need a little career advice

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drtomaso

Hey all-

I'm a long time lurker, first time poster. I need a little career advice, and hoped I might find people with similar stories who might be able to speak from their own experiences.

My background is in computer science- I did a BA and 3 years of work toward a PhD I never completed. I began my interest in investment/trading when I took a consultant position as a programmer for a top tier investment bank/broker dealer. I did 1.5 years in the front office, working with some incredibly smart people who were developing the firms electronic trading engines. Given that before that, I couldn't tell you the difference between an option and a future, I guess you could say I stumbled into this interest.

I'm now in my first regular "employee-status" job, in the back office for another huge IB/Broker Dealer. At first, I was learning quite a bit of new tech, so I didn't notice I wasn't learning anything new about the business world. I earn good money, but am quickly discovering I lack interest in a "pure-tech" job. The path I am on leads to being a tech manager 5-15 years down the road- a destination I am not sure I want to arrive at.

Initially, I considered trading my own account- but this posed several problems. Given the size of my initial stake (between 40-50k) I would have to be extremely good or extremely lucky to earn the return on my capital necessary to equal my old salary. Trading part time while working my "day job" is out too- the firm has "buy and hold" rules that would lock me into positions longer than 30 days. Even with a longer term strategy, this would wreak havoc with risk management. Prop shop trading might make the pay-cut more manageable, but with the associated risk of leverage, something I am not presently comfortable with.

Of course, none of that precludes working for someone, trading other peoples money ;)

So I am considering that which I considered unthinkable less than two years ago- returning to school. Currently I am debating between a MS/MA in Financial Engineering (Math Finance, etc), MS/MA in Finance, or an MBA. I listed them in kind of my order of preference- I am looking for work where I can actively participate in the business side of things (working on a trading desk, etc) while still employing my tech skills.

I have an almost limitless set of questions, but I will just stick to the few big ones. Has anyone out there made the switch? From tech to quant, tech to fund/port management or tech to trader? Which do you feel is better: a full time or part time (while continuing my day job) MS/MBA? What doors does an MS in Math Finance open that an MBA does not and vice-versa? What about just staying put and looking for a tech job that would sponsor a series 7? What doors open/close on that route?

many thanks,

Tom
 
Just know that NO degree will actually teach you how to trade. Having college degrees will always help in life in general, but how it would help in trading is unquantifiable.

Trading on the side while having a day job is less stressful. At least you know you have a steady income. But trading for a living on the other hand, requires deeper pockets and a bigger initial stake (six figures liquid).
 
I agree- no degree adequately prepares you for your job. This is especially true of trading- where it can be argued there is just as much if not more "art" than "science".

That said, trading on my own is simply not possible. Learning to trade doing anything other than paper trading will get me fired, and probably cut any future career off at the knees. I've seen it pointed out countless times that paper trading and live trading are two different animals. I cannot establish a track record prior to going 'live'. Trying to learn the art first is not possible in my circumstances.
 
Quote from drtomaso:


That said, trading on my own is simply not possible. Learning to trade doing anything other than paper trading will get me fired, and probably cut any future career off at the knees. I've seen it pointed out countless times that paper trading and live trading are two different animals. I cannot establish a track record prior to going 'live'. Trying to learn the art first is not possible in my circumstances.
More...

What about short term trading in a market that you can trade at a different time of the day when you are not working at your day job? Maybe get up early and trade the European/London open. You could trade forex/currency futures, debt, or equities.

Cheers,

TRADERguy
 
Quote from drtomaso:

So...no one out there has gone down the quant road and wants to share?
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Well, I am not sure my experience is standard, but I suppose it will give you some background. I first spent about 8 years in IT on wall street, eventually raising to a director (managing a group of about 80 developers), doing mostly VaR / portfolio risk type of stuff. I then went to a hedge fund (this is late 90s, when the term hedge fund is unfamiliar to most people), where I ran everything, risk / ops / IT, basically everything except trading. After the fund folded (long story), I went back into an ibank's prime brokerage side, this time leading a group of hedge fund analytics. Then I moved to a derivatives dealer running their electronic trading, risk and IT. The entire process for me to go from IT manager to run a desk took almost 12 years.

Even after the switch, I am not sure I am making that much more money than if I stuck around the IT side (divisional CIOs could make 800k-$1M). But overall I am glad I did, since I picked up knowledge that I have no chance of gaining if I just keep on running a large group of technologists.

A couple of observations, first of all, about 80-85% of all wall street IT staff have some desire to switch over to the "business side". It is only natural that one would seek out a position with more potential income, and more prestige. Doing a degree in Financial Engineering or Math Fin is a way to go, but the key is not just getting the degree itself, it is also about getting the right internships, the right exposure, maybe write a paper or two, etc. Not every MFE / MMF grad would even become a desk quant, since there are plenty of PhDs (physical, EE, math, comp sci) aiming for the same spot. It is all about getting exposure, naturally going to a top-tier program would help here.

However, going from Quant to Trading is a step all by itself. Not all quants would make it as traders, in fact, a good portion of them just don't have the mental toughness (and these types would just freak out when trading) to make it, so a lot of them just end up modelers or desk anlaysts. These guys don't make *that* much more than a top-flight developer (about $250 for IT, about $350 for a quant, all top level). The good news is that there are less and less "gunslinger" type of traders nowadays, so analytical thinking is very much prized. But in an environment where a lot of the other quants would have better math / stat background than you, finding a good niche is the key here.

At last, it is just as political (probably more so) on the trading side, the quant side, than the IT side. I have seen people navigate very well with just a MSc, but I have also see people with MIT / Berkeley PhDs just fall flat. A degree may get you in the door, what you accomplish after is all based on reputation, track record, and relationships.

Just my $0.02
 
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