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What in the world is a "quant"? A guide for students

Frances Chan

Careers Commentator

Find out what a quant is, whether you'd like it as a career, and where you can find internships!

💼 What do quants do day-to-day?
👍 Best parts of being a quant
👎 Worst parts of being a quant
⚖️ Work-life balance
💵 Pay
🔀 Exit options

3. Where can I find internships?

Part 1. What's a quant?

✨ "Quant" defined

"Quant" is short for "quantitative analyst." Quants are basically researchers in the world of trading. They do research to develop trading strategies that traders use to buy and sell things like commodities and stocks to make lots of money.

They're called quants because they use quantitative methods (think: mathematical models, statistical analyses, and computational algorithms) to come up with their strategies.

❓Why do quants exist?

Quants exist because the financial markets are incredibly complex, constantly changing ecosystems, akin to a dense, unpredictable jungle. In this jungle, success comes from making well-informed decisions quickly.

How do you make those decisions? That's where quants come in.

These professionals use advanced mathematics, statistics, and computer algorithms to analyze financial markets. They're like the navigators and strategists of the finance world, dissecting past market data to forecast future movements.

Why is this important?

Well, in the financial markets, better information and predictions can lead to better investment decisions. Better decisions mean the potential for higher profits.
Moreover, quants help manage risk. Investing is not just about making money; it's also about not losing it. By understanding the complex relationships between different financial instruments and market conditions, quants can advise on how to spread investments to minimize the risk of a significant loss.

High-frequency trading, where securities are bought and sold in fractions of a second, relies heavily on algorithms developed by quants. Without them, it would be like trying to navigate that dense jungle without a map or compass.

So, in summary, the quants exist because in the intricate, fast-paced world of finance, having the ability to make informed, data-driven decisions quickly provides a competitive edge.

What do quants do?

#1 Analyze data

As a quant, your primary job is to sift through mountains of data to find golden nuggets of information. These nuggets are insights that can predict future trends in the financial markets.

For example:

By analyzing the sentiment on social media, you might predict a surge in a company's stock price if people are overwhelmingly positive about their latest product.
By examining satellite images, you might predict changes in oil prices based on the amount of shadow cast by oil storage tanks.

#2 Make & improve tools of the trade

Once you have these predictions, the next step is to craft and refine the tools that traders use to navigate the financial markets. These tools are sophisticated models and algorithms designed to process information at lightning speed.

In a nutshell, quants are the masterminds behind the scenes, making sense of complex, chaotic data and turning it into actionable strategies. Their work supports traders by providing them with advanced tools to make informed decisions, much like how a navigator supports a captain by charting the best course through treacherous waters.

Part 2. Is it for me?

👍 Best parts of being a quant

Quants enjoy getting to work in an intellectual environment surrounded by some of the brightest people they've ever met.

It’s actually a great gig if you have the right kind of personality. It’s cerebral, you are in general surrounded with very intelligent people asking serious and relevant questions, and are being asked to provide answers that are accurate and to the degree they can be, factual.

It’s also quite humbling in many cases. The people attracted to Quant work are always VERY smart, and no matter how smart you are, there is always someone smarter. There are also common mistakes that come from learning quantitative disciplines, and they are generally only overcome by experience. Threading the needle between ‘theoretically possible but unworkable’ on one side and ‘correct and workable but too late’ on the other, can be very difficult.

With all that said though, I have absolutely loved my time in the quant trenches, and have for the most part enjoyed managing quant teams and staffers. It’s about finding things which are ‘true’ in the sense that they reflect the way the world actually works, whether you want them to work that way or not. And what could be more rewarding than knowing things that few people know, even when (and sometimes especially when) other people don’t want to know them, and only a very few have the intellectual discipline to really ‘know’ them in the first place?

– Former quant @ JP Morgan, Deutsche Bank, and more [LINK]

Other quants brings up that they enjoy their work because it's an opportunity to (1) do research and getting paid handsomely for it and (2) apply their passion for technical things like math and finance.

Aside from research labs at FAANG companies, there are very few jobs where you get to do academic-esque research and get paid a ton for it. Not to mention the field is full of fascinating computational problems and you get access to incredible data-sets and computational tools.

You get to work alongside BRILLIANT and INCREDIBLE people. Some of the best parts of the industry are the incredible conversations you have with colleagues. The field attracts people who have boundless energy and curiosity.

The whole reason people want to do this is because it's interesting. You get to wake up every day and constantly learn and apply graduate level mathematics/Computer Science - what more could you want?

