The quant trader interview guide

um i know there's a lot of stories about quant firms pumping out eight-figure bonuses and stuff like that and it definitely does exist but i'd say at the five-year mark you're probably an experienced trader but not a senior one so definitely mid-six figures we're talking five hundred thousand dollars three to seven hundred thousand dollars is a very safe bet so what does a quant trader interview look like well in this video you guys are in for a treat because i invited back the quant trader in this video here to go into more detail about the interview process hi i'm morgan i'm a quant trader and today we're going to go over some of the basic stuff for quant trader interviews we're going to go over the different rounds some specifics and advice for each round and then some of the materials that helped

so a quant trader is any type of trader that uses basically quantitative analysis data science some sort of data driven model to influence their decisions it doesn't mean that you're an algorithmic trader necessarily or using a bot to trade for you all it means is that you're using some sort of model to help you make decisions and as you can probably tell that could mean a lot of different things depending on where you

go some quantitators work at a variety of places some of them the big ones you've heard like at banks where they're going to be more on the research side or at hedge funds where they're going to be making models and employing advanced strategies advanced institutional strategies or ed trading firms and trading firms can be either proprietary trading firms which are very similar to hedge funds or they can be market making firms which are using quantitative strategies to make different markets and find arbitrage or alpha or profit if you

would say so the interview process usually two to four rounds beginning with an oa and then going to two or yeah usually one or two online or you know zoom skype or through the phone rounds followed by a final round where you're going to get many of the questions you saw before the mental math the logic the probably the brain teasers but with some in-person interviews about behaviorals and usually some sort of mock training so the first round uh is like i said

going to be an online assessment most of the time in this round you're going to get the same as what you'd see in an engineering place very standardized speed based exam basically that's testing how quick you can think and it's basically just trying to eliminate people who they don't want to consider for the in-person round so here you're going to get a lot of mental math just as many as you can answer in a certain period of time probability and combinatorics uh yeah that's a math question you might get two digits by two digit like 23 times 18. fast logic so a past political question is probably going to be something with combinatorics or probability the easiest side would be like given five crosses what are the odds you get x hens and

white tails the second and the third round are going to be in person versions of what you got in the first round which means that they're going to ask you things that are more in-depth questions that involve multiple stages so card questions where the situation changes on each round or dice problems where we add dice or take dice away and you have to create an ev or expected value alternatively they might give you some more mental math on the spot just both as a way to you know check that you can actually do the mental math and to see how you work under pressure

yeah so the final round interview in terms of mathematical rigor is probably very similar to the other two that came before it so the second and the third round some firms will increase in difficulty some will not um it shouldn't be too different if you were able to pass the math in the first couple you should be okay assuming you know knew and didn't just memorize uh the specific questions but the two things that stand out of the behavioral and the trading simulation or the mock trading that people will have you do the behavioral is like the behavioral at most other firms it'll you know change a little bit what they talk about based off of your background so if you're a finance major you have a finance background they might talk to you a little bit about that they might ask you some questions that normally you wouldn't get asked if you were you know humanities background or something like that but the one to focus on really is the mop trading which is where you and other interviewees will go into a room and make markets basically against each other which is where you decide whether you'd be willing to buy or sell a specific thing that you're trying to make a market let's do an example of a trading simulation okay so like let's say you're making a market on the people in the room that you're interviewing with and for some reason you think the average height is probably like five feet or something like that um so what you would do is you would give a market for example like five six or five ten or you know five at 510 um some market where you have what they call edge or profit on both sides of your expected value or your fair value if i think it's five eight if the range is like oh i think it's between like five seven and five nine yeah and then what uh what's your name 575. 99 so really you wouldn't want to be trading until you can buy or sell outside that range right so if you come by below five seven or you can sell above five times and that's a fair trading for you so i want to buy below five seconds yeah and i want to oh because it's lower right so i want to buy some five seven and i want to sell above five eight for you if you think if you're in six foot and your range for example was like five eight until six three then you should want to buy everything that's under five eight and then you would want to sell everything that's yeah so often the way you're thinking about it is not that you have this large range of outcomes that you think it's definitely in there right optimally you have an outcome that you think is very close to so like having a one inch wide range is much better than having a six inch wide range because the rank you can trade is smaller so you innately think you have more edge because you believe your information is better but you also need to account for variance so like if you walk into this room and there's everybody's either five foot or they're playing on a basketball team then you're going to have a lot of variance and your answer well it might very well have to be i won't create anything between five eight and six two so the way you win is you're supposed to make trades that are informed i guess height is something that they could use something else would be like the amount of people that you would expect in you know there's a lot of trading cards in chicago so the amount of people you'd expect to live in chicago and then people will create their markets and they will encourage you to trade by giving information that will drive markets one way or the other and ultimately it's just about the way you think and most importantly being the first person if you can be to trade so you are rewarded for taking initiative when you're trading at one of these firms most of the time the firm's giving these interviews are going to be testament to market making style and in market making you never have 100 of the information so your job is to take educated bets essentially or educated trades and put on positions that you think will be profitable so if you're too scared to trade you're telling the interviewees that you essentially don't want to market make so you don't want to be in that role so you really need to be trading

yeah so uh the first one that most people start prepping for is the mental math section and for me i just use zetta mac or zetamac which is an online mental math tool website that you can use it's the best where you can get in two minutes and it was really helpful just to get used to that sort of question a lot of them are going to be online mental math questions so uh getting ready for that and getting ready to you know typically be typing your answers into a computer is what was really important for me and just by the way warden's very good at santa mac his top score right now is i believe 74. 75 so try it out yourself so you can beat it i think my score last time the highest i've ever gotten i think was like 48. so that's a challenge for you guys so for to prep for logic and probability i used glassdoor as well as the book heard on the street by timothy falconcrack honestly if you've taken a probability or combinatorics class you will have covered 95 at least of what you need to know for the interview process there's two parts to glassdoor one of them is an advantage and a pretty big disadvantage the advantage is that a lot of the questions come from people who interview very recently and they're very company specific so the issue with using the book is that even though it has like a wide birth of questions it doesn't tell you which one is for which company and you do get some company specific questions one is that specific companies will ask you that other ones will not at all and that's what glassdoor is really useful for because you'll get to see what those interviews are like and if they have some very special math question or special probability or i've even seen like logarithm question logarithm estimation questions that they give you you're going to be prepared for those because you can learn that skill for that interview the downside of glassdoor is i would say maybe two and ten three and ten questions don't have an answer or you can verify without doing the problem yourself and for some people if they aren't as confident in their math abilities and don't trust themselves to be able to verify the question that's a really big downfall because they're not going to have an answer for it and they're going to have to throw out 20 to 30 percent of their questions as you get into the smaller firms the ones that don't have the big brand names you're going to have less question availability um those firms tend to have more specialized interviews so it's also tougher to prepare they're going to ask for different things but that was i wouldn't worry too much about preparing for the in those cases preparing for the generalized interview will do you pretty well in most cases so to prepare for the final round if you prepared correctly for the previous ones you are going to be fine on the math front i would be fairly sure of that going to the final round the one thing that makes a difference is in that trading game or in any sort of interaction game that they might come up with you to be really confident and preparing for that is going to be difficult more difficult for some people than others i know there are some clubs the finance club or the trading club at a lot of colleges will have these mock events for you to practice but if you don't have that resource i would say try to either practice with a group of people that are interested or absolutely worse just prepare yourself to make fair markets on different things and be willing to go out there and try to trade them when you're given the chance in the game

so we went over um the different realms of the interview process the different resources that i used to prepare for each of those processes and what each of the rounds would look like as well as some advice for each of the rounds when you get there