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High-Frequency Programmers Revolt Over Pay

151 points by nsoonhui 16y ago

patio11 16y ago
I think financial industry programmers are at the leading edge of this phenomenon (much like quants were the leading edge of programmers being paid for value rather than for hours), because they're the programmers who can most easily demonstrate that their code directly made a company millions. They're not the end of it by a long shot. Take A/B testing, analytics, conversion optimization, etc. If you are good at these, you can generate several million dollars of value over the course of a week. If you can credibly offer the prospect of results like that, some companies will pay you very well indeed.
- tom_b 16y ago
  I'd actually love to see more jobs that offered the opportunity to work with a small base salary but increased compensation levels based on measurable results. I'm really curious about non-startup work models that would encourage this. So far, the easiest path would seem to be via consulting, where you sold your services as business services that happened to be software-based rather than as a "warm body" to staff some open slot somewhere. It seems that overall, startups are probably lower expected value to the early employees in pure financial terms than having compensation tied to measured results for work done for some other company. I remember essays by both PG and Joel that mentioned the "value effect", PG talking about a "monster of productivity" hacker who added a bunch of value to Viaweb in a single day and in Joel's case, a summer intern who (I vaguely recall) suggested and then built the joelonsoftware jobs board. I think fogcreek offered the intern some type of stock option bonus for joining fulltime. I don't remember if the Viaweb hacker got something or already had equity of some sort.
  - rwmj 16y ago
    Surely you can just invest a large proportion of your salary in company stock and achieve the same end?
    - infinite8s 16y ago
      Usually company stock is offered on much better terms when it is part of your pay package.
      - redrobot5050 16y ago
        Most corporations don't offer enough stock in their employee stock ownership plans for this to really be effective. You have vesting (which means you have to wait before it can be sold) and dilution. You can also have situations in large corporations where your performance was incredible, and by every measurement you brought millions into the company. However, some guy in division X lost billions and the stock tanked. There was an AIG employee who wrote to the NYTimes about how his bonus was retroactively taxed 95%, and he claimed it was because of this exact situation. He had nothing to do with AIG's collapse. He was part of a highly profitable division, and was asked to stay on to help turn AIG around faster. That people were upset that he got his contractual 1.2 million bonus was lost on him.
    - coliveira 16y ago
      With stocks, if you can't have control over how the company is managed, you're just playing lottery.
      - maigret 16y ago
        With stocks you have to control the company management, of course proportionally to the the percentage of stocks you're owning. Too sad most investors forget that, you can see an example with BP.
  - GBond 16y ago
    >I'd actually love to see more jobs that offered the opportunity to work with a small base salary but increased compensation levels based on measurable results. Many sales positions are like this (eg. Enterprise Software). The key of such pay model is being easily measured down to the individual (which sales is). It doesn't apply to most cases because it is hard to accurately measure contributions of individual's performance of a product/result that is comprise of a team of peers. The "body shop" biz model is also easily measured (sit on seat 1 hr = pay for 1 hr).
    - matwood 16y ago
      "Sales" isn't that easy to measure. Sure, the sales person might have been the face to the other company, but were they the real reason the sale closed? I've written a bunch of small pieces of software for my current company and many new clients have said the only reason they picked my company over a competitor was my value add software. Did I see any of the sale commission? Nope.
    - maigret 16y ago
      Right, but still sale is a job only certain people can do (it's the same for programming I think) - so switching to sale is not that easy for most developers. Also if you are a very good programmer, switching to a whole other job you will not be able to reuse your programming skills like you could for a better paid gig in a slightly similar programming topic.
- davidw 16y ago
  > Take A/B testing, analytics, conversion optimization, etc. If you are good at these, you can generate several million dollars of value over the course of a week. If you can credibly offer the prospect of results like that, some companies will pay you very well indeed. Given the above statement, which I think is accurate, and given that you're pretty good at those things, and given the following statement from your interview: > You know what my revenue was for today? Nothing, because we’re in the dog days of summer, and sales slow to a crawl until school gets back in session. Doesn't that mean that your time would be more valuable employed doing the "million dollars of value in a week" stuff?
  - patio11 16y ago
    I did some consulting over the summer, and will do some in the future. Speaking generally, clients pay me quite well but customers pay me quite well while I sleep. I'm probably not going to talk consulting on HN too often -- it might sound like advertising.
    - davidw 16y ago
      I suppose doing both is ideal; I just wonder if it's possible you'd end up with the consulting being so much more valuable than bingo cards that the logical thing would be to do more of the former. Something that makes $1 when you sleep is not competitive with something that makes you $1000 when you're awake, even if, ultimately, the former is a superior model. Also, I don't think anyone minds if you mention that you do consulting; your feedback here is very valuable. One of the things I appreciate about this community is that self promotion is ok as long as it's not completely out of context or otherwise annoying.
- pierrefar 16y ago
  The problem with performance-based pay is that there are quite a few variables outside your control. Say you're doing a simple A/B test that you've correctly deployed. Now imagine Big Boss Man (or Big Client Man) decides to change something else on the website that is likely to affect the results of your test. What do you do then? Suppose the website goes down and the company doesn't make its millions and now they can measure no performance increase. Then there is politics. Big Boss Man might go to his Big Big Boss Man and tell him that he deserves the pay rise because he hired you or brought you in as a consultant, and so you're just a tool to his genius. Good luck with that one. My point is simple: if the bosses or clients don't want to pay you performance, they can find a million ways to do so. Tough contracts only go so far and my suggestion is to never enter such a relationship unless you're 100% trusting of the bosses or clients.
  - redrobot5050 16y ago
    Well, in the case of these financial programmers, they negotiated a simple percentage of the daily take. In a sense, they've negotiated themselves into the "VISA" position. Use me, and life is much easier and you make more money over all -- but I get a cut out of every transaction I helped you with. Again, for these programmers, who are literally in the business of making money, its a great approach.
- kingcub 16y ago
  Patrick, I have read a lot of your articles on A/B testing and what you do to optimize your order flow etc we do very similar things in trading. I think if you saw how we looked over our trades you would see it's very similar to how you go over your analytics to try to capture more market share. You are spot on, it is not the end of it by a long shot at all. It's all about applying the `conjecture - test - learn - adapt - repeat` process over and over. The faster you can make that cycle the more successful you will be, the more efficient / powerful any of those steps is where our edge comes in. A lot of firms in all parts of business still have yet to realize that is what they are, atleast in part, blindly doing when they are successful.
