Differentials between personal and industrious trading? (1 Viewer)

[Studentleader]

Are there many differences between trading done by firms (UBS, Goldman Sachs, Deutsche bank etc.) compared to trading done by everyday people? Is it just the precision in hedging/forecasting due to using an extensive amount of money? From reading forums such as Wilmott it appears that you need a PhD/Masters in order to trade - is this just for algorithmic trading?

My understanding of trading is quite little but I don't see why a PhD is required in Macroeconomic/Fundamental indicator trading.

Essentially I'm asking how my undergraduate degree in mathematics will help me trade (industry and personal) - I feel like I should be doing finance/economics.

Thanks

 

[dvse]

Are there many differences between trading done by firms (UBS, Goldman Sachs, Deutsche bank etc.) compared to trading done by everyday people? Is it just the precision in hedging/forecasting due to using an extensive amount of money? From reading forums such as Wilmott it appears that you need a PhD/Masters in order to trade - is this just for algorithmic trading?

My understanding of trading is quite little but I don't see why a PhD is required in Macroeconomic/Fundamental indicator trading.

Essentially I'm asking how my undergraduate degree in mathematics will help me trade (industry and personal) - I feel like I should be doing finance/economics.

Thanks

There are effective mathematical models for derivatives, not for the prices of the underlying assets. One doesn't need any formal education at all to trade the latter.

Undergrad finance and economics are quite primitive and you should be perfectly capable of learning them yourself if you wish. To follow economics or finance research you need much stronger maths background than what you would get from the respective degrees. Neither maths nor economics would really help you to become a successful trader, at least do something that will give you more options.

 

[Cookie182]

Well, you don't really need a formal education at all to be a trader.

Your maths studies will only help in quantitative research and "back-office" pricing jobs, I presume. For instance, I spoke to the guys at Optiver on a careers day- you don't need to understand Black-Scholes, Financial calculus etc

You need to be able to think logically and quickly- and be excellent at fast mental summation. You also need to be able to communicate very effectively, read widely (on current events) and have general stamina. All traits you don't particularly "study".

They do generally take Com/law grads, prob for the general intelligence, communication skills etc (as do IB's). Having said that, maths/engineering grads are also quite popular, due to the inherent logical skills you must have to complete those degrees (not because you need to specifically apply the knowledge).

This concerns me little, as I'm more interested in Financial Planning which is a practical application of your university studies.

I'm doing 3rd year Finance subjects atm- investment models, optimal portfolios etc...its interesting, but as with CAPM, its all theoretical, based on assumptions etc (similarly with macroeconomics) and basically useless for personal trading IMO

Having said all that, it never hurts to understand market trends, basic statistics ie alpha, beta etc, how trading systems work etc

But you can learn this outside uni

 

[Studentleader]

Should I actually consider completing any more economics after my first year if I want to do econometric orientated operations research?

Chances are I'll be doing the Econometrics unit at UWA and maybe the 'Mathematics for Economics' unit - what I see happening is though since I'm not doing an undergradute economics degree let alone majoring in quantitative economics (due to having to complete 'calculus for dummies' units) that I won't be able to apply to a post graduate economics course (which would have the econometrics I want to do.) Will this be this case or should I just continue with my 7 maths units a year?

 

[velox]

Well, you don't really need a formal education at all to be a trader.

Your maths studies will only help in quantitative research and "back-office" pricing jobs, I presume. For instance, I spoke to the guys at Optiver on a careers day- you don't need to understand Black-Scholes, Financial calculus etc

You need to be able to think logically and quickly- and be excellent at fast mental summation. You also need to be able to communicate very effectively, read widely (on current events) and have general stamina. All traits you don't particularly "study".

They do generally take Com/law grads, prob for the general intelligence, communication skills etc (as do IB's). Having said that, maths/engineering grads are also quite popular, due to the inherent logical skills you must have to complete those degrees (not because you need to specifically apply the knowledge).

This concerns me little, as I'm more interested in Financial Planning which is a practical application of your university studies.

I'm doing 3rd year Finance subjects atm- investment models, optimal portfolios etc...its interesting, but as with CAPM, its all theoretical, based on assumptions etc (similarly with macroeconomics) and basically useless for personal trading IMO

Having said all that, it never hurts to understand market trends, basic statistics ie alpha, beta etc, how trading systems work etc

But you can learn this outside uni

Most traders have a math background. I dont think any back office jobs require university maths.

Optiver is not a great example to use. As they are just a prop shop.