The interview questions of Jane Street, Jump and Citadel Securities
Electronic trading is evolving. It's not just quant funds offering jobs anymore; banks are too, and if all else fails you can build trading models and do it all yourself. That being said, the pinnacle is still generally seen as algorithmic trading specialists like Jump Trading, Citadel Securities and Jane Street.
Whether you're applying for a job at one of those firms or developing an algorithm on the side just to prove you can, you need your probability fundamentals to be in top shape. These are a list of questions asked across the top electronic trading firms that should act as a Litmus test of whether you're ready.
Jump Trading Interview Questions
A number of interview questions from Jump Trading are available via WallStreetOasis. Some of the most thought-provoking include.
- I'm dealing a deck of cards. You can stop it at any time and if the next card is red, you win. What is the optimal strategy for winning? (They seem to really like this one)
- There are four balls, two black and two white. You pick two and random and flip their color from one to the other and repeat. How many times would you do this to ensure all four balls are the same color?
- What is the probability that two people in a room full of 15 share the same birthday?
Citadel Securities Interview Questionss
The electronic trading sister firm of hedge fund Citadel is a bit more grandiose and/or abstract with its problems. Some of the most interesting questions from WallStreetOasis are:
- There are 100 prisoners and a room with a lightbulb. Prisoners are called in at random to turn the bulb on or off. Upon exiting, the room, they must guess whether they are the last of the 100 to enter the room. If they are correct, they go free, if not, everyone fails. Prisoners may communicate beforehand, but once the game begins, they are separated and have no idea who has or hasn't entered the room yet. What strategy would ensure the prisoners would be successfully released?
- How would I calculate the revenue of a company called Peloton without any source of data?
Jane Street Interview Questions
A number of Jane Street questions are available on WallStreetOasis, such as these:
- How would you calculate the probability of it raining on the weekend?
- You're betting on a two horse race with a group of people. They irrationally bet on whichever horse has won the most races in the past. You can bet on either horse but you do not know which horse everyone else is betting on. What would be your betting strategy?
However, Jane Street also provides a guide to probability with some interesting insights, particularly in regard to market making. One such question is:
- When you roll a six sided die, you receive $1 for every pip on the side rolled (i.e. rolling a two earns you $2, a three $3 and so on). Assuming you must pay an agreed amount each time the dice is rolled, ow would you make that market?
This is an interesting perspective, as you must also consider that the opposite party must agree to the conditions and have something to gain; good luck convincing them to sell a roll for $1. Jane Street says it would make the market "3 at 4, 10 up."
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