drx 16y ago
This is an extreme example of why you don't screw people over, even if you lack empathy. Nobody likes to be screwed over, but most people take it in exchange for other perks (job security, for one). But people have a screw threshold, and if you cross it, this is what happens. Now, this is not the main reason not be a jackass -- on the other side of the spectrum, you usually get much in return for being nice (if only for just differentiating yourself from everyone else) -- but that's another story.
parallax7d 16y ago
A market for trading perception of value should be regulated to increments of days or weeks, not minutes. The current structure for valuating securities does absolutely no good for our society. Not that it's overly evil or anything, it's just pointless, a massive waste of time and money, and is a cancer on our economic system. It's got to be a thrilling thing to code for though.
- drx 16y ago
  Minute trading introduces very high levels of liquidity to the market. Your thinking represents a common fallacy: "I cannot immediately see any benefit to X, therefore X is pointless / should be abolished".
  - abstractbill 16y ago
    Is more liquidity always better? (It's an honest question - I have no idea myself).
    - mailanay 16y ago
      Imagine liquidity as tank full of fuel in your car. The possibilities of going with a full tank are endless. More fuel than tank's holding capacity is pretty much useless.
      - anamax 16y ago
        > More fuel than tank's holding capacity is pretty much useless. And what, exactly, is the "tank's holding capacity" for liquidity?
        gloob 16y ago
        Whatever number happens to mesh with the poster's predetermined position on the matter. If they think that HFT isn't "real work"[0], they'll set the level low. If they're a free-market fetishist, they'll say the tank is indefinitely large. Metaphors are rarely a useful approach to understanding something. [0] An amusing position for a programmer to take, considering we make completely intangible stuff while spending hours a day sitting on our asses, but one that a lot of people on this site seem to hold.
endtime 16y ago
>He says one group was generating $100,000 a day from his high-frequency trading software and paying him $150,000 a year. I'm not saying I don't want the guy to have a higher salary, but there's an implied fallacy here. It seems he should be paid relative not to how much value his code generates, but to how hard it would be to replace him.
- patio11 16y ago
  When you say "should", are you making a positive observation or a normative claim? My positive observation is that people get paid whatever amount they can successfully negotiate, and a programmer at the very top of a field with ungodly amounts of cash money flowing around is in a good position to negotiate lots, because their BATNA is "I walk one block out of this office, have coffee with someone, and a week from now I'm making seven figures and you're competing against my algorithms."
  - roel_v 16y ago
    It's a positive observation in the sense that one's actual market value is equal to the cost of replacement. The price discovery method (negotiation) is imperfect, causing the discrepancy between the market value and the actual paid price, but the point of the grandparent would still hold.
- lol 16y ago
  It's non-trivial to create a tradeable strat. If he actually created it (rather than simply implementing it for somebody), he should almost certainly be paid more than that, and would be at many firms.
- SkyMarshal 16y ago
  And making 100k/day using the tens or hundreds of millions of principal an investment bank can provide is a far cry from making 100k/day trading one's own savings.
  - gaius 16y ago
TGJ 16y ago
It is the same for every company. Employee says I do 'x' and without me, the company would not be able to operate therefore I deserve part of the profit. Thing is, the employee was hired on and agreed to do 'x' and so they do not have a right to claim any more. As such, they can strike out on their own and as the article says, learn that there is great risk to be had and choose between large risk and making millions or little risk and a small salary.
- thijsterlouw 16y ago
  I don't think those bosses have so much more risk than the programmers, yet they earn substantially more than the programmers according to the article.
- tomjen3 16y ago
  >so they do not have a right to claim any more Not of what they made in the past, but they can certainly terminate the agreement and change the rules from now on (assuming that the boss approves, obviously).
guelo 16y ago
These are leeches stealing money from 401k's and pensions.
- patio11 16y ago
  I would have agreed with you prior to hearing this argument: if someone's pension fund wants to trade 10,000 shares of a stock with a 2 cent spread, then in the next few seconds market makers are going to make $200, guaranteed. The only thing HFT changes is who the marketmaker that pockets the $200 is going to be: some day trader in the bathrobe, market maker at the exchange, automated proptrading strategy, or a sickeningly optimized HFT bot which measures execution times in nanoseconds. Either way, the pension fund is going to transfer $200 to marketmakers. What you should be worried about is your pension fund actively trading, which it is doing because it is being managed by someone who takes ~2% off the top every year and who has to justify this by showing they can beat all these damnfangled machines at stock selection. They'll almost certainly underperform the index over time and overcharge index funds by about, oh, 180 basis points or so, precisely because they insist on conveying your wealth to marketmakers every time they trade.
  - noname123 16y ago
    Umm, yes and no. Example, I'm Fidelity Bob Fund Manager; after extensive research, I decide to make a decision to buy 200,000 shares of AAPL. So I enter my buy order into my OMS screen, which slices and dices these 200,000 shares into blocks of 100 shares (as for traders not to front-run me, because a naked buy order of 200,000 shares will drive the price up and I'll overpay long after my transaction is completed). HFT program meanwhile is actively scanning the quote book on all market centers for patterns of such a huge "whale order". Bob Fund may leave discriminating traces of evidence, such as executing the same blocks of buy order under my unique MPID multiple times. Or the HFT program is hooked up to a dark pool where it's constantly sending out small sell orders for 1 share to try to sniff out and match Bob Fund's huge buy order. Or it just might be that the HFT program has reverse-engineered the Bob Fund's VWAP algorithm for slicing/dicing orders and can detect how the orders are being sliced/diced under any given market conditions. Once the HFT algorithm is certain of a "whale order." It'll actively go out to every single market center, buy up all of the remaining AAPL liquidity on those markets and then present it to Bob Fund (voila! I'm providing you with liquidity at artificially inflated price!). Mr.Bob has no choice but to buy AAPL at a maybe a penny or two higher than what he could have paid for without HFT. The flip-side of the argument for HFT traders are that perhaps, they are better dealers than traditional dealers. For all we know, there might not be any interested retail investors who are willing to trade with Bob Fund; so Mr.Bob ends up trading with traditional dealers which have traditionally higher spread on the price of their stock, as they take on more risk as a dealer because they don't have the same execution speed and high-turnover rate as a HFT dealer. Also, HFT increases nominally execution speed and brings all market center's prices in line, as if there is a NBBO on ARCA and Bob Fund's order is on BATS, HFT will essentially act as the middle-man to match the true best bid and offer together, in the quickest time. However, the other counter argument against HFT is that it actually doesn't really provide liquidity to the market, as evident by the June flash-crash. During a situation such as this, broker-dealers are suppose to step during irrational exuberance and depression and trade with irrational investors and put a stop to the crash/rise. But HFT dealers stopped trading that day, triggering a lot of people's stop-market orders and hence we saw ridiculous sell orders of Accenture at $0.01. So I'd say, HFT is a mix-bag.
