Quant vs Trader at an Algo Prop Trading Firm

[backtoschoolsoon]

For a proprietary trading firm that only uses algorithmic trading strategies, what is the difference between a quant and a trader? It seems like there would be a lot of overlap in these roles since they both involve programming and creating trading strategies. Obviously, the trader is the one to actually execute the trading strategies. I am also guessing that the quant could assist the trader if the trader needs some kind of modeling or statistical analysis done. Is that the only difference? Also, if the quant is creating trade strategies, why isn't it more common for the quant to receive a performance based salary just like most traders? Or do they, just in the form of a bonus in addition to their salary? Also, how common is it for a quant/trader to actually be the same position? Remember, this is all regarding proprietary trading firms. Thanks in advance for your responses!

 

[Keith Tan]

in risk-reward ratio space, the trader gets rewarded for taking on risk. if the trade goes wrong, he is responsible as well. the quant is not subjected to any form of risk.

the quant is, afterall, a "glorified" programmer. while a quant can always be replaced with another cheaper quant, one cannot replace a star trader who knows how to bring in the profit.

when the quant is willing to take on risk even with his/her own baby, then the quant will be in the same position.