How to become a Quant Trader?

Trading as a lifetime career option was generally considered taboo in India a few years back. However, times have changed and trading has been one of the most rewarding choices of all time. There are a few ways or methods in which one can pursue full-time trading and earn a profitable amount. One such career opportunity is quant trading.

Quant trading is a trading strategy driven by quantitative analysis and implements complex mathematical models to identify trading opportunities. Quant trading does not consider qualitative analysis which assesses trading opportunities based on management expertise, industry cycles, etc. Instead, it uses statistical methods and programming languages. This article attempts to explain how to become a quant trader.

How to become a Quant Trader in simple steps

Quant traders are professionals who use their knowledge of finance, mathematics, and computer programming to identify trading possibilities in the financial market. The financial market is affected by multiple factors such as politics, climate change, health crises, etc. Quant trading observes trends and patterns related to these factors and converts the data into numbers. Quant traders analyze the numbers to suggest trading opportunities to their clients, using quantitative trading. Here is the step-by-step guide on how to become a quant trader:

  • Observe and understand financial markets

    To become a quant trader, observing and understanding a financial market is vital. The primary task of quant traders is to forecast future trade possibilities using quantitative elements.

  • Learn from experts in the field

    There are many books available on quant trading. Moreover, many websites and video platforms have useful content published by experienced professionals. This can help in easily understanding complex concepts and boost your knowledge of quant trading.

  • Pursue a bachelor’s degree in the relevant field

    Quant trading requires strong mathematical skills. You can opt to graduate in maths and statistics to form a strong fundamental base. Quantitative finance is also one of the best options when opting for a bachelor's degree since quant trading involves analyzing a vast amount of data.

  • Pursue a Master’s degree

    Though a master’s degree is not compulsory for all the roles of quant traders, it can help one stand out from the competition. Some employers ask for post-graduate prospects, too. One can obtain a master’s degree in financial engineering, computational finance, or pursue MBA to strengthen their abilities.

    Prospective quant traders can also attempt to have a Ph.D. in the finance field. This eases the selection, especially, when one does not hold any prior working experience. Here’s what you can do:

    1. Look for additional courses and technical skills

      You can further develop your skills and abilities by attempting courses specifically designed for quant trading. Following technical skills are majorly important to aspiring quant traders:

      • Mathematics and quantitative analysis: A quant trader cannot afford to be unfamiliar with the concepts of skewness, conditional probability, kurtosis, VaR, etc. Lacking proper knowledge of mathematics and quants can result in huge losses while identifying and implementing trading strategies.
      • Computer applications: A quant trader shall be comfortable using technical analysis, charts, patterns, spreadsheets, and relevant software applications. All the major duties of quant traders are associated with computer usage and cannot be performed manually often.
      • Programming languages: All the major tasks of quants including research, data analysis, data mining, and so on are performed using automated trading systems. This requires the knowledge of programming languages like C++, Java, Python, etc.
    2. Start looking for a job

      Once you have sufficient knowledge and all the relevant skills and abilities, you can start finding a job. If experience is the hurdle, you can start with data researcher or data analyst jobs.

What to expect as a Quant Trader

A quant trader needs to be highly skilled and exceptionally knowledgable to analyze and evaluate financial products and markets. Academically, one at least needs a bachelor’s degree in quant-related fields such as quantitative finance, operations research, computer science, and so on. Master’s degrees and Ph.D. are preferred by some employers.

Quant traders are expected to be proficient in one or more programming languages such as Java, C++, and Python so that they can build their algorithms. Moreover, a quant trader is expected to have an innovative and problem-solving mindset. Effective communication and teamwork are cherries on the cake.

On average, quants work for 60 hours a week or about 9 to 10 hours a day. Though, a career in the quant trading field is highly rewarding. A quant trader can expect lucrative salaries ranging from $125K to $500K. Additionally, there are attractive bonuses for well-doing quant traders.

What do Quant Traders do?

Quant traders identify trade strategies based on complicated mathematical models. Mostly, quant traders assess price and volume as parameters. Although, other parameters which can be converted into numbers are also incorporated into the strategy.

They also build computer programs using a trading strategy. Once the strategy is identified, quant traders tend to backtest the same on past data to assess its accuracy. They also optimize the strategy, if required. To minimize the risk, they also incorporate stop-loss limits and capital allocation limits.

The role of quants is not just confined to identifying trading strategies, they also implement trading systems. They work with the research department and provide necessary feedback. They customize existing trading models, too.

Final Words

Although a quant trader’s job is highly lucrative due to higher salaries, it asks for huge and continuous efforts. Along with getting qualified for the job of quant trader, one requires the right mindset. The job is highly challenging as computer programs developed by a quant trader compete with other trader’s built programs.

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Frequently Asked Questions Expand All

Quant traders work for longer hours. On average, quants work for 60 hours a week or about 9 to 10 hours a day.

You don’t necessarily need a PhD to be a quant trader. Analytical skills, successful live trading track record, exceptional knowledge in financial markets, and experience of working in the finance field can qualify you as a quant trader, even if you don’t have a PhD.

No, quantitative finance is not a dying career. Some models and fields get outdated and new fields are evolved, and the process repeats.