Quant interview preparation

Questions

100

Traced to a firm

53

Firms

15

Updated

September 2026

Asked at

All firmsOld Mission Capital12Tower Research Capital10Jump Trading7Akuna Capital5Citadel4DED.E. Shaw3Jane Street3ACAQR Capital Management2DRW2Millennium Management2Schonfeld2SCSquarepoint Capital2Susquehanna International Group2Belvedere Trading1Optiver1

Topic

All topicsProbability10Coins, cards and games6Expected value8Statistics11Market making15Estimation and mental maths4Stochastic processes4Regression5Machine learning6Time series6Programming10Options and derivatives8Fit and motivation7

Level

AnyCoreIntermediateHard

Type

AnyBrainteaserTechnicalCaseMarket viewFit

1. 061What is a market maker actually paid for, and how do you decide how wide to quote?Market makingCoretechnicalProp trading firmsQuant trading

   Say this

   You are paid to provide immediacy, and the bid-ask spread is the fee. Width is set by the risks you are taking on: how uncertain you are about fair value, how much adverse selection you expect, how long you will be stuck with the position, and how volatile it is while you hold it.

   Then walk it

   1. The business model in one line: buy at the bid, sell at the offer, turn over the inventory many times a day, and capture a fraction of the spread on each round trip. You are not forecasting direction, you are being compensated for warehousing risk.
   2. The four inputs to width. One, uncertainty about the true value, which is wide in an illiquid name and tight in a liquid one. Two, expected adverse selection, which is the probability the person trading with you knows something. Three, expected holding period until you can offload or hedge. Four, volatility over that holding period.
   3. A rough decomposition: half-spread should cover expected adverse selection cost plus inventory risk plus your fixed costs, plus a margin. In a liquid future the first term dominates and you quote one tick. In a wide illiquid option you might quote ten percent of the premium.
   4. Then the competitive constraint. You do not quote your theoretical width, you quote the tightest width you can justify given who else is on the book, because the trade goes to the best price. So in practice width is min of what I need and what the competition forces.
   5. The number worth knowing: on a liquid listed equity the effective spread is often under a basis point and market makers still make money, because they do enormous volume and their adverse selection is managed in milliseconds. On an illiquid corporate bond a dealer might need 50 basis points for the same economics, because they will hold it for days.

   Where candidates lose it

   Describing market making as making money on the spread with nothing about adverse selection or inventory. The spread is gross revenue, not profit. A candidate who cannot name the two costs that eat it has not understood the business, and this is the single most common weakness in trading interviews.

   Expect next

   • What is your biggest cost as a market maker?
   • Why would you ever quote a market wider than the competition?
   • When would you not want to quote at all?
2. 063Make me a market on something you cannot possibly know, and be ready for me to trade either side.Market makingCorephone / first roundProp trading firmsQuant trading

   Say this

   I would estimate fair value out loud, set a width that reflects how uncertain I am, quote it, and then stand by it. And I would say my size, because a market without a size is not a market.

   Then walk it

   1. Do the estimate first and say it: here is my central estimate and here is why. Then convert uncertainty into width. If my estimate is 300 but I could easily be wrong by fifty percent, my market should be something like 250 at 350, not 298 at 302.
   2. Then quote a size. Ten dollars a unit, or one lot. Naming your size unprompted is a strong signal, because it shows you understand a quote is a commitment.
   3. The interviewer will then trade you and immediately ask if you are happy, or they will tell you the answer is far outside your market. Both are tests of composure. The correct reaction is to update and re-quote, not to argue.
   4. When they trade one side, that is information. If you get lifted instantly on your offer, the market is probably above your offer, so shift both bid and offer up and consider widening. Skewing rather than freezing is what separates a trader from a calculator.
   5. The one thing you must not do is quote too tight to look confident. A tight market you cannot defend gets arbitraged in one question, and the interviewer will do it on purpose. Wide but honest beats tight and wrong, and you can always tighten once you have explained your uncertainty.

   Where candidates lose it

   Quoting a market so tight that any trade immediately loses you money, usually because the candidate thinks a narrow spread looks impressive. It looks the opposite. Also never quote a market without a size, and never argue when you get picked off. Update and re-quote.

   Expect next

   • I buy at your offer. Are you happy?
   • Now tighten your market by half.
   • The answer is actually double your offer. What went wrong in your estimate?

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.