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How and Why Wall Street Programmers Earn Top Salaries
msmoriarty writes "Given the level of interest in the recent highest-paid programmers discussion, our reporter decided to do a follow-up looking into the languages and skills needed to work on high-frequency trading systems. There's actually a pretty wide range of languages/tools used, but Linux is the 'default' OS and, not surprisingly, the 'ability to work under pressure when the traders are screaming at you' is a must-have skill."
"In high-frequency trading (HFT), programmers eke out every last incremental tick in performance to build algorithms that battle other algorithms for computational supremacy and millions in profits -- and earn a lot in the process."
Skimming money off billions of micro-transactions. Ahh, yes... forget investing in ideas and backing well managed companies... this is the way capitalism was envisioned.
"the 'ability to work under pressure when the traders are screaming at you' is a must-have skill.""
Yeah, most of the 'traders' I've met were complete assholes, probably because they realised their high salaries were more down to luck than skill.
Fortunately when I screw up air traffic controllers just have to start rerouting airliners with hundreds of people on board so they don't crash into each other, so I clearly couldn't justify being paid a Wall Street salary. I can't imagine the stress level of having a 'trader' screaming at me.
I'm past the whole "a-holes can yell at me if they pay me enough" phase.
we all understand what 'arbitrage' is. when the synthetic CDO market calls their deals 'arbitrage' we all know its fucking bullshit.
when the sales guys in the brochures talked about the 'AAA' ratings on these pieces of 'arbitrage', it was all bullshit.
when Lloyd Blankfein calls it 'hedging, not betting', its fucking bullshit. ]
there is absolutely nothing, whatsoever, 'valuable' behind a credit default swap. it is a bet. that is a fact, and its not rocket science, and its not a conspiracy theory, and its not "the ignorant and alarmist" decrying some nefarious boogey man. its the basic fucking fact of what fucking happened.
I beg of you. stop lying. nobody believes you anymore. this is like the scene in Shattered Glass when Peter Saarsgard has to finally explain to Hayden Christiansen that the whole charade has ended.
the financial industry has no clothes. we all know it. there is no point in pretending.
"They can't wait for the safe development cycle."
This, from the people in charge of trading amazingly large amounts of money in a market which influences the global economy in a big way. (remember that billion vs. million mix-up awhile back that caused some pretty big problems until it was fixed)
You call it risky, I call it reckless. You try what you're doing in any other field and you'd be fired pretty damn quick.
That said, I'm not so much angry at you as I am at the people who ask you to do this.
-1 disagree is not a modifier for a reason. -1 troll, flaimbait, redundant, overrated are NOT acceptable substitutes.
Just because you're good at what you do doesn't mean that what you do is good.
Microseconds? Why not nanoseconds? How about femtoseconds? Why wouldn't that make just as much sense?
What could possibly change in the underlying value of a corporation made up of flesh and blood humans and capital with decades of depreciation in a fucking microsecond? Here's a hint: nothing. You are not investing, or trading, but simply racing other gamblers. Investing doesn't benefit from microsecond response times, and trading doesn't need it either. People could buy IPO shares just fine over the phone. Nobody ever needed a microsecond response time to buy a thousand bushels of wheat, and never will, because bread is baked daily, not a million times a fucking second.
If politicians had two braincells to rub together, they'd enact a law to prevent trades faster than some tick, say, an hour. Your 'trading' company would go out of business in a week, and nobody would care. Farmers would still sell their wheat, and bakers would still buy it, but without you leeches skimming off the top.
I am most likely better than you at each and every aspect of software (and HDL) development you have mentioned. Except, of course, "debugging in minutes" -- that kind of irresponsibility would get me fired. I also have to work long hours, and have to have clear understanding of complex issues unrelated to software.
Except I do embedded software and FPGA development for professional audio equipment. Each device I worked on, each firmware release, each line of code, does something useful for many, many people. Some of those people don't even know that audio equipment, leave alone software, is involved with what they are hearing. Large fraction of my work ends up being free/open source, too -- platform, drivers, etc.
I also don't have any problems with posting here under my real name. Or with telling you, and people like you, to die in a fire.
Contrary to the popular belief, there indeed is no God.
Do you ever buy or sell stock? Perhaps indirectly, through a mutual fund or 401k type plan? If so, then you benefit from high liquidity in the market. HFT and other Wall Street shenanigans do skim from the top, but they also provide liquidity. It's almost certain that the liquidity benefits small market players more than the skimming hurts them. In other words, the money they're skimming comes from the banks and brokers rather than you and me.
For example, take the stock of Red Hat (http://finance.yahoo.com/q?s=RHT). Yahoo Finance right now shows that, as of the last time the market was open, I could buy 100 shares for $42.56 (that's the "ask" or best current asking price), or I could sell 300 shares for $42.09 (the best available "bid"). That's a bid-ask spread of about 50 cents. That spread is a hidden cost to either buying or selling stock: If you buy and then sell RHT, you will have paid about 50 cents per share just for the privilege, even if nothing in particular happens to the company. Let's split that 50-50 and say that every stock transaction in RHT (buy or sell) costs you 25 cents per share in implied fees.
Those bids and asks are set by individuals and companies who are competing. They want to get a good deal for either buying or selling the stock, but they also know that if they set asking price too high or their bid too low, they'll never make any trades. The more competition there is, the tighter the bid-ask spread will be. HFT and other algorithmic approaches allow firms to set prices on tons of stocks without requiring human attention for each one, which dramatically increases the competition and thus tightens the bid-ask spread.
In this example, if you outlaw HFT and similar trading strategies, maybe RHT will have a spread of $1 intead of 50 cents. Maybe you'll be happy that HFTers aren't making ther 5 cent skim off the top anymore, but it'll be cold comfort when you're paying 25 cents more on each transaction and it's just going to a different Wall Street firm.
If you think I'm exaggerating the effect of computerized trading of the spread, have a look at slide 8 (page 4) of this study: http://fisher.osu.edu/~diether_1/b822/trading_costs_2up.pdf. Starting in 1960, the average bid-ask spread has ben dropping steadily every decade to a small fraction of what it used to be.
Background: I am an actuary trained in quantitative finance. I've never worked in Wall Street or done any HFT or other algo trading.