jmillerinc 16y ago
I have a feeling this article confused the creators of the trading algorithms, which is what makes the money, with pure programmers, who are hired to implement someone else's pre-existing algorithms. Sometimes these are the same person, but in those cases that person almost always has a profit sharing contract, not only a base salary. (And if they don't, they're crazy.) The fact that the programmers in the article only had base salaries leads me to believe that they weren't the actual creators of the trading algorithms, so they don't really deserve a slice of the profits anyway, because someone else a) created the profit machine and b) is taking all the risks of running it. What really happens is that these programmer guys learn the trading secrets after a few years on the job, then depart to a different firm to recreate the machine themselves. There's no oppression or revolts here.
- ryoshu 16y ago
  That's an easy problem to solve. The people with the trading algorithms can just learn to program. No worries about programmers stealing trading secrets that way.
  - deleted 16y ago
    [deleted]
  - mahmud 16y ago
    HFT financial engineers can not necessarily learn software engineering in their operating time-frames. There is no "High Frequency Learning"; by the time they learn to configure a development environment they could have lost the edge.
    - kingcub 16y ago
      It's a lot easier for a good programmer to learn how to trade than for a good trader to learn how to be a programmer. Though most programmers make terrible traders and most traders make terrible programmers. A lot of depends on the company you are at, the more foresighted ones, were grooming guys for this role 5-10 years ago. And more importantly establishing a tradition of `trade developers.` Typically though the traders that become good enough programmers took an engineering discipline in college. Also, some of them are just so smart / driven that coding something good enough to make money is something they trudge through, but their code usually the ugliest thing you'd ever see this side of php.
beloch 16y ago
High frequency trading is under pretty high powered scrutiny at present. I fully expect legislation implementing trade reforms that will render the practice worthless in the very near future, whether it's frequency limits or per-transaction fees/taxes. If these guys want to spend money and time on start-ups that will likely be out of business before they come online, that's no skin off my nose. In fact, please excuse me while I laugh. These guys are basically the last players in on the ponzi scheme.
- noname123 16y ago
  Nah. Not going to happen. They introduced a bunch of legislation already in congress trying to tax per per share per transaction, all got killed very quickly; offends the All-American capitalism sensibilities too much. While I agree with you that HFT is a scam, I disagree with you that it's a ponzi scheme. It's more like ticket-scalping, so the scheme is going to go on forever, as long as SEC allows it (which they will because the sell-side lobby groups will label themselves as liquidity providers that tighten the spread) and normal people are trading. What amuses me about Main Street's outrage on HFT is that they suddenly take this expose as a new revelation that Wall Street is screwing with retail investors when the big prop shops/broker-dealers have been raping retail investors and pension plans/retirement mutual funds for decades. HFT is just the latest instrument of exploitations.
  - huhtenberg 16y ago
    A number of exchanges have already voluntarily dropped the 30ms preview. Just sayin'.
  - cturner 16y ago
    What's wrong with ticket scalping? Anti-scalping laws are a good example of the government intervening in a market to prevent natural price discovery, and to hand advantage to the sell-side.
    - ovi256 16y ago
      What's right with ticket scalping ? What value does it provide ? None.
nphase 16y ago
When they do, the security of their old, relatively low-paying gigs might start to look pretty good. The condescending tone of this line really bugs me.
- Leon 16y ago
  Yeah, that last part made the article sound like it was attempting to dissuade other programmers from choosing to strike out on their own, as if it had been written by management. But listening to management about job security is absurd, at least these days it is.
- gruseom 16y ago
  It's just the rote journalistic trope of the twisty ending. How would the article end otherwise? "Only time will tell if their get-rich dreams work out?" Too flat. It's considered better to give the reader a little frisson at the end. Bonus points for confirming the reader's pre-existing beliefs, as this one does. Count your blessings. At least the article didn't start with "Joe Schmoe, a programmer, is setting out to blah blah blah" and then end with "Back at blah blah, Joe Schmoe is still programming away, sure that millions are just around the corner."
- SwellJoe 16y ago
  Exactly! My immediate thought was, "You smug bastard." This is why I would never take a job as a programmer in the trading industry working for the big firms. I have dignity, and it would never cross my mind to put up with smug bastards taking this attitude with me all day, no matter how high the salary. It's not that the software is making people tons of money, it's that nobody respects that the software is making people tons of money (the side effect of respect, of course, would be fair compensation).
  - jteo 16y ago
    If you want to work as a programmer in the finance industry, work for a finance software firm, as opposed to a bank. At least you'll be a first class citizen.
gary201147 16y ago
Today's financial mathematicians are equally adept at programming and computational science. It seems unlikely that these guys are your run of the mill programmers.
- adn37 16y ago
  Sure they are smart. Question is: do they want to invest time to master the internals, needed to achieve high performance? Takes years to get there.
ssp 16y ago
Can someone explain in simple terms why high-frequency trading actually works? I can't understand how trading at a high frequency provides any advantage at all, except in a Martingale-fallacy way.
- deleted 16y ago
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- Elite 16y ago
  Caveat, I'm not a finance guy, but my understanding is that on a short time scale you can predict the price direction of stocks under certain conditions. For example, if I notice that there are several large orders buying a stock, I can assume that a large institution is trying to purchase a position. If you reach this conclusion quickly enough, you can buy up enough stock, temporarily hiking the price, and selling the stock back to the large institution as they are trying to fulfill their purchase order. Do this enough times, and for large enough orders, and you can make money.
- Dilpil 16y ago
  Certain trades are obvious winners- index funds available for less than the sum of their component parts for example. Everyone on the street knows they are obvious winners, so usually the trade isn't available for long. Firms have computers set up to constantly scan the markets for these opportunities. Whoever sees the trade first and gets to the exchange first ends up making all the money.
  - anonymousDan 16y ago
    But that sounds to me like it should be called low-latency trading, not high frequency?
    - sp332 16y ago
      Right so far :-) But the HFTs are not in the game for the long haul; they will immediately sell the stock to another investor, at a price between what the HFT paid for it and what the stock is worth to the other investors. That's why it's high-frequency trading. The buy and sell are almost synchronous.
