Job Prospect

I received an offer at a boutique crypto hedge fund to work as a dev on the trading systems. The work entails working closely with the quant to implement trading strategies (mostly arbitrage, presumably). I liked the team, and am inclined to accept. This is pretty much a dream job.

However, I have a few reservations. I don’t really know the kind of risk that I’m running. I don’t know what job security is like and whether the fund will be there tomorrow (and I have a family to feed). I don’t know if crypto is any different from a traditional hedge fund, and what some of the other things to look out for are.

What are your thoughts?
 
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I think you mentioned the most important point already. I assume by "boutique" you mean that it's a relatively small operation running a couple of strategies. I would want to understand to how well they are capitalized, how long they could sustain without trading p&l. Also try to understand what kind of strategies they are looking into running critically evaluate whether you see why they could develop an edge. Unfortunately, last year's performance is not necessarily a good indicator for future success potential as much of the easy money isn't there anymore due to increased competition (e.g. in latency for arbitrage strategies) or temporarily absent (e.g. lack of predictable retail momentum).
 
I do not have any experience at a crypto HF so take this with a grain of salt.

Obviously understanding their risk management and trading strategy would allow you to have a better understanding of the risks, but most of that information won't be attainable until you start working. What you can do is make judgements from the more general fund data. What is the AUM? Small fund means small pool of money to go around to employees. Try to get some understanding of the team's experience, especially the fund manager. Are they new to finance? Is this your fund manager's first gig? Lastly, try to get some insight on the investors. Are there a handful of BIG investors, or many smaller contributors? Are they individual or institutional (available information will be limited here as well)? How much of the fund's assets is held using leverage? These are all good questions to ask during the interview process.

Risk heavily depends on trading strategy, but in general, I would say a HF that exclusively trades crytpo is inherently more risky than one that doesn't. Even small/less experienced HFs can rely on the market structure of traditional finance for risk management.
 
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