If you're quantitatively-inclined and you want to work for a hedge fund, you may be finding it difficult to get in. There are hundreds queuing up for a role and most of them have attended top universities. Now however, a 'quant community' is democratizing the quant world. All you need to do is write a brilliant algorithm.
Quantopian, the 'quant community’ in question, runs its own hedge fund. It claims to be bringing ‘meritocracy’ to the algo-trading space. Users are allowed to develop their own algorithms and, each month, the winner is given $100k to manage for six months – and keep any profits.
Simon Thornington, a software developer at derivatives pricing firm Fincad, won the award in March. Thornington says his algorithm exploits one “specific weakness” in others' trading strategies – when the market goes down, it places buy orders. Surprisingly, perhaps, this works.
“For me, I find the doors to a professional automated trading job somewhat closed,” he says. “I don’t expect this to lead to a full-time job elsewhere, but it’s an opportunity to network with like-minded quants and adds validation to what is a hobby.”
Quantopian isn't the only place where junior traders can raise their profile. Battlefin also pitches quants against one another in trading competitions. In theory, the new platforms should impress recruiters and help users land hedge fund jobs without going to top schools. Recruiters, however, are not convinced.
“Hedge funds look for two things – top academics and a trading track record at a reputable institution,” says one hedge fund recruiter speaking on the condition of anonymity.
Thornington says that the algorithm was conceived some time ago, but took around a week to write in the evenings and weekends. What has long been a hobby is now being taken more seriously, he says.
“If the algorithm does well I will probably fund it myself afterwards and ask family and friends of they want to invest,” he says. “It’s made me take it a lot more seriously and could open up a lot more opportunities.”