How Do You Become A High Frequency Trader?

3 min read

While the broad contours remain the same, this post is written from Indian market perspective.

HFT is an extremely technical discipline and it attracts the very best candidates from varied areas of science and engineering - mathematics, physics, computer science and electronic engineering. While in the US, they usually look at Ph.D. in CS or physics/maths or an MFE degree, it's not so much in India. In India, an engineering degree in CS/Maths or MBA in finance from a reputed college along with your zeal for problem-solving and coding can give you a fighting chance to land up quant analyst or a quant developer job in an HFT firm. While the degree makes the resume presentable, it's not the barrier. If you have done lots of work and have something to show for in your resume, the industry recognizes it. But be aware that getting a quant analyst or a quant developer job will take a significant investment in terms of study and effort.

Who Is It For?

HFT is mainly a game of latency(Tick-To-Trade), which basically means how fast does your strategy respond to the incoming market data. The "Bleeding edge" firm actually talks of single digit microsecond or even sub-microsecond level latency ( Ultra-HFT ) with newer sophisticated customized hardware.

Its very competitive in the sense that you have to continuously evolve your system. And while its rewarding most of the time, its also disheartening when months of hard work and research goes to drain if exchange changes its architecture, a new regulatory environment surfaces or a competitor is able to exploit a process at a rate faster than you are. For this reason it suits highly technical, disciplined individuals who crave autonomy and a collegiate environment of extremely capable people, while acting under a decent amount of pressure.

Now, most of the HFT firms are pretty small in size usually lesser than 100 people. So, you should have a strong entrepreneurial culture and a meritocratic mindset. Given that the bonus component in total algo trading salary is a multiple of your base pay, you will need to demonstrate an ability to generate revenue in order to earn that bonus. The flip-side to this process is that often you will be able to "create your own role" within the firm.

The firm might not even be hiring, but if they feel that your skills in a particular area are strong enough they may create a position for you. The meritocratic approach of HFT firms usually allows significant autonomy in your projects. Thus if you wish to work with extremely smart and capable individuals, in a self-starting environment, then HFT is probably for you.

Such roles often come with longer hours than many might be used to. 10-15 hours per day are not uncommon. The fast-pace, intellectual stimulation, and compensation generally outweigh the workload, however. This may or may not suit your desired lifestyle!

How Do You Get Hired?

Most of the ways to get into HFT require extensive technical skills in one or more of the hard sciences such as mathematics, physics, computer science or electronic engineering.
  • Engineering/MBA colleges - Many HFT candidates are employed straight from college in the relevant area. Its not much different than campus for the tech industry, although it helps to show something relevant in your resume. Its quite common for the best undergraduates to be hand-picked from the top technical schools (IITs, BITS, NIT) and then "trained up" on the job.
  • Industrial Expertise in low latency/big data/machine learning - Experts in low latency software development are usually sought after. An expertise in the area of big data or machine learning is another way to enter this domain.
  • Financial Exchange Experience - Any individuals with insight into the inner workings of the exchanges being traded on will be highly sought after as they are likely to be able to help carry out research into new algorithms that can exploit the exchange architecture.
While the above are most common ways to pursue a career in algorithmic trading or HFT, nothing stops a motivated individual to get into this domain. As an aspiring quant, he would need to hone his skills in algo trading domain by doing relevant courses and work on something which he can show in his resume - probably implement some relevant paper on financial time series data, write some market data adapter keeping low latency in mind etc.


Next Step

If you’re a retail trader or a tech professional looking for a quant analyst / quant developer job or want to start your own automated trading desk, start high-frequency trading training today! Begin with basic concepts like automated trading architecture, market microstructure, strategy backtesting system and order management system. You can also enrol in EPAT, one of the most extensive algorithmic trading courses available in the industry.