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I run a mid-sized (5-10 employees) trading desk for an automated market-maker. My first thought upon reading about this game, not knowing what Starfighter is, w

I run a mid-sized (5-10 employees) trading desk for an automated market-maker. My first thought upon reading about this game, not knowing what Starfighter is, was "holy shit, I'd love to hire someone who excelled at this or even attempted it." I've worked with tons of extremely bright, well credentialed people who get lost in the weeds of analysis paralysis or trying to build the world's most complex model. Many fail. The best hires I've made internalize the nuts & bolts quickly, work hard to try many ideas, and are "smart enough." They're probably just as smart as the other guys actually but use intelligence as a tool rather than an end unto to itself.

MichaelGG 11y ago
Really? Aren't most of you at real cutting edge, like coming up with FPGA designs to implement the trade strategies?
- mrchicity 11y ago
  A lot of research is done in higher-level languages.
pjlegato 11y ago
Hey, send me a message, pjlegato at databaselabs dot io.
tomjen3 11y ago
I am definitely one of those people who would assume you have to be a genius to do work in finance because I imagine that if your product isn't perfect you will be eaten alive in the markets. That said there is also one other thing that prevents me from looking at a career in that kind of business: I imagine the traders as the kind of people with no empathy who are just looking to metaphorically stab you in the back the second they get a dollar in bonus for doing so.
- kasey_junk 11y ago
  I've found that traders are no more or less empathetic than any other cross section of users you might encounter in other industries. There are some trading desks that are more bro'd up than others and each trading desk has it's own culture, but the same is true of startups, which correlate pretty well with small trading desks in lots of ways. Further, the very concept of what a "trader" is has fundamentally altered in the last 15 years. A trader is just as likely to be a physicist or hold a PhD in signals processing today as they are to be your typical "Tall Guy With Aggression issues". I'd also point out that lots of people co-mingle different industries. Trading is not investment banking, which is not asset management. There are interesting software problems and good people working in all those fields.
- mrchicity 11y ago
  I should have phrased my point on smarts differently. You definitely have to be bright to make money trading; there is a baseline and it's pretty high. Beyond that, the most valuable things are attention to detail, working well under uncertainty where the best answer isn't obvious or even knowable, and simple hard work. Aside from systematic errors like Knight, market-makers rarely blow up due to competition or a bad model, they just fade away. They make or lose money pretty slowly, they just do it consistently over time. Aside from the most basic strategies there isn't one "right" way to price a market. It's an engineering problem like any other. How much risk do I accumulate? How should I manage this risk? How far apart should I set my bid and offer? Do I use a simplistic model with lower latency or a more complex one that's slower? Is it better to be more accurate and avoid bad trades or less accurate and build up priority in the order book by staying on a price longer? A market-maker's objective function is to maximize total profit (turnover * average gain/$ traded) while controlling risk (volatility of P&L over time). Usually changing your answer to questions like the ones above will shift turnover one way and profit per trade & risk in the opposite direction. For example, if you quote your bid and offer very close together, you'll trade large market share and have less risk exposure since you get in and out of positions very quickly, but your profit per trade will be low (if traders arrive randomly, at best you will make the small spread between your bid and offer, in reality a fraction of that since they usually have a reason to trade against you). If you set your quotes wider, you'll make more per trade on large dislocations, but do less volume and hold more risk. There are a lot of efficient points along this continuum and traders play to their strengths. Someone with little capital/risk tolerance, top-tier infrastructure, and forecasting models for the next price tick should play very differently than someone with a lot of capital, average infrastructure, and models that can forecast the next 10 minutes. And you are right regarding bonuses, but all team efforts have this problem. Who creates value and deserves the best compensation in a SaSS startup? Is it the salespeople who get clients? The engineers who build the software? The Ops team that keeps it running reliably? I actually find trading to be a bit more meritocratic than other tech jobs: either you make money or you don't, and teams are smaller so it's easier to assign reward (or blame).

MichaelGG 11y ago

Really? Aren't most of you at real cutting edge, like coming up with FPGA designs to implement the trade strategies?

mrchicity 11y ago
A lot of research is done in higher-level languages.

pjlegato 11y ago

Hey, send me a message, pjlegato at databaselabs dot io.

tomjen3 11y ago

I am definitely one of those people who would assume you have to be a genius to do work in finance because I imagine that if your product isn't perfect you will be eaten alive in the markets. That said there is also one other thing that prevents me from looking at a career in that kind of business: I imagine the traders as the kind of people with no empathy who are just looking to metaphorically stab you in the back the second they get a dollar in bonus for doing so.

kasey_junk 11y ago
I've found that traders are no more or less empathetic than any other cross section of users you might encounter in other industries. There are some trading desks that are more bro'd up than others and each trading desk has it's own culture, but the same is true of startups, which correlate pretty well with small trading desks in lots of ways. Further, the very concept of what a "trader" is has fundamentally altered in the last 15 years. A trader is just as likely to be a physicist or hold a PhD in signals processing today as they are to be your typical "Tall Guy With Aggression issues". I'd also point out that lots of people co-mingle different industries. Trading is not investment banking, which is not asset management. There are interesting software problems and good people working in all those fields.
mrchicity 11y ago
I should have phrased my point on smarts differently. You definitely have to be bright to make money trading; there is a baseline and it's pretty high. Beyond that, the most valuable things are attention to detail, working well under uncertainty where the best answer isn't obvious or even knowable, and simple hard work. Aside from systematic errors like Knight, market-makers rarely blow up due to competition or a bad model, they just fade away. They make or lose money pretty slowly, they just do it consistently over time. Aside from the most basic strategies there isn't one "right" way to price a market. It's an engineering problem like any other. How much risk do I accumulate? How should I manage this risk? How far apart should I set my bid and offer? Do I use a simplistic model with lower latency or a more complex one that's slower? Is it better to be more accurate and avoid bad trades or less accurate and build up priority in the order book by staying on a price longer? A market-maker's objective function is to maximize total profit (turnover * average gain/$ traded) while controlling risk (volatility of P&L over time). Usually changing your answer to questions like the ones above will shift turnover one way and profit per trade & risk in the opposite direction. For example, if you quote your bid and offer very close together, you'll trade large market share and have less risk exposure since you get in and out of positions very quickly, but your profit per trade will be low (if traders arrive randomly, at best you will make the small spread between your bid and offer, in reality a fraction of that since they usually have a reason to trade against you). If you set your quotes wider, you'll make more per trade on large dislocations, but do less volume and hold more risk. There are a lot of efficient points along this continuum and traders play to their strengths. Someone with little capital/risk tolerance, top-tier infrastructure, and forecasting models for the next price tick should play very differently than someone with a lot of capital, average infrastructure, and models that can forecast the next 10 minutes. And you are right regarding bonuses, but all team efforts have this problem. Who creates value and deserves the best compensation in a SaSS startup? Is it the salespeople who get clients? The engineers who build the software? The Ops team that keeps it running reliably? I actually find trading to be a bit more meritocratic than other tech jobs: either you make money or you don't, and teams are smaller so it's easier to assign reward (or blame).