How the Journey Began...

In a galaxy far far away… Kidding!

After about a month of exploring quantitative finance, I started mentioning to a few friends of mine that I had recently discovered an interesting career path and I had been considering going for it, I was very excited but they seemed even more confused than I was. Their first question was what is quantitative finance?

A very important question which (un)surprisingly I couldn’t answer in a concise manner, after all… did I really know what it was?

“It’s a mix of maths, finance and programming” I would say, which isn’t wrong but it’s a bit vague. Seemingly satisfied with my half-assed answer they’d then proceed to ask a much more difficult question to answer… why quantitative finance?

Most of them know me quite well and suspected what was coming, a long story with dozens of mini-stories which are crucial to fully understand the main story. Don’t worry I’ll make it shorter this time…

Why Quantitative Finance?

The story started back when I got my third job, about 8 years ago, which was my first decent salary. My first two jobs were very badly paid, I was fresh out of uni and didn’t know any better. I wasn’t on my way to becoming a millionaire but I was making twice as much as I had been making in my previous job back then, I was young and didn’t have many responsibilities, didn’t pay rent (but I did help with groceries at home) because I still lived with my mum.

My young self did not manage the sudden change in purchasing power very well (“at all” would be more accurate), frequent dinners and nights out, the latest gadgets, and more useless things… I also did a lot of travelling around the country which I don’t regret, my country is beautiful.

My “lavish” lifestyle meant I had very little savings and some debt when I first moved to the UK, but given I moved completely on my own I was forced to make new friends, explore a new city, and get new hobbies so I took this opportunity to make changes in many areas of my life. A “new country new me” sort of thing…

One of those things was my financial health and habits, they were pretty much nonexistent, and so I turned to what I knew best… Books! I started by reading about personal finance and creating healthier financial habits, which led me to implement the envelope system that I still use to this day. After a couple of years, I had cleared all my debt and had enough savings to live for about three months in case of a rainy day.

All About Numbers

Watching the numbers grow was intoxicating for me, once I had cut down my expenses to a manageable level (I still indulge myself with what’s truly important to me) the next step was figuring out a way to grow the money I was now able to save monthly… Investing was the next obvious step.

As most people and books seemed to recommend, I opened an account with Vanguard UK and bought some ETFs. I was lucky enough to see the money grow by double-digit points which further motivated me to go deeper into the subject. I started tracking my monthly net worth on a spreadsheet and it was exciting to be able to make predictions of where I could be if I kept working on my income and expenses.

My portfolio suffered a major loss during the start of the pandemic, at its worst I was almost 40% down, thankfully I had just read a book that talked about the psychology of investing quite frequently, so I managed to remain calm and I did the opposite of what my instincts were telling me, I bought individual tech companies that I thought were too big to fail (on top of buying more shares of my existing ETFs) and trusted that the market would bounce back… And bounce back it did!

After getting into basic passive investing, and picking a few successful stocks (along with a few failures, luckily the wins outweighed the losses), I wanted to be a bit more hands-on in the investing scene but I didn’t know what my options were at the time. Day trading quickly came up as an option during my research, but the more I read about it the more it seemed closer to art than science, and reading the rates of successful day traders was very discouraging as well, after all, I’m not that special. I was already familiar with value investing but dedicating most of my time plowing through dozens of financial reports a day didn’t seem like something I’d enjoy.

I was at a loss… Nothing really stood out for a few reasons, I’ve mentioned some already but there was also the issue that I’m a software engineer at heart, which means I love using technology to help me solve problems and, there’s a lot of knowledge and experience I’ve accumulated that I don’t want to go to waste. By then I had accepted finance/investing would be more akin to a side project or a hobby for me.

Catching a Break…

Several months went by and I had just been reading general finance-related books that were more like stories, to try and stay motivated, but it was getting more difficult by the book.

Then one day I decided to do something crazy and I clicked the link of a job posting LinkedIn was recommending to me. The job title read “Quantitative Developer” and the salary was along the lines of 3x what I’m making. I had seen similar job postings before but either they were for crypto companies or I just assumed they were. I have nothing against crypto, I just haven’t yet bought into it and I don’t really know much about it, I do know there have been major scandals so I’ve tried to stay away from it for now (although to be fair some major US banks have gone bankrupt recently so…).

This time I did something different and actually read the job posting, a lot of these postings are very brief and badly written, this one however described very well what the job was about and I immediately felt a sense of wonder, the posting sounded very cool and I couldn’t help but wish I had the skills to even consider applying.

“How have I not heard about this before?” I kept asking myself. I still had my suspicions as it sounded a lot like automated day trading, so I proceed to read more about this quantitative thing. Soon I realised there were several roles within quantitative finance and the role of developer wouldn’t be too hard to fill (or so people said) given my experience.

After going through dozens of blogs detailing what is quantitative finance and how to get into it, I set myself out to pick a good and simple introductory book for the subject that caught my attention, quantitative trading or algorithmic trading. In the end, I settled for Quantitative Trading by Ernest P. Chan for multiple reasons: it has decent reviews, it’s on the O’Reilly platform which I have a subscription for, and it focuses on retail investors (I’m not yet looking to completely change careers but I love the idea of implementing my own system).

And so the journey began!

Key Takeaways

• I started with personal finance to improve my financial health habits
• fell in love with testing and implementing changes to my life and investing strategies and seeing the numbers grow
• struggle to find a specific path to focus on in finance
• by chance LinkedIn recommended me a position for a quantitative developer role in a hedge fund
• started reading an introductory book on quantitative trading