in HFT*. In the past 10 years the space has evolved so rapidly that it's even not enough to ask someone where they're from; you have to ask about which particular years they were at firm A or B, for reasons I allude to later.



Thinking about this I'm actually inclined to say, even without further detail, that you should try to go with the smaller firm. I don't think spending a year or two at a shop that ends up not working out would be much of a cost to further employment. 'Cut the losers, ride the winners', just make sure you cut it at that if it's not working. Since it's early in your career it seems like a good bet to make. At the worst you gain exposure to the full workflow and, as a kicker, you get to see how a startup works (or doesn't). If it all goes pear-shaped and you're looking for a new job after a year or so (five is different) you'll just be a year behind your other self and interviewing for the same roles with a completely believable narrative, 'I was young and new and went to this startup but they sucked and blew up.' It only doesn't work if you're not good, 'I went to this startup and they got huge and then fired me.'



You mention exposure to the entire workflow being greater at a smaller firm and I completely agree. In fact, I think this exposure is vastly underrated by many people. I've seen too many 'traders' who work for a big shop or bank for a few years and think they can run off with their desk's trade and do it somewhere else before realizing that they don't have the full story. Going to a big firm will be more stable, but they will already have worked out the tricky things that everyone takes as given. It's important to understand which things are tricky and which are not. Going through that annoyingly difficult process yourself is more long term EV than having it given to you.



There are no secrets. There is no magic algo. I can tell someone how I trade and that information will be useless to them because they don't understand the full picture. The devil's in the details and they will phuck up the details because of their lack of understanding of *why* those particular details *are* the details. Knowing what is tricky and what is not will enable you to make the correct tradeoffs in developing whatever trading you do. You need to know where you have edge in order to push that edge, you don't want to spend years working on a roulette system vs learning how to run a casino because of a misunderstanding of which is trickier. This happens surprisingly often.

[sasquatch]

Feel free to ping me off this thread.



 



Sas