jacquesm 16y ago
The value created by the work that you did for hire does not have to translate in to your salary at all, just like you're not going to have to share in the losses if the project turns out to be a dud. When a welder helps to put together an oil rig that then either makes millions of dollars or explodes, sinks and causes billions in damage the fact that he did it as a salaried employee shields him from the damage just as much as it will insulate him from taking a share in the profits. That's why it's work for hire. You get to decide up-front if that sort of thing is what you want. So if someone offers you the opportunity to program a computer and make that company millions of dollars you are being compensated for your time, not for how much money your software will make. The shareholders of the investment bank and the people that thought up the spec for the thing that you are building will have a much bigger claim to the profits than the guy that codes it up, and not surprising, they're the ones that will eventually make more money on it than you. Why programmers should be different in this way from welders is not clear to me. Everybody that works for 'big-corp' makes the same kind of deal, and if you didn't make more money for the company than you cost you probably wouldn't have a job to begin with.
- msy 16y ago
  You clearly haven't worked in finance. The traders get a percentage cut, as do the quants, it's only reasonable the hackers started asking where their cut was. However they are conflating programmers and quants here, the guy who puts together a FIX interface is a pretty replaceable cog, the guys who develop algorithms and their implementations are quite literally worth their weight in gold if they're good. The thing with the serious high-freq stuff is the line between implementation and algorithm really starts to blur, you need people who can write seriously fast code that's also bulletproof and can be turned around fast. You need a deep understand of how markets work, how feeds work, how to handle everything from fast market conditions to managing latency issues in multi-venue trade distribution setups.
  - jacquesm 16y ago
    > You clearly haven't worked in finance. Chase Manhattan bank, the Netherlands branch, formerly the Nederlandse Crediet bank, about 3 years from when I was 19 to when I was 21, both as a systems level programmer as well as an application programmer. > However they are conflating programmers and quants here Yes, but I didn't, I only spoke about the programmers. They do not come up with the models, they just lay the bricks. The algorithm developer has a different role here and is more than likely not the same guy as the one that codes it up.
Sukotto 16y ago
I'm interested in playing with algorithmic (maybe even HF) trading to see if it's fun. Can anyone recommend a source of data on the cheap so I can papertrade? Clearly realtime data feeds are going to cost... but isn't there some public repository of historical data someplace?
- nzmsv 16y ago
  NASDAQ has some sample data here: ftp://emi.nasdaq.com/ITCH/ Their website also has a description of the format: http://www.nasdaqtrader.com/content/technicalSupport/specifications/dataproducts/tvitch-v4.pdf http://www.nasdaqtrader.com/content/technicalSupport/specifi...
- jamii 16y ago
  We are actively looking for market makers for smarkets.com . No fees and very little competition, it may be worth checking out if you want somewhere easy to get started. We just released a public API: http://apidocs.s3-external-3.amazonaws.com/index.html http://apidocs.s3-external-3.amazonaws.com/index.html
  - paulgb 16y ago
    Looks fun. What's the daily trading volume like?
    - jamii 16y ago
      Since we launched in February: 6085.51 | 2010-2 6375.40 | 2010-3 51072.15 | 2010-4 194208.93 | 2010-5 111775.68 | 2010-6 65577.25 | 2010-7 The spike is from the world cup. We will probably see a similar spike in August when the premier league starts.
  - nivertech 16y ago
    Do you make markets yourself? If I take the trouble and make markets for your exchange, will I be competing with another market makers and market participants only or with the exchange too?
known 16y ago
Isn't it obvious that employers prefer to hire wage slaves.
- redrobot5050 16y ago
  You don't get wealthy working for other people. Unless you're in finance.
inboulder 16y ago
Would anyone else like to see mandatory random delays added to markets just to put these window-breaking rent seekers out of business?
kingcub 16y ago
I'm Jeff's business partner / fellow programmer. We do both algorithms and infrastructure. The markets continuously adapt. It's a constant balance between writing the code you need right now, managing the code you wrote a bit ago, tweaking your existing strategies / finding new ones. We have to know how to trade, come up with new strategies, and write fast solid software that can adapt to get a new strategy to market in very little time. After that we have to analyze our trades constantly to stay in the competition. We are market-makers (MM), so we don't care all that much about forecasting / direction. We want to fill order flow at the cheapest price that we can make a profit on. All the competition in our little MM niche of High Frequency (HF) trading revolves around a fight amongst market makers to give the best price possible to customer orders. This leads to very tight markets. That works out very well for customers. I don't fault previous employers for paying us what they did as the article mentioned. It's a lot more than I ever expected to make coming out of college. The article seemed to have a programmers versus industry slant that I don't quite agree with. In my opinion industry is being taken over by programmers. Companies have a natural upper bound they can pay any employee. After that, and I have been on both sides of this, either you can accept the comfort of a regular paycheck or you can throw that all away to take a risk and grow in a different way. If you take the risk you're throwing away a sure thing for upside. I don't have a family yet so to me it was the right time to do this. The `programmers revolt` has been over for years. Programmer's won. Markets are all electronic or will be soon. It is inevitable and good that this happens, in the same sense it is good that we put robots into factories, use statistics to optimize business processes, etc etc. It's been a longer road to getting to this point than the article mentions, my first bit advice for someone who in the trading industry and wants to branch out on their own, is it's going to be hard, just like any startup. The money you see the company you are working for making is the result of a lot of work, that you just can't appreciate until you have to do it all yourself from scratch. Which we have, twice. The article was a bit off on this, we already had our first `failure` and are trying again. This time we learned to keep our IP. With a startup, we've had to wear all the hats that as employee we didn't have to think about at all ourselves. It's a combination of awesome, daunting, miserable and satisfying, like any challenging endeavor. Personally I find creating something from the bottom up a lot more rewarding than grinding out a paycheck.
- 16y ago
takrupp 16y ago
The article is only looking at a few of the shops. The good ones pay their developers based on performance with some tied directly in to their group's PnL (top firms like Getco, Goldman [on their HFT platform only], Jump, etc) pay their experienced guys over $500k, with some of those guys on over $1MM. The Sergey A. case, where a guy makes over $1MM guaranteed, is not that uncommon. Of course, right out of school they pay low 6-figures, but after 4-5 years of proven track record, if the firm doesn't want to pay $300k+ in compensation, their competitors will. Then its the developer's fault for not making sure they are in the market and getting compensated market rate.
nivertech 16y ago
The most interesting part of this Forbes article, is that it mentions Serge Aleynikov. Erlang hacker contributing to many open source Erlang projects.

