Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

High-Frequency Programmers Revolt Over Pay

forbes.com

Post reply on HN
Print view View original

11–20 of 175 posts

Re: High-Frequency Programmers Revolt Over Pay

#11

Post by tom_b »

patio11 wrote: post #2

I think financial industry programmers are at the leading edge of this phenomenon (much like quants were the leading edge of programmers being paid for value rather than for hours), because they're the programmers who can most easily demonstrate that their code directly made a company millions. They're not the end of it by a long shot. Take A/B testing, analytics, conversion optimization, etc. If you are good at thes…

I'd actually love to see more jobs that offered the opportunity to work with a small base salary but increased compensation levels based on measurable results.

I'm really curious about non-startup work models that would encourage this. So far, the easiest path would seem to be via consulting, where you sold your services as business services that happened to be software-based rather than as a "warm body" to staff some open slot somewhere.

It seems that overall, startups are probably lower expected value to the early employees in pure financial terms than having compensation tied to measured results for work done for some other company.

I remember essays by both PG and Joel that mentioned the "value effect", PG talking about a "monster of productivity" hacker who added a bunch of value to Viaweb in a single day and in Joel's case, a summer intern who (I vaguely recall) suggested and then built the joelonsoftware jobs board.

I think fogcreek offered the intern some type of stock option bonus for joining fulltime. I don't remember if the Viaweb hacker got something or already had equity of some sort.

Re: High-Frequency Programmers Revolt Over Pay

#12

Post by TGJ »

It is the same for every company. Employee says I do 'x' and without me, the company would not be able to operate therefore I deserve part of the profit. Thing is, the employee was hired on and agreed to do 'x' and so they do not have a right to claim any more. As such, they can strike out on their own and as the article says, learn that there is great risk to be had and choose between large risk and making millions or little risk and a small salary.

Re: High-Frequency Programmers Revolt Over Pay

#13

Post by drx »

abstractbill wrote: post #6
drx wrote: post #5

Earlier quoted context omitted.

Minute trading introduces very high levels of liquidity to the market. Your thinking represents a common fallacy: "I cannot immediately see any benefit to X, therefore X is pointless / should be abolished".

Is more liquidity always better? (It's an honest question - I have no idea myself).

Good question. I would imagine not, especially from the point of view of someone who can exploit an illiquidity.

Re: High-Frequency Programmers Revolt Over Pay

#14

Post by jbooth »

drx wrote: post #5
parallax7d wrote: post #4

A market for trading perception of value should be regulated to increments of days or weeks, not minutes. The current structure for valuating securities does absolutely no good for our society. Not that it's overly evil or anything, it's just pointless, a massive waste of time and money, and is a cancer on our economic system. It's got to be a thrilling thing to code for though.

Minute trading introduces very high levels of liquidity to the market. Your thinking represents a common fallacy: "I cannot immediately see any benefit to X, therefore X is pointless / should be abolished".

So?

Let's say all subsecond trading is abolished tomorrow, and rather than a smooth curve, all asset prices step at 1-second intervals.

What value was destroyed there?

If none, what value are these guys creating? None?

Re: High-Frequency Programmers Revolt Over Pay

#16

Post by patio11 »

endtime wrote: post #8

>He says one group was generating $100,000 a day from his high-frequency trading software and paying him $150,000 a year. I'm not saying I don't want the guy to have a higher salary, but there's an implied fallacy here. It seems he should be paid relative not to how much value his code generates, but to how hard it would be to replace him.

When you say "should", are you making a positive observation or a normative claim? My positive observation is that people get paid whatever amount they can successfully negotiate, and a programmer at the very top of a field with ungodly amounts of cash money flowing around is in a good position to negotiate lots, because their BATNA is "I walk one block out of this office, have coffee with someone, and a week from now I'm making seven figures and you're competing against my algorithms."

Re: High-Frequency Programmers Revolt Over Pay

#17

Post by jmillerinc »

I have a feeling this article confused the creators of the trading algorithms, which is what makes the money, with pure programmers, who are hired to implement someone else's pre-existing algorithms.

Sometimes these are the same person, but in those cases that person almost always has a profit sharing contract, not only a base salary. (And if they don't, they're crazy.) The fact that the programmers in the article only had base salaries leads me to believe that they weren't the actual creators of the trading algorithms, so they don't really deserve a slice of the profits anyway, because someone else a) created the profit machine and b) is taking all the risks of running it.

What really happens is that these programmer guys learn the trading secrets after a few years on the job, then depart to a different firm to recreate the machine themselves. There's no oppression or revolts here.

Re: High-Frequency Programmers Revolt Over Pay

#18

Post by silverlake »

abstractbill wrote: post #6
drx wrote: post #5

Earlier quoted context omitted.

Minute trading introduces very high levels of liquidity to the market. Your thinking represents a common fallacy: "I cannot immediately see any benefit to X, therefore X is pointless / should be abolished".

Is more liquidity always better? (It's an honest question - I have no idea myself).

Liquidity means you can easily find a buyer or seller. In what circumstance would this not be a good thing? You get minimal markups (bid/ask spread), you can get in and out of trades quickly, and you can easily determine the market value of your securities. Housing is totally illiquid: there's a big broker fee, it takes a while to sell your house, and you can only guess at its true value by comparing to recent sales of similar houses. There's some weird cases in global markets where liquidity allegedly causes problems.

Re: High-Frequency Programmers Revolt Over Pay

#19

Post by thijsterlouw »

TGJ wrote: post #12

It is the same for every company. Employee says I do 'x' and without me, the company would not be able to operate therefore I deserve part of the profit. Thing is, the employee was hired on and agreed to do 'x' and so they do not have a right to claim any more. As such, they can strike out on their own and as the article says, learn that there is great risk to be had and choose between large risk and making millions…

I don't think those bosses have so much more risk than the programmers, yet they earn substantially more than the programmers according to the article.

Re: High-Frequency Programmers Revolt Over Pay

#20

Post by patio11 »

guelo wrote: post #15

These are leeches stealing money from 401k's and pensions.

I would have agreed with you prior to hearing this argument: if someone's pension fund wants to trade 10,000 shares of a stock with a 2 cent spread, then in the next few seconds market makers are going to make $200, guaranteed. The only thing HFT changes is who the marketmaker that pockets the $200 is going to be: some day trader in the bathrobe, market maker at the exchange, automated proptrading strategy, or a sickeningly optimized HFT bot which measures execution times in nanoseconds. Either way, the pension fund is going to transfer $200 to marketmakers.

What you should be worried about is your pension fund actively trading, which it is doing because it is being managed by someone who takes ~2% off the top every year and who has to justify this by showing they can beat all these damnfangled machines at stock selection. They'll almost certainly underperform the index over time and overcharge index funds by about, oh, 180 basis points or so, precisely because they insist on conveying your wealth to marketmakers every time they trade.

Post reply on HN