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High-Frequency Programmers Revolt Over Pay

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Re: High-Frequency Programmers Revolt Over Pay

#131

Post by m104 »

jacquesm wrote: post #54

The value created by the work that you did for hire does not have to translate in to your salary at all, just like you're not going to have to share in the losses if the project turns out to be a dud. When a welder helps to put together an oil rig that then either makes millions of dollars or explodes, sinks and causes billions in damage the fact that he did it as a salaried employee shields him from the damage just…

I don't think the article was disputing the original work contracts or implying that any part of the contracts were illegal or deceptive. Instead, the programmers mentioned in the article were upset because they became aware of just how valuable their work and knowledge can be. Those past high frequency trading work contracts are over and done with, but that doesn't mean the programmers need to take the same terms for future work. In fact, with some investment of their own, they may be able to supplant some of the established trading house market with their own startups and actually receive the fruits of their labor. What a concept!

Wealth is all about percentages and the standard profit percentage share for professionals and engineers, "big-corp" or otherwise, is 0%. These programmers left to start their own trading companies, likely because the salary bumps being offered (a measly $45,000 extra on $150,000 base salary, in the example) were insulting compared to the revenue being generated directly from their work. That's demonstrable value. Consider: a 1% profit share from the example in the article would be over $300,000 per year. Not a large bonus at all for a financial managers or executive, but not an outlandish bonus for a highly valuable member of a lucrative enterprise, either.

Your last paragraph sounds a lot like, "keep your head down and be thankful you have a job." I assume you're just defending the status-quo and pointing out the tradeoff between sharing the risk/reward and being comfortably salaried. You can't possibly be implying that programmers or other skilled professionals shouldn't even try to negotiate better contracts, right?

Re: High-Frequency Programmers Revolt Over Pay

#132

Post by maigret »

GBond wrote: post #84
tom_b wrote: post #11

Earlier quoted context omitted.

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 som…

>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. Many sales positions are like this (eg. Enterprise Software). The key of such pay model is being easily measured down to the individual (which sales is). It doesn't apply to most cases because it is hard to accurately measure contributions of individual's per…

Right, but still sale is a job only certain people can do (it's the same for programming I think) - so switching to sale is not that easy for most developers. Also if you are a very good programmer, switching to a whole other job you will not be able to reuse your programming skills like you could for a better paid gig in a slightly similar programming topic.

Re: High-Frequency Programmers Revolt Over Pay

#133

Post by maigret »

coliveira wrote: post #115
rwmj wrote: post #70

Earlier quoted context omitted.

Surely you can just invest a large proportion of your salary in company stock and achieve the same end?

With stocks, if you can't have control over how the company is managed, you're just playing lottery.

With stocks you have to control the company management, of course proportionally to the the percentage of stocks you're owning. Too sad most investors forget that, you can see an example with BP.

Re: High-Frequency Programmers Revolt Over Pay

#134

Post by yummyfajitas »

jbooth wrote: post #113
gsmaverick wrote: post #103

Earlier quoted context omitted.

Possibly, but the biggest difference would be the increase in the bid/ask spread.

I don't see why high-frequency trading contracts that spread. If they overlap very briefly (say, across different markets) and nobody else has noticed yet, a trading program jumps in and arbs the difference. That increases the spread.

If they overlap very briefly (say, across different markets) and nobody else has noticed yet, a trading program jumps in and arbs the difference.

Utter nonsense. In the case of crossed markets it is illegal to trade. Trading under these circumstances would violate RegNMS and most matching engines will reject orders that would cross the markets.

HFT firms reduce the spread due to competition. If the spread is $0.03 (say $9.97 and $10.00), I can do one of two things to be at the top of the order book and be the first to trade. I can either place my order first, or I can place an order at a higher price. If I'm the fastest, I have the earliest order at price $9.97 and I get filled first in the event of a trade. In this case, I make $0.03/share. If I'm not the fastest, I can still get to the top of the book by placing an order at $9.98. This reduces the spread to $0.02, and I can only make $0.02/share.

Re: High-Frequency Programmers Revolt Over Pay

#135

Post by starkfist »

kingcub wrote: post #130
starkfist wrote: post #129

Earlier quoted context omitted.

If you're a good C++ programmer with a mathematics degree, what else do you need to know to get into work like this? Is it worth taking "MFE" style classes, like the ones offered at Baruch and NYU? Are the systems Windows or Unix? How much "advanced" math do you need to know? How much high performance infrastructure do you need to know? (networking, specialized storage & I/O, etc.) Is there a way to go directly to a…

Personally, I started in 03 programming C++ for an, at the time, small Chicago Prop trading firm. Prop firms tend to be in smaller than larger banks / hedge funds and that is the route I would try to take. There are several of them around the Chicago area. I never took an "MFE" class in college. I graduated with a CompE degree, taking most of my electives in CS. Math is important, primarily statistics. Being a good c…

Thanks for the insight.

I have an interview at one of the NYC prop shops, but it's for something more back office-y. Would it be a mistake to take this job, thinking I could move into something closer to the trading later? I've got mixed advice. Some people say it isn't too hard to shift, others say it's impossible.

