Do these programmers have a short career span. (lose x amount of dollars and you need to leave.)
How much could someone make in this field. Software engineers regularly make 100K so do these guys make more to justify the risk?
I don't think programmers in the field have an appreciably shorter lifespan than in other industries. I don't think that working in an algo trading company is intrinsically any riskier than working in any other kind of firm.
The hours tend to be longer and the work tends to be slightly more stressful than if you are working at a generic bigco, however.
Salaries in finance are low compared to comparable jobs. Bonuses can be very high. A senior programmer who'd make $150k in tech will probably get $130k in a hedge fund, but the bonuses... can be anywhere from 0 to 1000%. Median is probably 30%. Market conditions play a role.
Sadly, compensation has been getting worse for quants over the years. It used to be that you could take a $500k all-in for granted just for knowing college-level math and programming. That's no longer true.
Do these programmers have a short career span. (lose x amount of dollars and you need to leave.)
No worse than startups. It's probably better, to be honest. The age discrimination isn't nearly as bad as in the VC-funded world, people are less-often fired for stupid reasons in hedge funds, and the ethics are generally better in finance than in the VC-funded world. Finally, the lower status of programmers may be more visible in finance (i.e. you're clearly second-rate compared to traders) but less onerous. Engineers are third-class citizens in the Valley, with their 0.01% equity slices of post-A startups, and because the VC-funded startups aren't very selective and a third of the programmers are incompetent, they feel a need to use "Agile" micromanagement that you wouldn't see at a hedge fund.
If you lose serious money (meaning hundreds of thousands) doing something stupid, you'll get fired. If you're unluckym good funds won't fire you. A lot of statistical arbitrage is taking "51/49" bets.
How much could someone make in this field.
The upside is very high. That said, typically it's not going to be more than 25-50% more than you'd make elsewhere. You need to manage your career aggressively and become someone's protege if you want to get above $300k... but it can be done, and some people make 10-50 times that.
What percentage of a hedge fund does a typical engineer get?
In fact, when you hear about giant bonuses in finance what you are often really hearing about are groups that traded salary for profit sharing and it paid off. In the context of finance, this comes off as shady or outrageous but in the context of startup hits it doesn't.
Lets just say, having worked under option based equity arrangements and profit sharing arrangements, they both had their positives and negatives, but only ever felt like a system was stacked against me, as an employee, when equity/options were on the table.
The big issue I think with the equity based model, is the golden handcuffs it applies to early employees. Not only do they frequently forego market based compensation for long periods of time, when they make the decision to stop doing that, they are asked to take on more downside in order to keep any part of their deferred compensation. For all it's downsides, the trading environment would never ask someone to do that.
My immediate reaction to this point, though, is:
* The downsides of equity comp are shared by all roles in a tech company, not just engineers; the exceptions are the very most senior management, and the tiny cohort of founders. Both of which are exceptional at all firms.
* Dev jobs in finance are, I am pretty sure, a better deal than those in tech startups.
* But let's not move the goalposts: the argument is that engineers are second-class in tech startups in a way that isn't true in finance companies. Most engineering jobs at finance companies are cost-center roles.
As I mentioned, I do not think it is a fair characterization to say that engineers are more/less valued in either situation. I just think that using equity distribution percentage to argue one way or the other is problematic in that compensation is determined in 2 dramatically different ways.
That said, if I were going to argue anything, it would be that the equity options based compensation packages in tech startups seem to have more opportunity for abuse. So characterizing engineers as 3rd vs 2nd class isn't interesting, but characterizing one compensation structure as more exploitative than the other may be, and I think that is at the heart of what the original post was about.
[edit] I'd also add that any characterizations about the methodologies used in finance/trading vs tech startups is completely inaccurate. I've seen great development process in both places and the converse as well.
I think this will vary based on the size of the firm. Larger firms that trade in multiple markets and in different asset classes or firms that become registered broker dealers will tend to have larger back office operations. Smaller firms will outsource as much as they can so that the engineers are primarily focused on supporting whatever strategy the firm wants to trade.