THE HARD HARD
A long, long time ago I used to be a serious rock climber. Untalented, but serious. The greatest rock climber of all time is named Chris Sharma, and he has spent his life travelling the world pushing the boundaries of what is physically possible in the sport. When a climber is working on something beyond their abilities, they call it a project. Once they finish it, it gets a name and a difficulty grade. Until then, it is just a project. Sharma spent a lot of time in Spain, where there is a tremendous community of world-class climbers. They would always ask him which project he was going to work on the next day, and he would reply “the hard one”.
All his projects were hard, though, so that wasn’t too helpful.
Eventually, he found one that was so difficult even he could not climb it. From then on, when his friends asked him which project he was working on, he responded in Spanish “La Dura Dura”
The Hard Hard.
There has been a lot of posting recently on Twitter and LinkedIn about what it takes to first get a job at an elite quantitative hedge fund, then how to survive and thrive in that most competitive environment. I spent two decades on institutional trading desks surrounded by some of the finest, most educated minds in the world, many of whom struggled mightily with the demands of the job. Working at an elite financial institution is incredibly, almost incomprehensibly difficult for several reasons:
1. People tend to incorrectly assess their capabilities relative to their peers. In extreme cases this is called the Dunning Kruger effect. It possible to stand next to an Olympic athlete and recognize the physical characteristics that may make them exceptional, potentially much more challenging to realize that the unassuming person sitting next to them on the desk is a chess Grandmaster or Math Olympiad winner. Or both.
2. There is a huge gulf between academic knowledge and practitioner knowledge, present even in students that have earned PhDs from world-class institutions. This is not a criticism of academia, more an acknowledgement of both the depth and breadth of the practitioner knowledge set and the lengths that traders and analysts will go to to acquire, evaluate and apply novel tools and techniques. Elite traders are voracious consumers of information and relentless about honing the edges that allow them to remain profitable and will tend to possess an understanding of their chosen markets & products that far exceeds anything present in a textbook that may have been written two decades ago.
3. Everyone says they are willing to work hard, but most people mean they are willing to work sort of hard…or work hard for a while, then take the weekend off. Elite trading floors are full of people who just don’t turn off, and who have structured their lives so that they can remain immersed & operational literally as much as possible. It is extremely common in turbulent markets for traders to spend 48-72 hours on the desk, and I know of at least one story about an oil desk staying at work for over a week.
4. Everything is a competition or a fight. At the end of the day, winning is the only thing that matters. Glory, power, and money accrue to the winners. The losers are ignored, have their resources taken away, and are ultimately fired. There is no average on a trading floor, there is only winning and losing, and this can be incredibly difficult to deal with over the long term.
In summary, most aspirants are trying to compete against superior individuals who relentlessly self-educate to improve their technique and technology and are willing to literally work themselves into the ground to win because winning and the money it brings are the only things they care about.
Obviously, I am telling anyone interested in a career as a quantitative trader at a cutting-edge hedge fund to give up, right?
No, I am not.
I am telling you that if you want to be a quantitative trader at a cutting-edge hedge fund you must first fully understand the magnitude of the challenge you are contemplating and realistically, rationally, and dispassionately assess your ability to meet the threshold requirements for success. For many people this will likely involve a networking and self-education process to even find out what the threshold requirements are. It may be easier to work backwards and figure out what kinds of trading-related jobs you aren’t well-suited for and (hopefully) arrive at a solution via process of elimination.
Once you have a sense of your realistic goal, then you must commit and work harder than you ever have before. The thousand other people who want the job you are eyeing most certainly will be, and as always in the trading world, it is a competition.
Another reason to work through the process and push as hard as you are able is that there are many, many more trading and trading-adjacent jobs than the small handful available at the top five quantitative hedge funds. People are generally shocked to discover that somewhere, right now, someone is making just as much money (significantly more in many cases) trading minerals and metals and diary and diesel and a hundred other lesser-known products as the rocket scientists coding execution algorithms in C++. Preparing for the hardest seat in at the toughest firm and falling short is incredibly disappointing in the short term, but it might nonetheless make you an all-conquering superhero in a less-evolved, less technically sophisticated market or product.
In conclusion, aspiring traders need to understand that working at a top quantitative hedge fund or trading firm is literally The Hard Hard. For those that seek the challenge, learn as much as you can about the markets, math, and coding. Network as much as you can to understand the demands of the job you covet at the firm you want. Embrace the challenge, because either you will succeed, or you will gain the knowledge and tools that can help you succeed elsewhere in the markets.
For those who are interested, here’s a documentary about the first ascent of the actual rock climb La Dura Dura: