Launch Your Career as a Quantitative Developer: Here's How

A quant developer is yet another interesting role in the quantitative trading domain. There is a whole lot of difference between an algorithmic trader and a quantitative developer. While an algorithmic trader is the one who executes the trading strategies after analyzing the market, a quant developer is the one behind all the programming of the algorithms. 

Who is a Quant Developer?

A quant developer is a programmer who finally develops strategies with the help of a programming language. S/he is responsible for providing financial solutions to the quantitative trading industry. Quantitative developers, thus, need to have a thorough knowledge of applied mathematics, statistical models, algorithms and scientific computing.

Quantitative developers usually work at an investment bank, a hedge fund, a brokerage firm or a financial securities firm. Going forward, let us find out the types of quant developers.

Types of Quant Developers

Mainly, there are three types of quant developers in the financial domain:

• Front office developers: Quant developers who work with quantitative analysts and help implement and optimize the financial models. This implies getting the prototype code from a programming language such as Python and then rewriting it in another programming language such as C++ or Java. Front-office quantitative developers directly interface with the clients to deliver tailor-made software and analytical tools.
• Middle office developers: These are the quantitative developers who perform a middle office role at the banks. At investment banks, this implies working on large-scale systems. They are involved in coding the trading infrastructure, which helps the quantitative analysts or traders in running or executing their models.
• Back office developers: These developers are the ones who perform the role at the back office for tasks such as model validation and risk management. For this role, you need to have theoretical knowledge/skills, analytical capabilities and a deep approach to a problem. Model validation helps with solving the problems at the back end so as to avoid any further technical problems.

Next, we will find out what qualification helps to become a quant developer.

Educational Qualification to Become a Quant Developer

As we discussed in the definition of a quantitative developer, it is a mix of finance, computer science, applied mathematics, statistical models, algorithms and scientific computing, which a quant developer requires to be knowledgeable in. An aspiring quant developer must learn a coding language, especially the most common ones, such as Python, C++, C#, R and Java.

Also, the knowledge of tools is required to become a quant developer since these tools help with backtesting and finalizing the strategy for trading. Some of the general tools/platforms are discussed below in the article. Moreover, Quantitative Finance is another subject that provides the knowledge required to analyze financial markets and securities. This analysis is basically done by using mathematical models and huge datasets. Hence, the specialists in this field are known as quantitative analysts. 

Nevertheless, a quantitative developer gets much better at the job if he/she possesses the knowledge regarding the financial markets and pricing securities so as to understand what to code for the analyst. For instance, if the quantitative analyst comes up with a bull-market or bear-market strategy, the quant developer must have knowledge of the intricacies of markets as well as the prediction/pricing practice of the securities.

Hence, quant developers need not have their own strategies. They need to understand and adopt strategies to automate them perfectly. Moreover, it is equally essential to possess the knowledge of risk analytics for the management of risks to which most financial models are subjected. Hence, it is really crucial to acquire the knowledge of using quant models that help the analysts to analyse past data, and current as well as anticipated data for the future.

Let us now find out the job description for a quantitative developer.

Skills/Job Description Required as a Quantitative Developer

As a quantitative developer, the role that you take up is not only challenging but also exciting if you are into programming wholeheartedly. Also, in order to become a quantitative developer, you must know how to go about it, from honing the basic skills to mastering the advanced ones. 

• Below, I have mentioned all these skills as follows:
• Software development
• Communication skills
• Theoretical/technical skills
• Programming skills
• Machine learning and deep learning

Software development

Software development skill is one of the most important since it is an extremely important skill as a developer since it helps you understand the core of the development role. Moreover, automation requires a good knowledge of software development. This skill is highly appreciated in the finance domain as well. With all the development in your job profile, mastering the software development skill adds to the understanding of the core of the work.

Communication skills

It is extremely important that a quantitative developer maintains good communication skills/soft skills so as to be able to communicate well with the analysts and others for programming well. Knowing how to use soft skills is a plus for any quantitative developer since it increases efficiency and makes any quantitative developer successful.

Theoretical/technical skills

As a quantitative developer, you would need to develop and maintain the quant models for several functions at investment bank or financial services institutions. These functions are pricing, risk management as well as analysis. To develop such skills and to create these models, you will need strong knowledge in the statistical and mathematical domain. Some of these models which are deployed for quantitative development are:

• Consolidation model: This model helps with the consolidation of multiple business units into one model.
• Option pricing model: This model is on the basis of theories like Black-Scholes and binomial tree in trading.
• Forecasting model: This model helps forecast a stock's pattern and make the right decisions regarding investing in the stock market.
• Discounted Cash Flow (DCF) model: This model happens to be important for calculating net present value and future values in the market.
• Merger model: Also known as the merger and acquisition model, it is computed with the primary merging companies.

