Algo trading internship, What do I need to prepare?
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One thing to clarify before we start. In the business of algorithms, we're actually quite new. We have two operating algos that we're working on, and we're testing a few more. We look to this to become a very significant part of our business, but right now, we're quite small.
Are you talking about algos in the sense of order-execution algos, for finessing order placement, or do you mean alpha-capture algos? For order execution, we have quite a few; we call them trading tools. We have a group in India developing those for the traders. They're for internal use. The way we work with the completely automated trading systems is that we have a couple of developers in-house, and we also team up with developers all over, forming joint ventures with them.
On the proprietary trading side, you've got the automated part, which is your department, isn't it? Let me take a step back. I started off recently in the group - I worked here in the past and algorithmic trading interview returned - Algorithmic trading interview was heading up the office in Shanghai, then I opened another office in Beijing and so was head of our business in China. I am Israeli-American by citizenship. We acquired last year a company in Israel that was involved in proprietary trading.
I was asked to come back and head up what we have here in Israel. Just recently, we have started developing the automated trading, and that's where slowly most of my focus is shifting.
I'll algorithmic trading interview doing that full-time once it's at a level where it needs that much management. At the moment, algorithmic trading interview you involved in prop trading more generally, or do you have some responsibility for selling clearing services, and so on?
I have no responsibility for clearing at all. I am purely prop trading, and I will algorithmic trading interview moving over to automated prop trading. Just briefly, thinking about the manual traders you've got, are they employees, or on algorithmic trading interview profit share; how do you work it? They are full-time employees. We recruit them from the top schools globally.
We primarily recruit traders with no experience and then we train them. We don't teach them a specific style, and that's where this becomes really interesting. They bring their own personal touch to the market. They share profits, and that's a huge incentive, but they're full-time algorithmic trading interview.
How did the automated part of this come about? Yours is not a small organisation - where algorithmic trading interview it come from? It was a natural progression.
It became very clear to us a while back that we needed to have more of an automated element to our trading. There were two ways to go about it. One was to focus on building in-house and one was to algorithmic trading interview through joint ventures. We decided that the trading tools - execution algos, et cetera - were at a simple level and could be developed in-house, but we thought it algorithmic trading interview be great if we could team up with very good people all over the globe to form joint ventures for the creation of fully automated solutions.
We have two of those that have been developed in-house as well, so we're not neglecting that side algorithmic trading interview it, but we're looking at the opportunities we can capture because of our global exposure, because we come into contact with great people wherever we are. With the stuff you've developed in-house, and with the stuff you're seeking to do as JVs with outside specialists, would you say there's a particular style of automated model that you're after, or are you after a diverse portfolio of approaches and models?
We're not looking for a specific style, but we are looking for something that can definitely be leveraged in terms of size, that we can build on.
We're looking less at ultra-low latency, that's not the remit we want to get involved in; we're looking more at the strategy ones. In terms of the strategy, we're open to anything. We come across some very intriguing ones. Looking at your organisation algorithmic trading interview what it does elsewhere, you must have a shedload of clearing memberships.
So you must have a physical presence in an awful lot of the co-lo facilities, presumably, or you're at least close to the matching engine.
So in many ways you've amortised a lot of the cost that other new entrants to the market would have for high-frequency stuff, algorithmic trading interview you're not necessarily going to be buying new rack space, new lines, new everything, because you're already there. So I'm therefore doubly intrigued as to why you're not so interested in that low-latency space when you've bypassed a lot of the fixed costs up front.
When we algorithmic trading interview at it, we know what we are, and we know what we're not. We're a trading company - which is to say, the part where I'm operating is a proprietary trading group inside a financial-services company.
But we're not a technology company. We're looking always at what our competitive advantage is. To compete against somebody who's already there, who already has a lot of experience, for us to jump in and compete, the costs are very high; even though we have the rack space, that's only one small part of the algorithmic trading interview. We looked at it, and we decided we can bring our competitive advantage to the table in terms of developing the strategies.
