Max Dama’s Exit from Blogging

Update: Max has since taken down his blog, but his book still appears to be live.

At the start of this year, Evan and I were preparing to build an automated trading system, and I was in information gathering mode. Reading around the internet, I learned of a university student called Max Dama and thought he’d be a good model to emulate. Unfortunately, because our efforts with Learning Machine stalled, I never needed to delve deep into the mathematics and programming behind much of the material he posted on his blog.

I was surprised to find, when pruning my Google Reader feeds, that Max stopped posting way back in May. He has, however, kindly produced a small, free book on the fundamentals of the automated trading industry and how students can gain entry.

I’ve not yet had a chance to fully read through the book, but I’ve already been surprised by some of his commentary and advice; for example, on the list of automated trading companies on p 6:

College grads should apply to every single company on this list if possible. The best way to get a job is not to carefully court a specific firm, but to apply to as many as possible.

I don’t read this as saying ‘spam your résumé’. Rather, it’s a reflection of the jaw-dropping competitiveness of the market for graduate-level jobs in proprietary trading.

Your chances of getting into a particular industry can be roughly represented by this formula:

Chance
= Candidate's perceived relative quality
* (Candidate's number of applications/Total positions available)

The automated trading industry is small (reducing Total positions available). Firms require candidates to meet a very high minimum quality threshold, and within the band of candidates exceeding that threshold, most applicants will find it very difficult to differentiate themselves. Thus, the best thing they can do to maximise their chances of landing a position is to apply to many firms.

In his introduction, Max provides a summary of why working in automated trading is attractive. But that attractiveness has a downside: to enter the industry, you’re going to need to be an absolutely spectacular candidate.