Disclaimer: Take everything that you’ll find below with a massive pinch of salt. I figured I could write a short guide and send it to my friends instead of forwarding them the links one by one. Furthermore, the links I’m listing below helped me to massively increase my odds during interview processes, but be aware it’s a brutal and hard way to land a job in this industry. Odds are that no one that you know has ever experienced what you’ll be going through. Either way, here are my two cents to you help you to land you your dream job that will help you to fulfil all your dreams later in your life! Lastly, usually you won’t get much preparation time once you applied, so you’d better be ready (again, had to learn it the hard way and lost many opportunities…)…
How should you prioritise practising Coding Challenges, Speed Mental Math, Brain Teasers, and Stats?
TL;DR:
1. Brain teasers & Stats
2. Coding Challenges
3. Basic Finance Knowlegde
It depends on what role you’re aiming for. However, all of them will ask you brain teaser and stats questions. Speed mental math is more important for roles at high frequency trading companies like Flow Traders, Optiver to just name a few. For coding challenges it depends again on the companies and role. For instance, if you apply as an Algo Dev at Hutson River Trading (their title for a quant trader/researcher) you have to go through many of their coding challenges before you get to the other interview stages.
Coding Challenges
Practise your LeetCode medium/hard coding skills as in coding challenges you’ll need to be able to solve about 3-5 hard ones in less than an hour. Focus on the selection of the “73 data structure interview questions (with solutions and cheat sheet)” from Igotanoffer and then keep on practising the hard LeetCode challenges outside of their list, and yes do the hard ones…
I think it also won’t harm to go through their “71 algorithm interview questions (with solutions and cheat sheet)” while you’re at it.
Speeed Mental Math
Practise the Optiver/FlowTrader speed mental math tests here. Note, with the actual Optiver test you won’t get to skips questions, i.e. make you’re quick with all types of mental math problems. If you’re like me you’ll hit a speed limit rather quickly, thus I’d recommend to write down and practise the mental math tricks found on this YouTube channel (let me know if you find more mental math trick videos). Some tricks might slow you down but just focus on the ones that really help you in speeding up.
Brain Teasers
The more you solve the better. There are different types of questions that I lumped into this section, such as
1. Logic problems
2. Maths problems
3. Strategy game problems
4. Fermi problems (to be fair, never got those but kept it in for the sake of completeness)
Here are two PDFs I really liked whilst preparing and I think I a good way to start off:
Dice problems
Quant Trading Guide
Later I also started working through the following books:
– Quant job interview questions and answer by Mark Joshi, Nick Denson, and Andrew Downes
– A practical guide to quantitative finance interviews by Xinfeng Zhou
– Heard on the street: Quantitative questions from Wall Street job interviews by Timothy Falcon Crack
– 150 Most Frequently Asked Questions on Quant Interviews, Second Edition (Pocket Book Guides for Quant Interviews, Band 1) [This is the only one I haven’t found online but it’s available on Amazon. I’ve only heard good things about it, as in interviewer asking questions straight from it, since it’s less accessible]
Stats
A good friend of mine, who’s a Quant Researcher, recommended to me having a good understanding on “Confidence Intervals for Regression Parameters” (click on the link and whilst you’re also make sure you have a solid understanding of Chapter 7). Then, I’d recommend to go through the Elements of Statistical Learning book but focus on the chapter highlighted in Headlands Tech’s blog post.
Here are two recommendations from a Quant Researcher at Squarepoint:
– “Being very clear with «basic» statistics (e.g. what tests to use in what situation [also found this very important during interviews]). Also be very very clear in your head about linear regression and what is actually estimated and tested with the different tests. For example the different ways to arrive at the l2 penalisation and what it means. What is exactly dimensionality reduction / why. My favourite book for that is «element of statistical learning».”
– “if you make it past that it’s worth thinking more about the market [knowing what is going on in the market also shows interest… In my case it was usually a very good ice breaker and was able to bond over this during chats/interviews. I used Morning Brew to stay moderately up to date but there for sure better sources out there] and how would you reply to questions like «given this dataset, what do you do».”
– “For a bit less «geeky» funds I would recommend being very clear with Bayes.”
– “And I would also advise being very clear with how to come up with «fair value of this game» type of questions.” [E.g. you roll a fair standard dice and get as a payout the number you roll. What are you willing to pay to forgo the current number and roll again (sometimes also called the price of the optionality to roll again)?]
Basic Finance Knowledge
Make sure that you’re solid on the finance basics found in “Options, Futures, and Other Derivatives” by Hull. There are summaries and questions in the end of every chapter, which is great to speed up practising. Here’s the list a prop. trading shop gave me to practise for their Quant Trading interview:
1. Introduction
2. Futures markets and central counterparties
3. Hedging strategies using futures
4. Interest rates
5. Determination of forward and futures prices
6. Interest rate futures
(7. Swaps [I added it here since I also got some questions on Swaps])
10. Mechanics of options markets
11. Properties of stock options
18. Futures options and Black’s model
19. The Greek letters [a question about these will for sure come your way!]
20. Volatility smiles and volatility surfaces [while you’re at it also have a look at the VIX white paper]
Finally, I haven’t found any good source to practise numerical and aptitude tests. So, let me know if you found any good practice material and/or websites. Unfortunately, I haven’t found any good top hedge fund list but as a rule of thumb starting at 1B AUM is already a good sizes. Here are two blogs summarising prop trading and high frequency shops which I believe are more interesting anyways to build your own wealth:
– 47+ Best Prop Trading Firms
– 15 Well-Known High-Frequency Trading Firms
Last updated: 29/05/2023
Steven Battilana 