Is it possible for the retail algo traders to take the same approach to risk management as the larger quant funds? is there a risk management budget imposed on the trader beyond that which they impose on themselves, or is there a compliance or risk management department that enforces this?
Is there a risk management budget imposed on the trader beyond that which they impose on themselves, or is there a compliance or risk management department that enforces this?
Usually there's multiple layers of risk checks that gets looser or more general as you move more distance away from the trader. Depending on the size of firm, risk and compliance may refer to the same group, but there's enough differences between the two for the groups to be separate - compliance can just be involved with legal work (e.g. preparing quarterly and annual filings to regulators) whereas risk would be involved in the trading (e.g. setting exposure limits). Depending on the firm's strategy style, a "trader" might only be a warm body to keep an eye on screens and make small tweaks to risk parameters live based on market activity.
As for whether it's possible - well it's not really something to aspire to. Generally large quant funds have these multiple bureaucratic safeguards because they need to protect themselves against rogue actors. If you are a rule-abiding and successful portfolio manager, researcher or trader at a quant firm, compliance and risk are often viewed with a derogatory mindset.
Likewise, if you're working on your own, there's no one to protect against besides yourself. If I were a retail trader, I would take advantage of the nimbleness of the operation and figure out where I can have additional efficiencies here that are not possible in a bank.