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We know how software engineers work. They develop and create software solutions that businesses and consumers use. Whether web applications, mobile games, apps, robots, or operating and network systems, we can see the work of software engineers in many of the things we use every day. C++ developers and software engineers possess a high level of proficiency in programming languages, mathematics, and of course, technology.
But have you heard of hedge fund C++ developers and software engineers? Have you ever wondered what’s it like to be one? Read on as we give you a basic idea of what hedge fund software engineers do, the tasks and the tools they use, and the programming language they often use in hedge funds.
How hedge fund software is created
A systematic hedge fund software is a model that uses software algorithms to make trade decisions. The algorithms decide which stock to buy and which to sell. But of course, it is not as simple as that. But in a nutshell, here is how hedge fund software is made.
A group of quantitative researchers, traders, and developers study and come up with various theories on how to wisely invest and earn from different markets. The markets that we are referring to are stocks, forex, bonds, and commodities. These theories are then backtested using historical market data.
The work of the software engineer starts when a viable theory is approved. The software engineer, together with the C++ developers and researchers, will then write a code (also called a model) for the approved theory. Once the code is created, it will be integrated into the trading system for further testing. If the model looks promising, it will be released into the production environment.
What are the tasks and tools of a hedge fund software engineer?
The main task of the software engineer in a hedge fund is to create the models that will be integrated into the trading system. It may sound simple, but in reality, it involves a significant degree of mathematics, algorithms, and programming language. Once the model is written, it is executed daily to ingest the latest market data. A hedge fund has multiple portfolios based on different investment strategies, and each one of the portfolios has one or more software models.
A hedge fund software engineer has to work closely with traders and quantitative researchers to understand the challenges at hand and develop the tools to bring the trading strategies to the market. But their work doesn’t stop after developing the model; they optimize it continuously.
The basic tools that software engineers use in developing models are programming languages like C, C++, Python, Linux, Perl, and many more. Most recently, hedge fund software engineers use the MQL5 programming language, which is popular for its trading specialization.
Benefits of being a hedge fund software engineer
Like in any other job, there are pros and cons to working as a hedge fund software engineer. Working in a hedge fund is vastly different from working in a tech company. Software engineers who are used to being treated as elite employees may feel as though they are second-class citizens in hedge funds since we all know that traders rule the hedge fund. But of course, there are upsides to working in hedge funds.
Here are some of the benefits you can get:
- Higher overall compensation
- Impact of work directly visible
- Opportunity to advance career
- The work culture in hedge funds is great
- Chance to learn a lot from the rigorous employee training
How much do hedge fund software engineers make?
One of the perks of working as a hedge fund software engineer is the high compensation. The pay ranges from $250,000 - $500,000 for software engineers who work mainly on the software development side of things. They create and build trading systems, risk, data processing, among others. The closer to quantitative work you are, the more money you’ll make. Some receive $800k or more.
With a high salary also comes high expectations. Top hedge fund companies demand a lot from their software engineers. There is also very little room for error in hedge funds. A single mistake in programming might cost you your job. The upside of high compensation is that you can attain financial freedom at a young age, retire early, and settle down easily.
Top hedge fund software platforms
Here are some of the top hedge fund software platforms in the market today:
This is a portfolio management software for fund managers, asset managers, and crypto managers. Hedge funds can enable users to track their fund’s net asset value as well as their profit and loss (P&L) in real-time. Users can also create orders through Bloomberg EMSX, manage pre-trade and post-trade checks, and evaluate portfolio risks.
Alternative Soft is another portfolio management software specializing in asset selection, report creation, investment management, and risk analysis. Their hedge fund features include the trade status, an analysis of whether the trade will break any strategy rules, the amount of cash that will be encumbered, a graphical table of all liquid and illiquid cash, and a single currency portfolio even if assets are in different currencies.
One of the best all-in-one platforms for hedge funds in the market right now, MetaTrader 5 for hedge funds can establish and automate your funds in a matter of minutes. Its unique system provides the investor fast access to see the assets under management’s (AUM) performance. You just log in from any device or platform, and you’ll see real-time data. There is also a feature that allows the investor to communicate with the broker within the system. It has 13 000 ready-made solutions for expert analysis and has powerful algorithmic trading features.
Takeaway
Based on the factors discussed above, it would be safe to say that working as a software engineer for hedge funds is a good career path. You get to work with smarter people, so you get smarter, learn faster, and learn more. You will also be on the fast track to a portfolio manager career. In hedge funds, you will be rewarded handsomely for your work but expect to be pushed harder to produce and perform.