151 points by nsoonhui 16y ago

I think financial industry programmers are at the leading edge of this phenomenon (much like quants were the leading edge of programmers being paid for value rather than for hours), because they're the programmers who can most easily demonstrate that their code directly made a company millions. They're not the end of it by a long shot. Take A/B testing, analytics, conversion optimization, etc. If you are good at these, you can generate several million dollars of value over the course of a week. If you can credibly offer the prospect of results like that, some companies will pay you very well indeed.

tom_b 16y ago
I'd actually love to see more jobs that offered the opportunity to work with a small base salary but increased compensation levels based on measurable results. I'm really curious about non-startup work models that would encourage this. So far, the easiest path would seem to be via consulting, where you sold your services as business services that happened to be software-based rather than as a "warm body" to staff some open slot somewhere. It seems that overall, startups are probably lower expected value to the early employees in pure financial terms than having compensation tied to measured results for work done for some other company. I remember essays by both PG and Joel that mentioned the "value effect", PG talking about a "monster of productivity" hacker who added a bunch of value to Viaweb in a single day and in Joel's case, a summer intern who (I vaguely recall) suggested and then built the joelonsoftware jobs board. I think fogcreek offered the intern some type of stock option bonus for joining fulltime. I don't remember if the Viaweb hacker got something or already had equity of some sort.
- rwmj 16y ago
  Surely you can just invest a large proportion of your salary in company stock and achieve the same end?
  - infinite8s 16y ago
    Usually company stock is offered on much better terms when it is part of your pay package.
    - redrobot5050 16y ago
      Most corporations don't offer enough stock in their employee stock ownership plans for this to really be effective. You have vesting (which means you have to wait before it can be sold) and dilution. You can also have situations in large corporations where your performance was incredible, and by every measurement you brought millions into the company. However, some guy in division X lost billions and the stock tanked. There was an AIG employee who wrote to the NYTimes about how his bonus was retroactively taxed 95%, and he claimed it was because of this exact situation. He had nothing to do with AIG's collapse. He was part of a highly profitable division, and was asked to stay on to help turn AIG around faster. That people were upset that he got his contractual 1.2 million bonus was lost on him.
  - coliveira 16y ago
    With stocks, if you can't have control over how the company is managed, you're just playing lottery.
    - maigret 16y ago
      With stocks you have to control the company management, of course proportionally to the the percentage of stocks you're owning. Too sad most investors forget that, you can see an example with BP.
- GBond 16y ago
  >I'd actually love to see more jobs that offered the opportunity to work with a small base salary but increased compensation levels based on measurable results. Many sales positions are like this (eg. Enterprise Software). The key of such pay model is being easily measured down to the individual (which sales is). It doesn't apply to most cases because it is hard to accurately measure contributions of individual's performance of a product/result that is comprise of a team of peers. The "body shop" biz model is also easily measured (sit on seat 1 hr = pay for 1 hr).
  - matwood 16y ago
    "Sales" isn't that easy to measure. Sure, the sales person might have been the face to the other company, but were they the real reason the sale closed? I've written a bunch of small pieces of software for my current company and many new clients have said the only reason they picked my company over a competitor was my value add software. Did I see any of the sale commission? Nope.
  - maigret 16y ago
    Right, but still sale is a job only certain people can do (it's the same for programming I think) - so switching to sale is not that easy for most developers. Also if you are a very good programmer, switching to a whole other job you will not be able to reuse your programming skills like you could for a better paid gig in a slightly similar programming topic.
davidw 16y ago
> Take A/B testing, analytics, conversion optimization, etc. If you are good at these, you can generate several million dollars of value over the course of a week. If you can credibly offer the prospect of results like that, some companies will pay you very well indeed. Given the above statement, which I think is accurate, and given that you're pretty good at those things, and given the following statement from your interview: > You know what my revenue was for today? Nothing, because we’re in the dog days of summer, and sales slow to a crawl until school gets back in session. Doesn't that mean that your time would be more valuable employed doing the "million dollars of value in a week" stuff?
- patio11 16y ago
  I did some consulting over the summer, and will do some in the future. Speaking generally, clients pay me quite well but customers pay me quite well while I sleep. I'm probably not going to talk consulting on HN too often -- it might sound like advertising.
  - davidw 16y ago
    I suppose doing both is ideal; I just wonder if it's possible you'd end up with the consulting being so much more valuable than bingo cards that the logical thing would be to do more of the former. Something that makes $1 when you sleep is not competitive with something that makes you $1000 when you're awake, even if, ultimately, the former is a superior model. Also, I don't think anyone minds if you mention that you do consulting; your feedback here is very valuable. One of the things I appreciate about this community is that self promotion is ok as long as it's not completely out of context or otherwise annoying.
pierrefar 16y ago
The problem with performance-based pay is that there are quite a few variables outside your control. Say you're doing a simple A/B test that you've correctly deployed. Now imagine Big Boss Man (or Big Client Man) decides to change something else on the website that is likely to affect the results of your test. What do you do then? Suppose the website goes down and the company doesn't make its millions and now they can measure no performance increase. Then there is politics. Big Boss Man might go to his Big Big Boss Man and tell him that he deserves the pay rise because he hired you or brought you in as a consultant, and so you're just a tool to his genius. Good luck with that one. My point is simple: if the bosses or clients don't want to pay you performance, they can find a million ways to do so. Tough contracts only go so far and my suggestion is to never enter such a relationship unless you're 100% trusting of the bosses or clients.
- redrobot5050 16y ago
  Well, in the case of these financial programmers, they negotiated a simple percentage of the daily take. In a sense, they've negotiated themselves into the "VISA" position. Use me, and life is much easier and you make more money over all -- but I get a cut out of every transaction I helped you with. Again, for these programmers, who are literally in the business of making money, its a great approach.
kingcub 16y ago
Patrick, I have read a lot of your articles on A/B testing and what you do to optimize your order flow etc we do very similar things in trading. I think if you saw how we looked over our trades you would see it's very similar to how you go over your analytics to try to capture more market share. You are spot on, it is not the end of it by a long shot at all. It's all about applying the `conjecture - test - learn - adapt - repeat` process over and over. The faster you can make that cycle the more successful you will be, the more efficient / powerful any of those steps is where our edge comes in. A lot of firms in all parts of business still have yet to realize that is what they are, atleast in part, blindly doing when they are successful.

