Quantitative Trading interview questions

An early research screen that tests statistical hygiene before a candidate proposes a signal.

You find that a stock rose on 70% of the days when a popular sports team won. Can you trade this result? What checks would you run before treating it as evidence?

A basic mental-maths screen that tests whether a candidate separates probability from payoff.

You pay $3 to play a game. A fair six-sided die is rolled: you receive $12 on a 6 and nothing otherwise. Should you play once? What would change if you could play 1,000 independent times?

A basic prop-trading exercise tests whether candidates translate probabilities into a price and a trading decision.

A contract pays $100 if a coin lands heads and $0 if it lands tails. You believe heads has a 55% probability. What is the fair value? Would you buy at $54, and would you sell at $56?

A first-round market-microstructure check for candidates new to electronic trading.

A stock is quoted at $49.98 bid and $50.02 offer. You want to buy 1,000 shares now. Explain the difference between sending a market order and a limit order at $50.00.

A first-round electronic-trading screen checks that a candidate can read a two-sided market precisely.

An ETF is quoted at $101.20 bid and $101.28 offer. What are the mid-price and bid-ask spread? If you buy 500 shares at the offer and immediately value them at the mid-price, what is your mark-to-market loss before fees?

An execution-trading interview checks that a candidate can reconcile fills before offering an opinion on execution quality.

You buy 1,000 shares in three fills: 200 at $24.90, 500 at $25.00 and 300 at $25.10. What is your VWAP? If the arrival mid-price was $24.95, what was your implementation shortfall in dollars before commissions?

A research discussion at a systematic or market-making firm tests whether your backtest resembles tradeable reality.

You propose a pairs trade that buys the underperformer and shorts the outperformer when two historically correlated stocks diverge. How would you test whether the strategy is real before trading capital?

Fermi estimation is a standard prop trading round. You have sixty seconds.

How many tennis balls fit in a Boeing 747? You have one minute.

A systematic-trading interview tests whether a candidate follows a risk process when a live position conflicts with a backtest.

Your mean-reversion strategy is long a stock after a three-standard-deviation selloff. The position is down another 4% intraday, while the model still says buy. What do you check before deciding whether to hold, reduce…

A prop-trading technical round checks whether you can construct a hedge from payoffs rather than memorise Greeks.

A stock is $100 today. Tomorrow it will be either $120 or $90. A call with a $100 strike pays $20 in the up state and $0 in the down state. How many shares hedge one short call in this one-period model?

A sizing follow-up tests whether you distinguish an estimated edge from a known probability.

A trade wins 55% of the time and loses 45% of the time. It makes or loses 1% of the capital allocated. What is full Kelly sizing, and why might a trading desk use less?

The interactive trading game used at every prop firm.

I have a bag with 10 balls, each numbered 1 to 10. I draw three and the contract settles on their sum. Make me a market. Then I show you that one of the balls drawn is a 10, what's your new market?

Options market making interviews probe what you do when you cannot hedge continuously.

You're short gamma into the close, with earnings after the bell. What are your options, and what do you do?

A senior prop-trading case tests how you turn fill data into a controlled quoting decision.

Your ETF market-making strategy earns the spread on most fills, but over the past week your fills lose 4 basis points on average after one second. Volatility and displayed spreads are unchanged. What would you…

A portfolio-construction question after several apparently independent signals lose money together.

Four market-neutral strategies have low correlations in their monthly backtests. During a volatile week, all lose money and gross exposure breaches an internal limit. How would you diagnose the common risk and decide…

The practical hedging problem on any desk that cannot trade the exact instrument.

You're long $10m of an illiquid corporate bond and want to hedge the rates risk. The only liquid instrument is a Treasury future. What ratio do you use, and what risk remains?

Electronic market making interviews test whether you understand the microstructure you'd trade in.

Why does latency matter to a market maker, and what is queue position worth?

Tests whether you reason about why a bet is being offered, not just its expected value.

I offer you a bet: I roll a fair die, and if it comes up 6 I pay you $10; otherwise you pay me $1. Do you take it? How much would you pay for the right to play 100 times?

The core mechanic of market making, tested with a live scenario.

You're making a market at 99 / 101 in a contract. You get hit on the bid three times in a row and are now long 300 lots. What do you do with your quote?

Trading firms use this to test whether you understand compounding and ruin.

You have an edge: a bet that pays 2:1 and wins 40% of the time. What fraction of your capital should you bet, and why not more?

A systematic-trading review after a research backtest appears to generate alpha around splits, special dividends and index changes.

A daily equity signal shows a sharp return improvement after a new corporate-action vendor feed is added. The gain is concentrated around special dividends, rights issues and spin-offs. How would you determine whether…