Will MetaTrader5 fill the job void?

[Versiunea romaneasca] [MQLmagazine.com in romana] [English edition]

Didn’t you ever find job posts for financial markets & trading a bit awkward?

So, as I see, things are a bit like this: there are two categories of jobs.
First category, jobs for traders. These guys are manual , discretionary traders. As opposed to the usual hyped forex trader, these ones work on level II markets for equities and derivatives, with the eyes glued to the orderbook, quick in hand movements and decision making. We might call them Joe Saluzzi’s guys. They need to know how the market psychology reflects in the order book structure and dynamics. This is why these jobs have a very upsetting thing mentioned inside, “knowledge of financial markets is a plus, but not required”. Sounds familiar? Then why the hell did you study this in the first place? Ok, I’ll drop this here, we discussed it in a past article, it’s a “smoked” issue… These guys are slowly being removed from markets, because, unlike the retail traders that have the same traits, they have to work in level II environments, and even worse, in the most cases they work in the same field where the high frequency trading engines roam. And there’s no way for them to compete with the “douchey computers”; the machines are not only faster in terms of execution, but also unethical : they are colocated within exchanges.

Second category, jobs for quants & algo developers. We might call them Irene Aldridge’s followers. Working with complex models that only they understand, they make the algos and program the machines that kill the first category of traders. You can literally find hundreds of job posts for these – but requirements are high , either on the math side , requiring PhDs in physics, math, or statistics, or on the programming side, requiring knowledge in vast computing fields, from low-level networking to extensive math & statistics packages as well as a lot of SQL.

Now…where the hell are we? MetaTrader folks never needed any of these. Statistics were completely unnecessary, because of the low quality of MT4’s Strategy Tester. No need of low-level networking, FIX, SQL. As for complex physics models, the same – no level II , there was no need for them. However, in time, the MetaTrader community grew to an impressive size.

Does it mean that this huge community has no skills? Then why the few MetaTrader jobs are only on freelancing market and include either pesky EA modification projects or things that are outside MQL itself, such as MQL decompiling?

If we think about the finance world, then normal repartition should apply. Which means the majority of funds and trading desks should be somewhere in the middle, using technology of an average quality. Now if the technology is average , it surely can’t be used for complicated high frequency trading games. Then my criteria should apply – it could be used for intermarket approaches, which allow arbing due to latency differences. But, as I said, the technology has an average quality. Sure there is connectivity, prop trading desks around the world have good connectivity – just look at the job posts, they trade quite everything in equities and futures. But, question is, why do they use prop trading, if they have the connectivity? Why not employing more automated trading, if high frequency approaches are not quite possible?

I’m thinking about two possible explanations:
1. The costs of implementing automated desks that use HFT is enormous. Institutional platforms are very costly, even the ones that are used more for informational purposes. They cost shameless amounts of money. Add to this the salaries of quant developers and PhDs and you’re almost going under…
2. The implied paradigm. As I explained in my previous article, the delusion is a result of marketing combined with limits in trading platforms. Now these mid class institutionals may have connectivity, but as we know, average quality institutional platforms have backtesting problems. Not the kinda problems MT4 Strategy Tester has, they have the problem of …lacking it. That is, the producer puts so much emphasis on connectivity and a “white label” API solution, or FIX for more sophisticated desks, that the topic of backtesting gets out of question. Once you put the topic of backtesting out of question, all that remains is people’s gut about the markets. What tricks and scalping techniques they know about the order book, and that’s just about all – that’s the paradigm they have to use on a daily basis.

MetaTrader4 is a plagued platform, and I’m not going to enumerate again all its problems.
Shamefully, MetaQuotes pulled in this whirlwind an entire generation of traders. Ever since MT4 was out, there is this feeling of hopelessness in terms of multiasset backtesting. In a way, it fed the wrong paradigm and own demise, it’s viewed as a junk platform in institutional environments. MT4 may not have been adopted ever by big banks and hedge funds, but small trading desks would have adopted it , if it would have filled the analytics needs and event based programming. And that would have meant decent jobs for retail traders and developers, mark my word! … we wouldn’t have this stigma of Cynderellas of the trading world as we have now.

I expect the final demise on MT4 in retail trading in a few months after the launch of MT5. However, what happens with MT4 is no interest for me, because if it will fail, it will be because its own supporters will desert it for the candies of MT5, not because brokers will impose MT5 before its time.

I am interested in what else might be found in the MT5 pack. If MT5 is the bridge between the retail approach of MT4 and the real institutional platforms , not quite like X-Trader or Strategy Runner, but more like the top notch – Athena, Tango, Orc, FlexTrade , in terms of everything that excludes latency, in both execution and backtesting, then MT5 might mark the beginning of the changes for the retail community. The problem for prop trading desks is simple – adopt a level II platform that allows a lot of automated trading and backtesting in all the areas of trading that hedge funds analyse and operate, except for latency issues; drastically cut trading platform costs – we might even think about custom MetaTrader5 implementation – for their own needs, with their own datafeed. Speed of trading will be higher than whatever the prop traders could have done, analytics and market paradigm improved, all at lower costs than before and way below hedge fund costs!

This could mean finally good and decent jobs for the retail segment. Because the prop desks don’t have the approach that hedge funds have, and they are not forced to stand up the same costs as they do. Their approach is nearer to the retail field, since they don’t use automation. And retail traders that lost years with MT4 are likely to benefit of job openings for MQL5; there will be a transfer of know-how and funds between the retail community and their counterparts in the institutional world. Retail traders can be easily upgraded to more institutional views of the market, because they already have the development skills accumulated in the MT4 times. I couldn’t have thought of a better moment for MT5 to come than in this crysis, when everyone needs to reform : retail segment on the brink of the collapse in US, people losing jobs, hedge funds with a higher pressure from both investors and market. In a time when everyone cuts costs , MT5 appears as the “poor man’s institutional platform”, with features that go beyond mid class institutional platforms. That makes it a good candidate for a lot of the institutional segment, and when this reform happens, the retail segment is right there, awaiting to get jobs…. and be retail no more.

Let’s not forget about the emergence of AlgoDeal as a quantish backtesting platform. Retail quants that lost years on MetaTrader4 might try this one too for sharping up Java skills while viewing MetaTrader5 strategies from another angle. As retail quants skills approach hedge fund requirements this way, amazing changes in careers may happen…

Note: Finance jobs from Romania and other destitute contries of the Eastern Europe don’t fill the profile mentioned in this article. For instance, just compare the financial jobs section of the job sites (or, better said, career sites) like efinancialcareers.co.uk or QuantSpot.com with romanian resume servers like bestjobs.ro or ejobs.ro . Finance here is mostly mixed with accounting and banking, without a clear position and clear subfields in the domain list, denoting not only the lacking hedge funds , prop trading desks and investment banks, but also the ignorance of job site webmasters.