drx 16y ago

This is an extreme example of why you don't screw people over, even if you lack empathy. Nobody likes to be screwed over, but most people take it in exchange for other perks (job security, for one). But people have a screw threshold, and if you cross it, this is what happens. Now, this is not the main reason not be a jackass -- on the other side of the spectrum, you usually get much in return for being nice (if only for just differentiating yourself from everyone else) -- but that's another story.

parallax7d 16y ago

A market for trading perception of value should be regulated to increments of days or weeks, not minutes. The current structure for valuating securities does absolutely no good for our society. Not that it's overly evil or anything, it's just pointless, a massive waste of time and money, and is a cancer on our economic system. It's got to be a thrilling thing to code for though.

drx 16y ago
Minute trading introduces very high levels of liquidity to the market. Your thinking represents a common fallacy: "I cannot immediately see any benefit to X, therefore X is pointless / should be abolished".
- abstractbill 16y ago
  Is more liquidity always better? (It's an honest question - I have no idea myself).
  - mailanay 16y ago
    Imagine liquidity as tank full of fuel in your car. The possibilities of going with a full tank are endless. More fuel than tank's holding capacity is pretty much useless.
    - anamax 16y ago
      > More fuel than tank's holding capacity is pretty much useless. And what, exactly, is the "tank's holding capacity" for liquidity?
      - gloob 16y ago
        Whatever number happens to mesh with the poster's predetermined position on the matter. If they think that HFT isn't "real work"[0], they'll set the level low. If they're a free-market fetishist, they'll say the tank is indefinitely large. Metaphors are rarely a useful approach to understanding something. [0] An amusing position for a programmer to take, considering we make completely intangible stuff while spending hours a day sitting on our asses, but one that a lot of people on this site seem to hold.

endtime 16y ago

>He says one group was generating $100,000 a day from his high-frequency trading software and paying him $150,000 a year. I'm not saying I don't want the guy to have a higher salary, but there's an implied fallacy here. It seems he should be paid relative not to how much value his code generates, but to how hard it would be to replace him.

patio11 16y ago
When you say "should", are you making a positive observation or a normative claim? My positive observation is that people get paid whatever amount they can successfully negotiate, and a programmer at the very top of a field with ungodly amounts of cash money flowing around is in a good position to negotiate lots, because their BATNA is "I walk one block out of this office, have coffee with someone, and a week from now I'm making seven figures and you're competing against my algorithms."
- roel_v 16y ago
  It's a positive observation in the sense that one's actual market value is equal to the cost of replacement. The price discovery method (negotiation) is imperfect, causing the discrepancy between the market value and the actual paid price, but the point of the grandparent would still hold.
lol 16y ago
It's non-trivial to create a tradeable strat. If he actually created it (rather than simply implementing it for somebody), he should almost certainly be paid more than that, and would be at many firms.
SkyMarshal 16y ago
And making 100k/day using the tens or hundreds of millions of principal an investment bank can provide is a far cry from making 100k/day trading one's own savings.
- gaius 16y ago

TGJ 16y ago

It is the same for every company. Employee says I do 'x' and without me, the company would not be able to operate therefore I deserve part of the profit. Thing is, the employee was hired on and agreed to do 'x' and so they do not have a right to claim any more. As such, they can strike out on their own and as the article says, learn that there is great risk to be had and choose between large risk and making millions or little risk and a small salary.

thijsterlouw 16y ago
I don't think those bosses have so much more risk than the programmers, yet they earn substantially more than the programmers according to the article.
tomjen3 16y ago
>so they do not have a right to claim any more Not of what they made in the past, but they can certainly terminate the agreement and change the rules from now on (assuming that the boss approves, obviously).

guelo 16y ago

These are leeches stealing money from 401k's and pensions.

patio11 16y ago
I would have agreed with you prior to hearing this argument: if someone's pension fund wants to trade 10,000 shares of a stock with a 2 cent spread, then in the next few seconds market makers are going to make $200, guaranteed. The only thing HFT changes is who the marketmaker that pockets the $200 is going to be: some day trader in the bathrobe, market maker at the exchange, automated proptrading strategy, or a sickeningly optimized HFT bot which measures execution times in nanoseconds. Either way, the pension fund is going to transfer $200 to marketmakers. What you should be worried about is your pension fund actively trading, which it is doing because it is being managed by someone who takes ~2% off the top every year and who has to justify this by showing they can beat all these damnfangled machines at stock selection. They'll almost certainly underperform the index over time and overcharge index funds by about, oh, 180 basis points or so, precisely because they insist on conveying your wealth to marketmakers every time they trade.
- noname123 16y ago
  Umm, yes and no. Example, I'm Fidelity Bob Fund Manager; after extensive research, I decide to make a decision to buy 200,000 shares of AAPL. So I enter my buy order into my OMS screen, which slices and dices these 200,000 shares into blocks of 100 shares (as for traders not to front-run me, because a naked buy order of 200,000 shares will drive the price up and I'll overpay long after my transaction is completed). HFT program meanwhile is actively scanning the quote book on all market centers for patterns of such a huge "whale order". Bob Fund may leave discriminating traces of evidence, such as executing the same blocks of buy order under my unique MPID multiple times. Or the HFT program is hooked up to a dark pool where it's constantly sending out small sell orders for 1 share to try to sniff out and match Bob Fund's huge buy order. Or it just might be that the HFT program has reverse-engineered the Bob Fund's VWAP algorithm for slicing/dicing orders and can detect how the orders are being sliced/diced under any given market conditions. Once the HFT algorithm is certain of a "whale order." It'll actively go out to every single market center, buy up all of the remaining AAPL liquidity on those markets and then present it to Bob Fund (voila! I'm providing you with liquidity at artificially inflated price!). Mr.Bob has no choice but to buy AAPL at a maybe a penny or two higher than what he could have paid for without HFT. The flip-side of the argument for HFT traders are that perhaps, they are better dealers than traditional dealers. For all we know, there might not be any interested retail investors who are willing to trade with Bob Fund; so Mr.Bob ends up trading with traditional dealers which have traditionally higher spread on the price of their stock, as they take on more risk as a dealer because they don't have the same execution speed and high-turnover rate as a HFT dealer. Also, HFT increases nominally execution speed and brings all market center's prices in line, as if there is a NBBO on ARCA and Bob Fund's order is on BATS, HFT will essentially act as the middle-man to match the true best bid and offer together, in the quickest time. However, the other counter argument against HFT is that it actually doesn't really provide liquidity to the market, as evident by the June flash-crash. During a situation such as this, broker-dealers are suppose to step during irrational exuberance and depression and trade with irrational investors and put a stop to the crash/rise. But HFT dealers stopped trading that day, triggering a lot of people's stop-market orders and hence we saw ridiculous sell orders of Accenture at $0.01. So I'd say, HFT is a mix-bag.

