Making it there

At the end of 3rd semester, I didn’t really know where I was heading in life as my grades were messed up and my self-confidence was at an all-time low. Deep down I knew I had potential and with the support of a friend, I decided to bring a change in my life.

Sometime around January 2017, I came across a competition organized by a hedge fund called WorldQuant LLC on Channel-I where the task was to make quantitative trading models and they were offering summer internships for the very first time in India in their Mumbai office through it. I knew that this was my opportunity. I left a couple of groups on campus and dedicated my entire time in learning finance and statistics. I aced this competition in March and finished 2nd in India. All this happened in less than 4 months. I was really mesmerized by the dependency of mathematics in finance, and by then, I realised where my interest was. This was how I stepped into quantitative finance. At the end of the internship at WorldQuant, I was offered the research consultant contract to work part-time with the firm. I have now completed more than a year working with the firm and ended up becoming one of their top consultants in India.

The 5th semester end-terms were over and I started to wonder where I should apply for the pre-final year summer internship. I didn’t apply at a well known trading firm which hired interns from our campus because I was sure I didn’t want to work as a day-trader/technical analyst but rather wanted to contribute somewhere in quantitative finance. I spent the December winter vacations strengthening my concepts in statistics and finance.

On coming back to campus, I was pretty chilled out and was quite confident that I would get an offer sometime soon. I focused entirely on my part-time work with WorldQaunt, made some money and just applied at 2-3 companies in Jan-Feb via LinkedIn where I got the response at the end of Feb stating they have already hired interns during December. This proved to be a big blunder from my end. Thus, if you are targeting a big hedge fund or one of the prestigious banks, start messaging their employees on LinkedIn during mid-October.

Now March was here and I started sending messages on LinkedIn to anyone working in quant finance. I knew that my chances of getting into a top-tier firm were low but even then I was confident of converting if I got an interview because I knew my stuff and had devoted an entire month of December working on it.

Thus I would advise those interested in quant finance to spend the winter vacations wisely learning new things and applying for internships instead of filling your resume doing random internships. Trust me, those internships never help.

After applying for the entire month of March, I got responses from a lot of places to reach out to them next year for a job but only a couple of them were hiring interns. One of them was Edelweiss Group and I knew that this could be my best shot. My interview was scheduled 2 weeks after I got the response and during this time I interviewed for the other hedge fund B&B Analytics whose CEO is an IITR alum. I converted this one and took a sigh of relief that I finally have an internship in hand. But I still kept preparing for the Edelweiss interview. To my surprise, they called me before the scheduled date and told me that the interview was being conducted then.

The interview lasted a little longer than an hour and was taken by 4 people asking questions from different domains: Finance, Statistics (Mainly Time-Series Analysis and some basic concepts), Puzzles, 2 Questions on Expected values and some resume based questions mainly quant trading strategies. I received the final offer a week later.

My internship period was from 10th May to 30th July. 2 weeks after the start of my internship at Edelweiss, I received a call from a major hedge fund based in Gurgaon completely out of the blue. I didn’t even remember applying there and they took my interview and offered me the internship. But by then, I had built a great rapport with my mentor and senior colleagues at Edelweiss and was enjoying learning new things in Fixed Income Products under their guidance. Hence, I refused that offer.

This interview too was on similar lines as Edelweiss but they asked the logic behind atleast 5 completely different strategies I had made.

• Some tips and suggestions if applying for a quant role:

  1. Start applying to those big banks and hedge funds during mid-October.
  2. Learn advanced statistics especially time-series analysis and develop an intuition on how market works. Try to make some innovative trading strategies which are unique using OHLC data (Open-High-Low-Close), volume, fundamental and sentimental datasets and explain this in the interview. Talk all numbers during the interview mentioning how the strategy outperformed the indexes with lesser risks. Be ready with the numbers for Sharpe Ratio, Returns and Drawdowns. If you do this well, trust me you’ll be hired!
  3. Participate in competitions from quant firms like WorldQuant, TrexQuant, Auquan or make strategies on Quantopian, this gives a big boost to your profile and increases your chance for getting an interview. The research consultant opportunity with WorldQuant is now pretty easy to get into if you understand markets and know 2-3 basic trading strategies which work well in Stat-Arb eg. mean reversion, asset efficiency ratios, capturing Earnings Announcements Trends etc.
  4. For Stats, Schweser’s FRM L-1 Book 2(Quantitative Analysis) is good way to learn and ace the interview and then you can take it forward on your end doing some advance courses on Coursera like MITOpenCourseware.
Note: Basics of Statistics are very important and are always asked in the interview. Eg. Assumptions of Linear Regression

  5. For Finance, you should know the basics of all asset classes: Equity, Fixed Income, Currencies and Commodities. Derivative products of these asset classes are very important.

