How to Become a High Frequency Trader: A Guide for Computer Science Engineering Students
Introduction
The high frequency trading (HFT) industry, a subset of the wider financial industry, requires a unique blend of technical expertise, mathematical knowledge, and programming skills. If you are a computer science engineering student from India aspiring to enter this field, this article provides a comprehensive guidance on how to get started.
Understanding the HFT Landscape
The path to becoming a high frequency trader involves more than just reading research papers. It requires a deep understanding of both computer science and mathematics, as well as significant technical skills and substantial investments. Unlike other sectors, HFT demands a technical skill set that crosses over several disciplines.
One of the biggest challenges is the financial investment required. High frequency trading firms require colocated servers at exchanges and extensive software development, making it a costly venture to start. However, you can start preparing by honing your skills in programming, mathematics, and computer science.
Academic and Skill Development
General Education:
For those early in their education, it is advisable not to specialize in just one area. Instead, focus on gaining a broad understanding of both mathematics and computer science. While skills in C/C and Java are recommended due to their performance capabilities, ultimately, your choice might depend on which area you find more appealing. However, a strong foundation in both areas will benefit you in the long run.
Financial and Economic Knowledge:
While knowledge of economics and finance can be helpful, overemphasis on these fields might not be necessary. Professionals in this field are often mathematicians, programmers, or have strong fundamentals in both mathematics and computer science. A major in Computer Science, Mathematics, Quantum Mechanics, Physics, or Statistics could provide you with the necessary skills and knowledge.
Getting Your Foot in the Door
The best way to start your HFT journey is to get a job in a big bank or hedge fund where you can work in their HFT division. Alternatively, you can search for opportunities in specialized HFT firms. Here are some steps to help you get there:
Get a Degree: Pursue a degree in Computer Science, Math, or Finance. A strong academic background is necessary to gain the necessary skills and knowledge. Seek Employment: Apply for jobs in large banks or hedge funds where HFT divisions exist. If you are hired, try to get transferred to the HFT department. Develop Relevant Skills: Work on developing skills in financial algorithms, low-latency software development, and machine learning. This will enhance your chances of being hired by an HFT firm.What HFT Entails
Technical and Entrepreneurial Skills:
HFT is a highly technical field, requiring candidates with expertise in mathematics, physics, computer science, and electronic engineering. In India, having a strong engineering background from a reputed college combined with coding skills can give you a competitive edge. While a degree is important, practical skills and achievements in coding are equally significant.
HFT firms are typically small, often with fewer than 100 employees. Therefore, a strong entrepreneurial mindset and a meritocratic approach are essential. The compensation in HFT is performance-based, often a multiple of the salary, and you must demonstrate the ability to generate revenue to earn your bonus. The pace of work can be intense, with long hours (10-15 hours per day) being common, but the intellectual stimulation and compensation often outweigh the workload.
Final Thoughts
While HFT is a lucrative field, it is not the only option in the finance and technology sectors. There are other well-paying, interesting roles available that do not require the same level of specialization. Take into consideration your interests and lifestyle before making a decision.