jmillerinc 16y ago

I have a feeling this article confused the creators of the trading algorithms, which is what makes the money, with pure programmers, who are hired to implement someone else's pre-existing algorithms. Sometimes these are the same person, but in those cases that person almost always has a profit sharing contract, not only a base salary. (And if they don't, they're crazy.) The fact that the programmers in the article only had base salaries leads me to believe that they weren't the actual creators of the trading algorithms, so they don't really deserve a slice of the profits anyway, because someone else a) created the profit machine and b) is taking all the risks of running it. What really happens is that these programmer guys learn the trading secrets after a few years on the job, then depart to a different firm to recreate the machine themselves. There's no oppression or revolts here.

ryoshu 16y ago
That's an easy problem to solve. The people with the trading algorithms can just learn to program. No worries about programmers stealing trading secrets that way.
- deleted 16y ago
  [deleted]
- mahmud 16y ago
  HFT financial engineers can not necessarily learn software engineering in their operating time-frames. There is no "High Frequency Learning"; by the time they learn to configure a development environment they could have lost the edge.
  - kingcub 16y ago
    It's a lot easier for a good programmer to learn how to trade than for a good trader to learn how to be a programmer. Though most programmers make terrible traders and most traders make terrible programmers. A lot of depends on the company you are at, the more foresighted ones, were grooming guys for this role 5-10 years ago. And more importantly establishing a tradition of `trade developers.` Typically though the traders that become good enough programmers took an engineering discipline in college. Also, some of them are just so smart / driven that coding something good enough to make money is something they trudge through, but their code usually the ugliest thing you'd ever see this side of php.

beloch 16y ago

High frequency trading is under pretty high powered scrutiny at present. I fully expect legislation implementing trade reforms that will render the practice worthless in the very near future, whether it's frequency limits or per-transaction fees/taxes. If these guys want to spend money and time on start-ups that will likely be out of business before they come online, that's no skin off my nose. In fact, please excuse me while I laugh. These guys are basically the last players in on the ponzi scheme.

noname123 16y ago
Nah. Not going to happen. They introduced a bunch of legislation already in congress trying to tax per per share per transaction, all got killed very quickly; offends the All-American capitalism sensibilities too much. While I agree with you that HFT is a scam, I disagree with you that it's a ponzi scheme. It's more like ticket-scalping, so the scheme is going to go on forever, as long as SEC allows it (which they will because the sell-side lobby groups will label themselves as liquidity providers that tighten the spread) and normal people are trading. What amuses me about Main Street's outrage on HFT is that they suddenly take this expose as a new revelation that Wall Street is screwing with retail investors when the big prop shops/broker-dealers have been raping retail investors and pension plans/retirement mutual funds for decades. HFT is just the latest instrument of exploitations.
- huhtenberg 16y ago
  A number of exchanges have already voluntarily dropped the 30ms preview. Just sayin'.
- cturner 16y ago
  What's wrong with ticket scalping? Anti-scalping laws are a good example of the government intervening in a market to prevent natural price discovery, and to hand advantage to the sell-side.
  - ovi256 16y ago
    What's right with ticket scalping ? What value does it provide ? None.

nphase 16y ago

When they do, the security of their old, relatively low-paying gigs might start to look pretty good. The condescending tone of this line really bugs me.

Leon 16y ago
Yeah, that last part made the article sound like it was attempting to dissuade other programmers from choosing to strike out on their own, as if it had been written by management. But listening to management about job security is absurd, at least these days it is.
gruseom 16y ago
It's just the rote journalistic trope of the twisty ending. How would the article end otherwise? "Only time will tell if their get-rich dreams work out?" Too flat. It's considered better to give the reader a little frisson at the end. Bonus points for confirming the reader's pre-existing beliefs, as this one does. Count your blessings. At least the article didn't start with "Joe Schmoe, a programmer, is setting out to blah blah blah" and then end with "Back at blah blah, Joe Schmoe is still programming away, sure that millions are just around the corner."
SwellJoe 16y ago
Exactly! My immediate thought was, "You smug bastard." This is why I would never take a job as a programmer in the trading industry working for the big firms. I have dignity, and it would never cross my mind to put up with smug bastards taking this attitude with me all day, no matter how high the salary. It's not that the software is making people tons of money, it's that nobody respects that the software is making people tons of money (the side effect of respect, of course, would be fair compensation).
- jteo 16y ago
  If you want to work as a programmer in the finance industry, work for a finance software firm, as opposed to a bank. At least you'll be a first class citizen.

gary201147 16y ago

Today's financial mathematicians are equally adept at programming and computational science. It seems unlikely that these guys are your run of the mill programmers.

adn37 16y ago
Sure they are smart. Question is: do they want to invest time to master the internals, needed to achieve high performance? Takes years to get there.

ssp 16y ago

Can someone explain in simple terms why high-frequency trading actually works? I can't understand how trading at a high frequency provides any advantage at all, except in a Martingale-fallacy way.

deleted 16y ago
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Elite 16y ago
Caveat, I'm not a finance guy, but my understanding is that on a short time scale you can predict the price direction of stocks under certain conditions. For example, if I notice that there are several large orders buying a stock, I can assume that a large institution is trying to purchase a position. If you reach this conclusion quickly enough, you can buy up enough stock, temporarily hiking the price, and selling the stock back to the large institution as they are trying to fulfill their purchase order. Do this enough times, and for large enough orders, and you can make money.
Dilpil 16y ago
Certain trades are obvious winners- index funds available for less than the sum of their component parts for example. Everyone on the street knows they are obvious winners, so usually the trade isn't available for long. Firms have computers set up to constantly scan the markets for these opportunities. Whoever sees the trade first and gets to the exchange first ends up making all the money.
- anonymousDan 16y ago
  But that sounds to me like it should be called low-latency trading, not high frequency?
  - sp332 16y ago
    Right so far :-) But the HFTs are not in the game for the long haul; they will immediately sell the stock to another investor, at a price between what the HFT paid for it and what the stock is worth to the other investors. That's why it's high-frequency trading. The buy and sell are almost synchronous.