     You should know the pricing of Options, Forwards and other derivatives. For this, Schweser’s FRM L-1 Book 3(Financial Markets & Products) is more than enough.

     Black-Scholes Equation is always asked in any quant finance interview. I gave 3 interviews and it was asked in all of them. You should be able to derive the equation and know its assumptions.

  6. Be ready for puzzles during the interview. I was asked in 2 out of the 3 interviews.
  7. Know either Python or R. They mostly don’t ask questions on these, but better safe than sorry.
  8. Make a different resume for different quant roles: For hedge funds, mention the numbers (profits you made from your strategy) in the work description and the datasets you used. For trading desk quant roles, mention how you made your own features using stock data and how it correctly predicts the price movements. Make use of commonly used financial jargons a lot along with the names of the models you used.
  9. Start reading The Economic Times, The Economist and stay up-to-date with the recent macroeconomic news. This will definitely help if you go and work in Fixed Income Quant Funds or Trading Desks.
  10. Look at how to apply via LinkedIn on Ram Bansal’s Internship Diaries post.

Work

Edelweiss is a traditional Indian company and the work environment was completely different from my previous summer internship at WorldQuant. Only after working here, I realized the difference between working for a FinTech company and a core finance company. The work culture at Edelweiss is very demanding and the capacity to work hard is the most important trait acknowledged by the company and its employees. The place is full of IITians and they are very friendly to work with. I was one amongst 3 Interns in Treasury Management. The other 2 were from IIT Kharagpur.

Edelweiss hires on-campus interns only from IIT Bombay in Global Markets Division and MBA students for Wealth Management. So you can apply in other divisions like Treasury Management off-campus

I worked on 3 projects during my internship.

The first two were in Fixed Income and the 3rd in FX Options. I was given a 60 page research paper covering everything about Credit Default Swaps(CDS) on Day 1 to know about it in depth.

In my 1st project, my responsibility was to get daily and weekly bond axes cover and send my analysis of the daily market movement to the Fixed Income traders in India and Singapore. In this project, I got the opportunity to work extensively on the Bloomberg Terminal which is a dream come true for any Market Data Analyst.

The Bloomberg Terminal

In the 2nd project, I made trading strategies on CDX IG, HY, EM and iTraxx Asia ex-JP CDS Indexes and for Sovereign bonds, CDS of 5 countries using Open Interest(OI) and historical spread. The previous quant experience helped a lot.

In the 3rd project, I had to make mean reverting strategies on G20 currencies in the FX Spot market. This was very interesting and I would be continuing this even after the end of my internship, collaborating with one of my senior colleague at Edelweiss.

Working till late and on weekends was very common during the first half of my internship but I finished most of the work because of it. Dominos, McDonald’s and live screening of FIFA WC matches in amazing restaurants was very common and fully sponsored by the employees.

Summing up and key takeaways:

The best aspect of the internship was working and interacting with amazing people who knew their stuff. I was given many research papers to study and had a lot of discussions on macro-economics, markets and statistics with the employees.

During one of these discussions, I came to know the harsh realities of trading and how difficult it is to sustain a long term career in it. Most of the people working in trading are trying to shift to quant finance. Therefore, this experience gave me a good understanding of what I want to do ahead.

(The research papers I had with me during the end of the internship. They are the best out there. If anyone wishes to read them, reach out to me I can share them with you guys.)

In a nutshell, there are hardly any companies hiring on campus interns for quant finance. You need to keep applying as much as possible and keep learning on the way.

As said by someone,“You don’t do incredible things by just having passion, you need obsession”.You need to have faith that hard work would be eventually rewarded and one should keep doing what he/she is good at irrespective of what others are doing. Sending innumerable LinkedIn messages and not getting a response is definitely painful but you never know when you’d strike gold!