– Quant on Reddit

1. Money, fortune, financial security & freedom. (or at least the potential for this)

2. Ambition, challenging yourself, testing your skills, and proving yourself to the world.

3. Education and interests related to math and/or financial industries.

– Quant on Quora

👎 Worst parts of being a quant

Research work is hard to quantify sometimes, which can lead others to expect a lot more from you than is reasonable.

In my opinion, the worst part of being a quant is working with PMs and analysts who have limited or no understanding of the technical aspects of your role and who simply want 'results'.

These individuals often don't understand why it takes a certain amount of time to generate and test results.

They also don't like uncertainty associated with completion dates due to unforeseen programming or modelling issues that are the nature of the beast.

Uncertainty, changes in delivery timing, and technical issues are sometimes viewed by individuals as a performance weakness with you instead of aspects associated with the role.

I've used the following analogy with some success when describing the specifics of my role with senior managers with no appreciation of my day-to-day:. 'Im not building an Excel spreadsheet. I'm building Excel and the spreadsheet'. They kind of get that.

– Quant @ an asset management fund

⚖️ Work-life balance

Quants are generally happier about their work-life balance than other roles in trading. From our survey data:

For the question "How satisfied are you with the average number of hours you spend in the office?", the typical rating given by quants was 9 out of 10 (compared to 8.7 for other trading roles).
Just 29% of quants worked over 50 hours (compared to close to 40% in other trading roles).

What explains this discrepancy?

Quants often engage in highly structured problem solving, involving data analysis, model building, and algorithm development. This type of work tends to be more predictable in terms of time management compared to the often reactive nature of trading, where market movements can dictate longer and more unpredictable hours.
The work of quants is frequently project-based, focusing on long-term developments such as creating new trading algorithms or refining existing models. This allows for more controlled planning and more flexible scheduling, as opposed to the day-to-day immediacy and unpredictability found in trading roles.

💵 Pay

According to Glassdoor, the median salary of a quantitative analyst is $177k including bonuses. Here's how much quants earn at different stages of their career.

Years of experience	Median salary (including bonus)
0-1 years	$120k
1-3 years	$148k
4-6 years	$177k
7-9 years	$191k

This may seem lower than expected as quants are known to make half a million. The following video sheds light on this notion.

Aside from personal differences, your pay will vary depending on the firm and how important quants are to the firm. Here's how a trader explains it.

General rule: the closer you are to the money the bigger cut you get. At some firms, QR [quantitative research] is closer to the money and traders are relegated to a somewhat menial role. At others, traders are closer to the money and can earn significantly more than researchers.

Your pay will also vary depending on other factors. Here's how a quant recruiter explains it.

I'm a quant headhunter. I place quant researchers/traders, quant developers, and PMs into buy-side firms (prop & hedge).

In my experience, there are certain firms that are known for paying way above their competitors, and sometimes just to stop other firms from hiring the talent. Some of these firms include Citadel (Securities & GQS), Millennium, Jump Trading & Tower Research.

Additionally, each firm has a slightly different way of paying their talent; which also varies on seniority. Examples below:

Deferral scheme. Where your bonus is split and paid across multiple years (20% year 1, 30% year 2, and 50% year 3)

100% cash. Paid in one lump (usually in Feb/March). Occasionally firms have a payback clause, where if you have to repay the money if you leave within 3/6 months of receiving the bonus

Internal funds. Some hedge funds allow employees to invest a certain amount into internal funds, which can give you returns ranging from 40-100%. This has great tax benefits

PnL (%) cut. Used specifically for PMs & senior hires in pod set-ups. Prop firms usually pay between 30-60%.

🔀 Exit options

The typical career path for quants is to move up and become a manager of other quants. And what about when you're tired of being a quant? Here are common exits options.

Tech giants: Think of big companies like Google, Facebook, or Amazon. Quants are attractive to these firms because they're great at analyzing data and making sense of complex information. They could help improve how these companies target ads, recommend products, or even optimize operations. Many quants go into big tech for better work-life balance.
Other roles in finance: Quants can switch to different areas within finance, like becoming a risk manager [link], portfolio manager, or moving into investment banking[link]. Each of these roles benefits from a quant's ability to understand and manage complex financial data.

Quants have lots of transferrable skills, so there are lots of other options – they just tend to come with a pay cut.

Where to find internships?

If working in this field sounds interesting to you, you can find lots of finance internships right here at Prosple. Search away!