jacquesm 16y ago

The value created by the work that you did for hire does not have to translate in to your salary at all, just like you're not going to have to share in the losses if the project turns out to be a dud. When a welder helps to put together an oil rig that then either makes millions of dollars or explodes, sinks and causes billions in damage the fact that he did it as a salaried employee shields him from the damage just as much as it will insulate him from taking a share in the profits. That's why it's work for hire. You get to decide up-front if that sort of thing is what you want. So if someone offers you the opportunity to program a computer and make that company millions of dollars you are being compensated for your time, not for how much money your software will make. The shareholders of the investment bank and the people that thought up the spec for the thing that you are building will have a much bigger claim to the profits than the guy that codes it up, and not surprising, they're the ones that will eventually make more money on it than you. Why programmers should be different in this way from welders is not clear to me. Everybody that works for 'big-corp' makes the same kind of deal, and if you didn't make more money for the company than you cost you probably wouldn't have a job to begin with.

msy 16y ago
You clearly haven't worked in finance. The traders get a percentage cut, as do the quants, it's only reasonable the hackers started asking where their cut was. However they are conflating programmers and quants here, the guy who puts together a FIX interface is a pretty replaceable cog, the guys who develop algorithms and their implementations are quite literally worth their weight in gold if they're good. The thing with the serious high-freq stuff is the line between implementation and algorithm really starts to blur, you need people who can write seriously fast code that's also bulletproof and can be turned around fast. You need a deep understand of how markets work, how feeds work, how to handle everything from fast market conditions to managing latency issues in multi-venue trade distribution setups.
- jacquesm 16y ago
  > You clearly haven't worked in finance. Chase Manhattan bank, the Netherlands branch, formerly the Nederlandse Crediet bank, about 3 years from when I was 19 to when I was 21, both as a systems level programmer as well as an application programmer. > However they are conflating programmers and quants here Yes, but I didn't, I only spoke about the programmers. They do not come up with the models, they just lay the bricks. The algorithm developer has a different role here and is more than likely not the same guy as the one that codes it up.

Sukotto 16y ago

I'm interested in playing with algorithmic (maybe even HF) trading to see if it's fun. Can anyone recommend a source of data on the cheap so I can papertrade? Clearly realtime data feeds are going to cost... but isn't there some public repository of historical data someplace?

nzmsv 16y ago
NASDAQ has some sample data here: ftp://emi.nasdaq.com/ITCH/ Their website also has a description of the format: http://www.nasdaqtrader.com/content/technicalSupport/specifications/dataproducts/tvitch-v4.pdf http://www.nasdaqtrader.com/content/technicalSupport/specifi...
jamii 16y ago
We are actively looking for market makers for smarkets.com . No fees and very little competition, it may be worth checking out if you want somewhere easy to get started. We just released a public API: http://apidocs.s3-external-3.amazonaws.com/index.html http://apidocs.s3-external-3.amazonaws.com/index.html
- paulgb 16y ago
  Looks fun. What's the daily trading volume like?
  - jamii 16y ago
    Since we launched in February: 6085.51 | 2010-2 6375.40 | 2010-3 51072.15 | 2010-4 194208.93 | 2010-5 111775.68 | 2010-6 65577.25 | 2010-7 The spike is from the world cup. We will probably see a similar spike in August when the premier league starts.
- nivertech 16y ago
  Do you make markets yourself? If I take the trouble and make markets for your exchange, will I be competing with another market makers and market participants only or with the exchange too?

known 16y ago

Isn't it obvious that employers prefer to hire wage slaves.

redrobot5050 16y ago
You don't get wealthy working for other people. Unless you're in finance.

inboulder 16y ago

Would anyone else like to see mandatory random delays added to markets just to put these window-breaking rent seekers out of business?

kingcub 16y ago

I'm Jeff's business partner / fellow programmer. We do both algorithms and infrastructure. The markets continuously adapt. It's a constant balance between writing the code you need right now, managing the code you wrote a bit ago, tweaking your existing strategies / finding new ones. We have to know how to trade, come up with new strategies, and write fast solid software that can adapt to get a new strategy to market in very little time. After that we have to analyze our trades constantly to stay in the competition. We are market-makers (MM), so we don't care all that much about forecasting / direction. We want to fill order flow at the cheapest price that we can make a profit on. All the competition in our little MM niche of High Frequency (HF) trading revolves around a fight amongst market makers to give the best price possible to customer orders. This leads to very tight markets. That works out very well for customers. I don't fault previous employers for paying us what they did as the article mentioned. It's a lot more than I ever expected to make coming out of college. The article seemed to have a programmers versus industry slant that I don't quite agree with. In my opinion industry is being taken over by programmers. Companies have a natural upper bound they can pay any employee. After that, and I have been on both sides of this, either you can accept the comfort of a regular paycheck or you can throw that all away to take a risk and grow in a different way. If you take the risk you're throwing away a sure thing for upside. I don't have a family yet so to me it was the right time to do this. The `programmers revolt` has been over for years. Programmer's won. Markets are all electronic or will be soon. It is inevitable and good that this happens, in the same sense it is good that we put robots into factories, use statistics to optimize business processes, etc etc. It's been a longer road to getting to this point than the article mentions, my first bit advice for someone who in the trading industry and wants to branch out on their own, is it's going to be hard, just like any startup. The money you see the company you are working for making is the result of a lot of work, that you just can't appreciate until you have to do it all yourself from scratch. Which we have, twice. The article was a bit off on this, we already had our first `failure` and are trying again. This time we learned to keep our IP. With a startup, we've had to wear all the hats that as employee we didn't have to think about at all ourselves. It's a combination of awesome, daunting, miserable and satisfying, like any challenging endeavor. Personally I find creating something from the bottom up a lot more rewarding than grinding out a paycheck.

16y ago

takrupp 16y ago

The article is only looking at a few of the shops. The good ones pay their developers based on performance with some tied directly in to their group's PnL (top firms like Getco, Goldman [on their HFT platform only], Jump, etc) pay their experienced guys over $500k, with some of those guys on over $1MM. The Sergey A. case, where a guy makes over $1MM guaranteed, is not that uncommon. Of course, right out of school they pay low 6-figures, but after 4-5 years of proven track record, if the firm doesn't want to pay $300k+ in compensation, their competitors will. Then its the developer's fault for not making sure they are in the market and getting compensated market rate.

nivertech 16y ago

The most interesting part of this Forbes article, is that it mentions Serge Aleynikov. Erlang hacker contributing to many open source Erlang projects.