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How does pay work in this field? It is commission or salery? Do these programmers have a short career span. (lose x amount of dollars and you need to leave.)

How does pay work in this field? It is commission or salery? Do these programmers have a short career span. (lose x amount of dollars and you need to leave.) How much could someone make in this field. Software engineers regularly make 100K so do these guys make more to justify the risk?

michaelochurch 12y ago
How does pay work in this field? It is commission or salery? Salaries in finance are low compared to comparable jobs. Bonuses can be very high. A senior programmer who'd make $150k in tech will probably get $130k in a hedge fund, but the bonuses... can be anywhere from 0 to 1000%. Median is probably 30%. Market conditions play a role. Sadly, compensation has been getting worse for quants over the years. It used to be that you could take a $500k all-in for granted just for knowing college-level math and programming. That's no longer true. Do these programmers have a short career span. (lose x amount of dollars and you need to leave.) No worse than startups. It's probably better, to be honest. The age discrimination isn't nearly as bad as in the VC-funded world, people are less-often fired for stupid reasons in hedge funds, and the ethics are generally better in finance than in the VC-funded world. Finally, the lower status of programmers may be more visible in finance (i.e. you're clearly second-rate compared to traders) but less onerous. Engineers are third-class citizens in the Valley, with their 0.01% equity slices of post-A startups, and because the VC-funded startups aren't very selective and a third of the programmers are incompetent, they feel a need to use "Agile" micromanagement that you wouldn't see at a hedge fund. If you lose serious money (meaning hundreds of thousands) doing something stupid, you'll get fired. If you're unluckym good funds won't fire you. A lot of statistical arbitrage is taking "51/49" bets. How much could someone make in this field. The upside is very high. That said, typically it's not going to be more than 25-50% more than you'd make elsewhere. You need to manage your career aggressively and become someone's protege if you want to get above $300k... but it can be done, and some people make 10-50 times that.
- tptacek 12y ago
  Wait, let me see if I understand the logic here. Engineers are second-class citizens in finance, but third-class citizens in "the VC-funded world". Evidence: engineers get "0.01% equity slices of post-A startups". What percentage of a hedge fund does a typical engineer get?
  - kasey_junk 12y ago
    I get what you are trying to say, and don't agree with the either the second/third class citizen descriptions, but in hedge funds/prop trading shops compensation is typically not equity based, but is very typically profit sharing based, with the engineers getting a pretty hefty share of any trading profits. In fact, when you hear about giant bonuses in finance what you are often really hearing about are groups that traded salary for profit sharing and it paid off. In the context of finance, this comes off as shady or outrageous but in the context of startup hits it doesn't. Lets just say, having worked under option based equity arrangements and profit sharing arrangements, they both had their positives and negatives, but only ever felt like a system was stacked against me, as an employee, when equity/options were on the table.
    - tptacek 12y ago
      Sure, but let me go a little further out on this limb and challenge you, too: in established trading firms --- DRW, Two Sigma, that sort of place --- what percentage of the returns do you think go to non-founding engineers?
      - waterlesscloud 12y ago
        In established tech companies like Google or Facebook, what percentage of equity goes to newly-joined engineers?
        tptacek 12y ago
        Way, way, way out on a limb, but here goes: a higher percentage of the total return that goes to engineers at DE Shaw (a firm I did not select at random.)
throwaway283719 12y ago
You generally receive a salary (dependent on what you do, what kind of firm you work for and how experienced you are, but $60-200k probably captures 95% of people) and a performance-based bonus which could be anywhere from 0x to 10x your salary, again depending on exactly what you do, how the firm performs that year, how your team performs that years, and how "close to the money" you are. I don't think programmers in the field have an appreciably shorter lifespan than in other industries. I don't think that working in an algo trading company is intrinsically any riskier than working in any other kind of firm. The hours tend to be longer and the work tends to be slightly more stressful than if you are working at a generic bigco, however.

michaelochurch 12y ago

How does pay work in this field? It is commission or salery? Salaries in finance are low compared to comparable jobs. Bonuses can be very high. A senior programmer who'd make $150k in tech will probably get $130k in a hedge fund, but the bonuses... can be anywhere from 0 to 1000%. Median is probably 30%. Market conditions play a role. Sadly, compensation has been getting worse for quants over the years. It used to be that you could take a $500k all-in for granted just for knowing college-level math and programming. That's no longer true. Do these programmers have a short career span. (lose x amount of dollars and you need to leave.) No worse than startups. It's probably better, to be honest. The age discrimination isn't nearly as bad as in the VC-funded world, people are less-often fired for stupid reasons in hedge funds, and the ethics are generally better in finance than in the VC-funded world. Finally, the lower status of programmers may be more visible in finance (i.e. you're clearly second-rate compared to traders) but less onerous. Engineers are third-class citizens in the Valley, with their 0.01% equity slices of post-A startups, and because the VC-funded startups aren't very selective and a third of the programmers are incompetent, they feel a need to use "Agile" micromanagement that you wouldn't see at a hedge fund. If you lose serious money (meaning hundreds of thousands) doing something stupid, you'll get fired. If you're unluckym good funds won't fire you. A lot of statistical arbitrage is taking "51/49" bets. How much could someone make in this field. The upside is very high. That said, typically it's not going to be more than 25-50% more than you'd make elsewhere. You need to manage your career aggressively and become someone's protege if you want to get above $300k... but it can be done, and some people make 10-50 times that.

tptacek 12y ago
Wait, let me see if I understand the logic here. Engineers are second-class citizens in finance, but third-class citizens in "the VC-funded world". Evidence: engineers get "0.01% equity slices of post-A startups". What percentage of a hedge fund does a typical engineer get?
- kasey_junk 12y ago
  I get what you are trying to say, and don't agree with the either the second/third class citizen descriptions, but in hedge funds/prop trading shops compensation is typically not equity based, but is very typically profit sharing based, with the engineers getting a pretty hefty share of any trading profits. In fact, when you hear about giant bonuses in finance what you are often really hearing about are groups that traded salary for profit sharing and it paid off. In the context of finance, this comes off as shady or outrageous but in the context of startup hits it doesn't. Lets just say, having worked under option based equity arrangements and profit sharing arrangements, they both had their positives and negatives, but only ever felt like a system was stacked against me, as an employee, when equity/options were on the table.
  - tptacek 12y ago
    Sure, but let me go a little further out on this limb and challenge you, too: in established trading firms --- DRW, Two Sigma, that sort of place --- what percentage of the returns do you think go to non-founding engineers?
    - waterlesscloud 12y ago
      In established tech companies like Google or Facebook, what percentage of equity goes to newly-joined engineers?
      - tptacek 12y ago
        Way, way, way out on a limb, but here goes: a higher percentage of the total return that goes to engineers at DE Shaw (a firm I did not select at random.)

throwaway283719 12y ago

You generally receive a salary (dependent on what you do, what kind of firm you work for and how experienced you are, but $60-200k probably captures 95% of people) and a performance-based bonus which could be anywhere from 0x to 10x your salary, again depending on exactly what you do, how the firm performs that year, how your team performs that years, and how "close to the money" you are. I don't think programmers in the field have an appreciably shorter lifespan than in other industries. I don't think that working in an algo trading company is intrinsically any riskier than working in any other kind of firm. The hours tend to be longer and the work tends to be slightly more stressful than if you are working at a generic bigco, however.