Re: High-Frequency Programmers Revolt Over Pay

#136

Post by kingcub »

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…

Patrick, I have read a lot of your articles on A/B testing and what you do to optimize your order flow etc we do very similar things in trading. I think if you saw how we looked over our trades you would see it's very similar to how you go over your analytics to try to capture more market share. You are spot on, it is not the end of it by a long shot at all. It's all about applying the `conjecture - test - learn - adapt - repeat` process over and over. The faster you can make that cycle the more successful you will be, the more efficient / powerful any of those steps is where our edge comes in. A lot of firms in all parts of business still have yet to realize that is what they are, atleast in part, blindly doing when they are successful.

Re: High-Frequency Programmers Revolt Over Pay

#137

Post by JoachimSchipper »

jacquesm wrote: post #80
sfk wrote: post #72

Earlier quoted context omitted.

You were the one who said just lay the bricks . This clearly implies that laying bricks is an inferior task compared to coming up with models. EDIT:jacquesm, do you have a voting ring or why are your posts at 2 points (and mine at 0) the instant you post?

Why should I have a voting ring? If the situation would have been reversed would it be ok with you if I accused you of having a voting ring? I don't think so. If there is anybody on HN that has an aversion against voting rings it probably is me, and I wouldn't ever stoop so low as to cheat on something as silly as a conversation on a website (or anywhere else for that matter). Whoever voted for me is free to step for…

It wasn't me, but if you up-/downvote because you agree/disagree with someone, it's hardly surprising that you'd upvote one guy's posts and downvote the other. Really, there's no need to stipulate a voting ring here. (And adding one point to a comment is pointless, anyway; you'd use a voting ring to get submissions to the front page.)

Re: High-Frequency Programmers Revolt Over Pay

#138

Post by kingcub »

m104 wrote: post #131
jacquesm wrote: post #54

The value created by the work that you did for hire does not have to translate in to your salary at all, just like you're not going to have to share in the losses if the project turns out to be a dud. When a welder helps to put together an oil rig that then either makes millions of dollars or explodes, sinks and causes billions in damage the fact that he did it as a salaried employee shields him from the damage just…

I don't think the article was disputing the original work contracts or implying that any part of the contracts were illegal or deceptive. Instead, the programmers mentioned in the article were upset because they became aware of just how valuable their work and knowledge can be. Those past high frequency trading work contracts are over and done with, but that doesn't mean the programmers need to take the same terms fo…

We tried to get a percentage, figuring that our value added on top of all the infrastructure they had was worth atleast that much. Long story short, the prop firms weren't interested. It's a better for them to just hire new people, to maintain what they've got, it's that lucrative. Though that's starting to dry up as trade developers aren't cheap to hire anymore whether or not they are good. A lot of people I worked with back then have deals arranged where they get cuts now. It makes little sense for them not to.

Re: High-Frequency Programmers Revolt Over Pay

#139

Post by kingcub »

beagle3 wrote: post #128
shin_lao wrote: post #62

Earlier quoted context omitted.

HFT algorithms aren't that complex. When it comes to finding the differences of pricing between two brokers buying from the cheapest and selling to most expensive, there's no need for an advanced pricer (and there's no time anyway). The difficulty of HFT is designing a machine that can trade fast enough. I'm not sure you realize how difficult this is. You just can't take a quant and make him an über C++ programmer ov…

Have you actually done any HFT work? I know that's what most people believe, but the HFT outfits I am familiar with have algorithms that are extremely complex, and while they need to be fast, just being faster than them with a dumb algorithm won't get you anywhere.

FWIW I am an HF Programmer Trader, (Jeff Gomberg's Business Partner / Fellow Programmer actually) In certain cases being dumb and fast will get you very far. For example, with an arbitrage strategy, being able to get the arbitrage faster than someone else will make a lot of money and it is all about speed. It is that simple. The problem is that going that fast is very expensive (depending on the trade), so you have to be smart and decide if you can or can't get the other side of the arb in time, and it spirals on from there. But if you were the fastest being smart is less important and vice versa.

Re: High-Frequency Programmers Revolt Over Pay

#140

Post by SwellJoe »

VolatileVoid wrote: post #121
SwellJoe wrote: post #46

Earlier quoted context omitted.

Exactly! My immediate thought was, "You smug bastard." This is why I would never take a job as a programmer in the trading industry working for the big firms. I have dignity, and it would never cross my mind to put up with smug bastards taking this attitude with me all day, no matter how high the salary. It's not that the software is making people tons of money, it's that nobody respects that the software is making p…

Excuse me. I work as a programmer for a large investment bank, have dignity, and am respected by my users (commodities trading, sales and operations). I am also respected. However, I also took the time to learn my users' business and product-lines. One major problem that software developers have is that they don't take the time to learn their users' product. If you don't take the time to learn about what they do, why…

It goes both ways, I suppose. But, the description of the situations in this article sounded pretty much inexcusable and intolerable. And, specifically, the tone of the author was downright infuriating.

Honestly, I do know several people working in finance (Perl is apparently heavily used in that industry, and we're a Perl shop, so we meet folks in that industry quite often at conferences), and they generally seem happy with their work and their jobs. It's certainly an interesting field, and one in which you'd get to work on a massive scale, which is usually fun. I worked in the oil and gas industry for a while, and they've got big data (terabytes of it for a single well, for example). It's definitely interesting.

But, the big money guys do have a reputation for supreme arrogance, and recent events in our economy have not made them seem any less so.

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