Earning to give in quantitative trading

Why earning to give in quantitative trading could be a high-impact option

If you want to earn to give, and you have strong mathematical skills, quantitative trading is probably one of the options in which you can donate the most.

A number of people we’ve advised over the years have successfully taken this path and made large donations, while also gaining valuable skills in management, software engineering, research, and other areas. They also tend to enjoy a culture that’s high-performing and more ‘nerdy’ than is stereotypically the case in finance.

One main caveat is that the industry faces many risks — these activities could become unprofitable due to regulation or competition — so it’s important to make sure you also build strong career capital.

There are also concerns that certain forms of quant trading could have a negative social impact — we’d encourage you to avoid strategies like this, and to stick to socially neutral or beneficial options.

Generally speaking, whether a particular path for earning to give is worth it depends on:

• how much you can potentially earn in the path
• the other impact you might have in the path (including avoiding jobs that cause significant harm)
• how valuable the career capital you’ll gain is
• how needed funds are in the problem areas you think are most pressing
• and how good your fit is for the path vs. your next best option

If you would be well-suited to one of our priority paths, then your potential earnings would have to be much higher for earning to give to be your most impactful option. But this is possible with quantitative trading, and it’s possible that if you’re just an exceptionally good fit for it, it could be more appealing than roles working directly on a pressing problem.

If you aren’t a good fit for a priority path, it’s more likely that earning to give could be your top option, even if you pursue a path that pays less than quantitative trading on average. Unfortunately, because of this variability, it’s hard to give one-size-fits-all advice in this area.

Read more about the pros and cons of earning to give, tips on how to think about where you should donate, and particular risks to watch out for, in our separate article, “Why and how to earn to give.”.

What does quantitative trading for earning to give involve?

Quantitative trading means using algorithms to trade on the financial markets for profit, typically at hedge funds and proprietary firms. We think that, for the most part, the direct impact of the work is likely neutral, and it might be one of the highest-paid career paths out there.

Compensation starts at around $100,000–$300,000 per year, and it can reach $1 million annually within a couple of years at the best firms. Eventually, it’s possible to earn over $10 million per year if you make partner. We estimate that if you can work as a quantitative trader at a good firm, the expected earnings average around $1 million per year over a career.

This is similar to being a tech startup founder, except that startup founders who make it into a top accelerator have more like a 10% chance of getting $30 million in 3–10 years — so the startup option involves much more risk and a major delay.

Given the expected earnings in quantitative trading, this work can enable you to make large donations to effective charities relatively quickly. This is enough to set you up as an ‘angel donor’ in many communities — meaning you could fund promising new projects that larger donors could later scale up if they’re successful enough in the early stages. (Read more about how to donate effectively.)

There are two broad pathways in quantitative trading:

• Traders develop and oversee the strategies
• Engineers create the systems to collect data, implement trades, and track performance

It varies from firm to firm, but typically, engineers get paid less while having more stability in their earnings.

Salaries can also vary significantly by firm. There are perhaps only a couple firms where it’s possible to progress to seven figures relatively quickly without a graduate degree (these include Jane Street, Hudson River Trading, and D. E. Shaw). The pay is often significantly less at other firms, though still often several hundred thousand dollars per year. Other firms offer higher earnings but require a PhD.

Many people find quantitative trading surprisingly engaging. Creating a winning trading strategy is an intellectual challenge, and you get to work closely with a team and receive rapid feedback on how you’re performing. The hours are often 45–60 hours per week, rather than the 60–80 hours per week reported in entry-level investment banking.

These jobs are prestigious due to their earnings, and you can learn useful technical skills as well as transferable skills like teamwork and strategy.

The main downsides of these positions are that they may not help you make that many good connections, since you’ll mainly only work with others in your firm, and they don’t help you learn about global problems on the job. They’re also highly competitive.

In addition, note that quantitative trading positions are very different from ‘quant’ jobs at other financial companies, such as investment banks or non-quantitative investment firms. Usually ‘quants’ are ‘middle office’ staff who provide analysis to the ‘front office’ staff who oversee the key decisions. This makes them more stable but significantly lower paid. Such firms also typically have a less geek-friendly culture.

Is quantitative trading harmful?

People often object that this path causes harm. If true, the harms might offset the benefits done by donating or could be otherwise morally impermissible.

We agree you shouldn’t take a career that causes significant harms, even if you think by doing so you can do more good overall. We explain why in our article on harmful careers.

However, we think quant trading doesn’t cause significant harms, and the impact of the work alone on society is likely neutral. There may have been cases where extremely high-frequency trading did cause harm, though, so you should carefully consider whether the type of trading you seek to do could be damaging, perhaps in unexpected ways. We discussed these issues in more depth in a separate article.

That said, since we don’t think quantitative trading causes significant positive direct impact either, almost all of your positive impact comes from your potential donations.

How to assess your fit

To assess if this path might be a good fit for you, consider the following:

• Would you be capable of finishing in the top half of the class at a top 30 school in mathematics, theoretical physics, or computer science at the undergraduate level?
• Top quantitative trading firms look for intelligence, good judgement, and rapid decision-making skills. One indication of these traits is that you like playing strategy games or poker.
• Do you have strong communication and teamwork skills? If you want to succeed in quantitative trading, you’ll need to work closely with your colleagues hour-by-hour in potentially stressful situations.
• Would you be capable of reliably giving a large fraction of your income to charity? (If you’re unsure about this, finding support in your giving though community or public commitments can help.)

How to enter this field

To become a quantitative trader, it’s helpful to have finished in the top third of your class in mathematics at an Ivy League university. Slightly weaker mathematical ability can be compensated for with strong programming ability and rationality skills (for instance, being good at poker). You’ll generally need qualifications in mathematics, physics, computer science and so on to be considered, though not always. Many jobs require a PhD, though some can be entered directly with an undergraduate degree. Applying to internships is one of the best ways to test out your fit.

For someone with the necessary mathematical skills, our impression is that this option offers very good pay and job satisfaction relative to its difficulty.

For more details on quantitative trading and how to enter, read a guide from someone with experience in the path.

Learn more

• Why and how to earn to give
• Our in-depth quantitative trading career review — especially the section on the direct impact of the work and whether it causes harm
• Why we think only a small proportion of people should earn to give
• How much do people pursuing earning to give actually give?
• Which industry has the highest paying jobs?
• How much do hedge fund traders earn?
• Our management consulting career review

Read next:  Learn about other high-impact careers

Want to consider more paths? See our list of the highest-impact career paths according to our research.

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