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It's not simply a question of designing an algo and sitting back while it does the work.

This is what you do all day as a systematic trader at a hedge fund

It's not like this

Some of the best jobs in contemporary trading are for systematic traders working with quantitative hedge funds. These are traders who design trading strategies using computing models, which trade automatically. It's a job that might sound low maintenance - you design one successful computer algorithm which trades for you and the job is done. This isn't exactly the case, says Robert Carver, the former head of fixed income at quantitative hedge fund AHL, who outlines a typical day.

07:25 Get train to the office

When I worked for an investment bank I had to be at my desk for 07:30. But most systematic traders don’t actually trade – their systems are fully automated. So there is more flexibility around working hours: because it’s a creative job it’s better to work when it suits you.

8:15 Arrive at the office: Check overnight risk, market news, and strategy profit & loss

This part of the job is the same for all traders. I managed a team and we took turns doing this relatively boring but important task. Too many ‘quants’ get caught up in the abstract world of financial models and lose touch with the market.

9:00 Daily scrum meeting

At systematic funds traders work closely with software developers. We even adopted some of their working practices – including this meeting. Every morning we discussed what progress we were making and what was holding us up. This meeting is sometimes called a ‘stand-up’: nobody is allowed to sit down – which ensures it’s is over quickly.

9:15 Work with new source of data

Data is the lifeblood of the systematic trader, and new sources of data are always appearing. But using new data isn’t straightforward. The data has to be sourced, we have to work out how to feed it into our databases, and it will probably need to be cleaned to remove erroneous entries.

10:00 Client meeting

We had a dedicated team of client managers, but as a senior manager I still had to show up for meetings with more important customers. My everyday clothing was jeans and casual shirts, but on days that clients visited I would don a suit and tie. Clients were usually interested in new ideas, and we were quite open in discussing them. The more information you can give about your strategies, the more likely you’ll get investment.

11:00 Strategy testing

Once you have some data the next step is to test and develop a trading strategy that uses the data. This is probably the most exciting part of the job – nothing beats the “Eureka!” moment when you find something new that appears to be profitable. However this is just the beginning: the strategy has to be thoroughly tested to make sure it is robust.

12:30 Lunch

At lunchtime I would head downstairs to our office canteen. The menu changed every day, and there was even a bar (sadly not open at lunchtime – probably a good thing!). If I was really busy I just grabbed a sandwich to eat at my desk, but there was usually time to sit down and catch up with some colleagues.

13:30 Writing up research

All research has to be written up before the idea can go further. It’s also important to document ideas that didn’t work – otherwise someone else will waste time trying the same idea.

15:00 Research review meeting

Some funds operate in “silos”, where you develop your own ideas and keep them secret. But I worked in a colloborative business where we worked together and shared information. This helped improve good strategies, and made it less likely that bad ideas would be implemented. The downside of this is that there a lot of meetings!

16:00 Pair programming with developer

All systematic traders have to be able to code, otherwise you can’t manage data or test strategies. However it’s unlikely that the prototype code written to test the strategy will be robust enough for trading with real money. Professional software developers code up the “live” production algorithm, working closely with the traders.

17:00 Implementation meeting

Actually putting a strategy into live trading is a team effort involving people from all over the business including technology, operations, compliance, risk and many others. Systematic funds don’t usually have the “rock star” mentality of other hedge funds where star traders get all the attention. Everyones contribution is important and acknowledged.

18:00 Leave the office. Read on the train home

The journey home was an opportunity to catch up on the latest academic research. Hopefully they would inspire me to dream up a new idea whilst I slept.

Robert Carver is a former head of fixed income at quantitative hedge fund AHL. Now retired he never has to wear a suit, but still systematically trades his own account. He is the author of 'Systematic Trading' and 'Smart Portfolios'.

Have a confidential story, tip, or comment you’d like to share? Contact: sbutcher@efinancialcareers.com in the first instance. Whatsapp/Signal/Telegram also available.

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Photo by Chris Thompson on Unsplash

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AUTHORRobert Carver Insider Comment
  • It
    Itrader Tv
    3 February 2020

    hedge funds and investment banks support the idea of systematic trading because they don't want human emotion risk on their investment. Emorions are black hole in any fund, they are dangerous. But here is the thing market participants are human and they are mostly move with their emotions even who is thinking that they are systematic. Result; you have to catch up human emotions, understand, and transfer in code!
    That is not easy and that is not work too. This is not opinion, this is fact as you compare worst drawdowns and return of all these funds. Most of them underwater, more of them can not catch even ETF's such as SPY. They charge 2/20 so their bread is on 2% not on 20%.
    Why I am telling this because time is changing and if you plan a career it is better to plan it in gray area not in black or white. Semi-Systematic traders are future.Warren Buffet style do not trust code style is future. This industry very tough you can pretend for a while you are king but soon or later somebody will ask correct question such as what is your Gain to pain ratio?

  • IH
    IHateHD
    18 September 2018

    Strange, the writer does everything but trade.

    Here's what I do as a hedge fund manager in a systematic hedge fund
    - 6:00-9am Check overnight calibrations, compare backtested results to previous day live pnl, double check processes, review research
    - 9:00am Ensure trading system is live and prepped with calibrated results
    - 9:30am Hold breath and await the open
    - 9:30-12 Laugh/cry/cheer/shake fist at trading screen, while ensuring systems are operating as they should
    - 12-2pm Meetings /external investors/vendors/team
    - 2-3 Continue any research from the start of the day
    - 4:00pm Run a victory lap/curse the day
    - 4-10pm Continue research, design new strategies/coordinate any production changes for the following day

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