I think in trading firms, you would not be defined as a "software engineer", but rather "quantitative analyst". Often times, quants require other advanced mathematics degrees as well, thus creating a distinction between quant, and software engineer. Also, this article seemed to focus only on tech firms anyway.

Nope, software engineers and quantitative analyst are two different positions. The first one is building an infrastructure (market data feeds listeners, caches,...) for second one (which builds model based on that infrastructure). Been there, seen that...

Good point. And now that I think of it that way, It wouldn't surprise me that the software engineers in finance are not making google money. I guess I thought the parent was surprised because he was thinking quants.

And I forgot to mention that 128K is really a low end for finance software guys. It's not uncommon to see salaries about 200K for experienced guys even outside of Manhattan ;-)

Their base salary (which is what is listed here) may not be a whole lot more; a large portion of their compensation comes in the form of annual bonuses. That's also the case for some of the listed firms, FWIW. As a senior engineer at one of them, I have received bonuses that are twice my "base salary" in good years.

Exactly. These kind of bonuses are not uncommon...

Well to be clear software engineer isn't the high man on the totem poll in most trading firms.

I think the outside population has a skewed view of what the technology looks like in a typical hedge fund due to all the stories about highly technical funds.

Many hedge funds dont' have that great of computer technology and the technology that they have is applied to back office processing rather than trading. In these types of firms, which I'd say make up the majority of funds, tech is viewed like marketing would be viewed in a techology company, a necessary evil but not a core part of the team.

Most funds buy their technology and build out to fill the missing pieces.

Some funds do build out sophisticated tech, and in these funds tech is valued and paid accordingly, but they are not the majority of funds.

One other point I should make is that salaries are usually pretty small. $50,000/year at a fund isn't unheard of. Many people draw no salary after they've been at a fund for a few years.

The idea being that you put your money where your mouth is. If you're good you get paid via year end bonus, otherwise you leave the industry:)