Obviously, when we develop the strategies, even though we're not looking to be ultra-low latency, the fact that we are that close to the exchange in a lot of locations does give us an advantage in execution. But we're not looking for that to be solely our advantage. Again, in view of your having clearing memberships across the globe, do some of your strategies look at fairly sophisticated multi-leg trades that are arbing across multiple markets and possibly time zones, or are they all single-market strategies?
The majority are single-market strategies. We have some that are trading the same algo in more than one market, but not against each other. We have one that does work across markets. That's all my preconceptions out algorithmic trading interview the window straight away. I looked at the organisation, and thought, these guys are in a great place to do A, B and C, and you're not doing any of it.
Inwhen screen trading came in, the big thing was all the prop groups. We were still clearing, and said instead of chasing after clients, why don't we create our own? That's where our thinking comes from. We were still in London, where there was a lot of competition, so we said why don't algorithmic trading interview do it in Israel?
We went in There, we had the competitive advantage of a lot of really high-quality guys: Inwe moved on to other places. So we started in clearing, now we're proprietary, and we combine the two to create a really unique competitive advantage. What was interesting, when we started going abroad inwe went to India, China, eastern Europe, places that people associate with outsourcing, particularly the back office. We had our back office algorithmic trading interview London and all our traders in India.
We're used to changing people's preconceptions of how things are done; we're used to thinking a bit creatively. You have fantastic access to enormous intellectual capital in those countries, as you've obviously found out. With the two models you've developed in-house, where is your alpha development centre? Where do those two models come from? Specifically they came from Israel, but there's no limitation.
We don't have a algorithmic trading interview centre. We're trying to step away from that. We don't want to look at one location because we find culture, creativity, all over - there's no reason why somebody in India, say, can't come up with a great algorithmic trading interview to create alpha. Those limits are just limits we place on ourselves; why do that? These two started in Israel because that just happened to be the case, but there's no reason to say that, two or three years from now, Israel will necessarily be the place that created most of the alpha.
So let me get this clear. Any prop trader, or any person working for the firm in any of your centres, could come up with an idea - could say, this is the approach I take with my manual trading but I think it would automate really well, how about knocking up a model for it?
Is that the way it would go? It could go, yes. We're very happy to explore ideas; obviously we're not going to go after every one, but we encourage our guys to talk to us. They're in the markets, they see stuff a lot of the time that we as managers don't see. We have hundreds of people trading the algorithmic trading interview, extremely intelligent and very creative guys, they come up algorithmic trading interview great ideas.
That's one source from which we create algos. The other main source is because of our global spread we have offices in India, China, Hungary, Romania, Israel, Mauritius, and we have clearing offices in London and Chicago, which gives us a lot of exposure so we get to meet a lot of people who come to us with algos that are already working.
When we sit down with somebody who's not from the group, it's usually somebody who's quite a few levels beyond the idea stage. We're looking to work with them to optimise their model, and bring it to the best assets through our connectivity to the exchanges. With the guys in-house, presumably by now people in the organisation are aware that you're the go-to guy, becoming more and more the go-to guy, for the automated stuff.
Is the as assumption that wherever they are, you'll get an email? How does it work? We're still hammering out the exact details, but the idea, yes, is algorithmic trading interview they'll tell their local manager about their idea, that manager will pass it on to me, I'll examine it with my team and we'll think it through from a lot of different perspectives. If we want to do it, we have the option of doing it locally to the guy, adding algorithmic trading interview quant, say, and somebody to write the algo, or we'll do it centrally.
With algorithmic trading interview lot of trading models and trading ideas, there are often a lot of sub-components to the overall model, and you often algorithmic trading interview that there are bits of a model that are basically re-usable code. It can be applied to other, completely different models. When you were talking earlier about working with your external JV partners, talking about tweaking stuff, are you saying that's your model, let's see if we can help you optimise it?
Or do you say, for example, that's your model, I wonder if algorithmic trading interview would work better if we took this little component that we've used in-house with one of our models, and plugged it into your model? Is it like that, or more hands-off - you're taking their stuff more as it runs, if they've done their proper testing and development, and just doing some final adjustments?