Programming skills

The next step is to gear yourself up by familiarizing yourself with efficient algorithms and the knowledge of programming languages such as C/C++, Python, Java and MATLAB. This will equip you to be a quant developer in the financial industry. Programming skills are the most important for a quant developer, and if you have all other skills but are not a master at programming, then you can upskill anytime with the help of online learning programs.

Machine learning and deep learning

With machine learning and deep learning knowledge, you will be able to implement logistic regression models, neural networks, LSTM, among other ML techniques in the finance industry. Moreover, machine learning technology is advancing and making it convenient for the financial domain at every step. With time, the advancement of technology and knowledge helps quantitative developers with their role on a professional level. To give you an instance, for the position of quantitative developer at iRageCapital, here are the job responsibilities:

The developer will work with our quant research/analyst team and will assist in projects to improve stock selection, portfolio construction or implementation. The main goals for this person would be around developing an internal research platform.

Skills Required:

• Strong coding and data management capabilities
• Ideal candidates would have basic knowledge of accounting and finance
• Candidates should have strong coding skills in Python (NumPy, Pandas, Matplotlib, Zipline)/Django/JavaScript etc.
• SQL capabilities and understanding of relational databases, and intermediate knowledge of finance/accounting
• Learnability, teamwork and flexibility are important traits

Moreover, the following are the tools that quantitative developers use to develop financial models and trading strategies:

• Blueshift
• Maygard
• Quantcode
• Rosetta code
• Quantconnect
• Quandl
• Quant Lib
• JQuantLib

Now, we will take a look at the salary/compensation for a quant developer.

Salary/Compensation

A quantitative developer’s financial reward/salary is tremendous, and it is so because the job of a developer involves everything from understanding markets to coding. Below, we have arranged a list of average salaries/compensation for the role of a quantitative developer in different countries:

Source: Glassdoor

Although the above-mentioned salaries are just a representation of the average base salary for a quant developer as a fresher in each country. Whereas a professional quantitative developer can earn almost around $2,50,000 a year, excluding bonuses. With the bonuses added, the salary even goes up to $500,000 per year for a successful quantitative developer.  Now, let us see what steps you can take as an aspiring quant developer.

Steps to Become a Quantitative Developer

As you have now gone through the skills required for this role and the salary/reward for the quantitative developer, now you can see the steps to becoming a quantitative developer. In this subtopic, you will find out how to map the skills with the requirements of the industry. These important steps are:

• Identifying and developing the gaps in skills
• Shortlisting career opportunities
• Preparing for the interview
• Professional development
• Identifying and developing the gaps in skills

First of all, as an aspiring quant developer, you need to find out the gaps in skills or such skills which are missing in your path. As you read in the above section, you need some technical, programming and software-related skills as well as communication skills. The best is to find out which skills are needed to be picked and covered in order to avoid any hindrance.

For instance, if you are from a financial market background and never could work on any technical skills, then you must opt for the courses which could provide you with the expertise. Since it is extremely crucial to build upon these skills, you must enrol yourself in a course specializing in that particular subject which you need. You can avail the benefits of courses offered online, such as Machine learning and deep learning in financial markets, Automated trading using Python. 

Shortlisting career opportunities

Secondly, you must shortlist the career opportunities available so that you can find out the one that deems you suitable. After shortlisting, you can begin applying for the quantitative developer role in the companies you prefer. Here is a list of top companies that hire quantitative developers:

• iRageCapital
• Citi Group
• JP Morgan Chase
• CRISIL

Preparing for the interview

Preparing for the interview is the next step to look for when aspiring to become a quant developer. It is highly recommended that you take professional help by gaining knowledge from an existing quant developer or enrol in a course such as quant interview questions preparation. It is much better if you prepare yourself with a mix of tricky interview questions for cracking the quant interview. 

Professional development

Last but not least is professional development which implies keeping yourself updated all the time, even after you have a job that you can rely on. Keeping up with the new opportunities and finding ways to better yourself professionally will help you enhance your capabilities. Also, you will be able to contribute exceptionally well to the company you are working for.