What college majors are best for trading (and are favored by trading firms)?

Quote from TraderGreg:

What college majors are best for trading (and are favored by trading firms)?

The first look would be at finance (my current major), but it also seems like there could be value in economics, international business, and a few others.

I want to either work for a macro hedge fund, continue trading intraday like I do now, and possibly starting my own business (thinking of adding a management minor).

Any advice is helpful. Thanks
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Hi, Greg. My background is in Financial Economics with a minor in mathematics. I've gotten interviews for Vice President jobs in several areas, but never actually landed the job. I kept getting beat by 10 year Wall Street Veterans, both bond and quant types.

You have to make your own experience if you expect these jobs. I've run my investment advising business for 3 years now, and started straight out of college.

If you're looking for a market making position, these only go to experienced people that have the job already, and are not entry level.

If you're looking for prop shop trading, you'll find you won't learn anything from whatever "mentor" they put you with.

Spend years writing algorithms in both tradestation and WL. I noticed you don't like code, and if that's your block, I can't say you'll ever get past that stage.

I am working towards Level II of the CFA curriculum. The job titles for positions with this one credential include such things as:

Cheif Investment Officer at US BANK

President of Commerce Trust Company

CEO of American Century

If these titles don't tell you how respected the CFA charter is, I can't offer you much more advice.

Absolutely finance and economics is at the heart of trading. Computer science only helps if you are "implementing" the system, but this says nothing about "developing" the system. These are not the same thing.

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This system will show you what happens after learning both how to "implement" and "develop" a system. Self-study and the ability to know what to learn and how to learn are keys to trading success. I'd have no hope of getting the CFA charter without both the mathematical and analytical background I forced myself to do while attending college.

The very last thing to remember about this business is that you will be expected to produce far in excess of the value you provide to the firm. If you cannot produce at least twice in revenue as what you're paid, you will be fired, and this is why the industry is considered, "cut throat." As a trader, if you have no profits, which will be often to near all the time when you start, you won't have a very pleasant financial life.


Good luck.
 
Quote from MIT_ALGO_TRADER:

I can't believe that no one has said physics yet.
Physics is the best subject if you want to learn how to think analytically, especially considering how abstract pure maths is becoming. Most financial models are indeed derived from physics, same with most trading systems, although this is often times not entirely apparent.

From an observational standpoint, who has been hired and where?

prop @ BB: math/econ, econ, econ/finance

Quant hedge funds (DE Shaw, Citadel, Bridgewater, etc): CSEE, Math, Physics, occasionally Econ

Prop Shops: Math, Econ, CSEE, Physics, occasionally Engineers

I will also note that:
The prop shop observation is mainly based upon Jane Street, DRW, SIG, and Optiver, all who provide liquidity before taking directional trades.

Finance majors are far more highly desired at your standard prop firm, where more directional trades are being placed and less quantitative ability is needed.

I don't understand psychology as a major. It's a completely worthless degree. You can't learn trading discipline/psych by memorizing a book.
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A minor in math will suffice. Physics is overkill for what the OP is asking, and won't offer any unique insights into "why" prices are set where they are.
 
Quote from bwolinsky:

A minor in math will suffice. Physics is overkill for what the OP is asking, and won't offer any unique insights into "why" prices are set where they are.
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How does physics not offer insight into why prices are set where they are?
Consider:
Black-Scholes-Merton, Cox-Ingersoll-Ross, and Modigliani-Miller.
They were all based off the same thought processes as physics teaches, which explains the names behind the models.
 
Quote from trader_404:

Play lots of video games, and put it on your resume. Seriously. Our office hired a professional Quake player who traveled around winning tournaments, and he turned out to be one of the better traders.

Being able to efficiently digest real time data, crunch your risk/reward, and slam down size with instinct and conviction has alot to do with gaming.

I've also know a guy who came on from professional poker playing.

As for me, I have an EE bachelors, and its been nothing but helpful in structuring my trades in terms of probabilities.
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Nice. Going to school for EE/minor in math myself. EEs as good as done, just need to pick up 2 math classes now. Go engineering.
 
Quote from MIT_ALGO_TRADER:

How does physics not offer insight into why prices are set where they are?
Consider:
Black-Scholes-Merton, Cox-Ingersoll-Ross, and Modigliani-Miller.
They were all based off the same thought processes as physics teaches, which explains the names behind the models.
More...

He's going to miss insights that will only be realized actually doing the major. I know there are those out there that went from teaching physics to being financial quants, but this is an exception. If you want detail, read <u>My Life as a Quant</U>. You'll find it's a very thankless job.

I acknowledge this is there, but it's covered in a Financial Economics setting. Quantum physics is physics, this is not finance. Quantum physics is something only a genius is going to understand, and there aren't many. In the context of finance, quantum physics is, by itself, far beyond the scope of any valuation.

You don't have to be that advanced at mathematics to be a succesful trader. If you understand probability theory (MAT 310), Econometrics (ECO390), and Empirical Analysis(ECO395), Mathematical Modeling for Economics (MAT350), these are absolutely the extent of the math behind all of finance. I guess you can see which classes I was in during college.

The only use for Black-Scholes is in its application. I seriously doubt there are even 1 in 1000 traders that could derive this formula in a room.

He didn't ask "How do I become a quant", he asked, "what college major is best for trading?".

The point I'm making is that if he wanted to be a trader, he's going to use the models already developed within the firm. Knowing how to use the models does not require that advanced level of understanding. I can't think of a single physics equation applicable to finance.

Calculus is one thing, but quantum physics is just that.
 
Quote from scot.mcpherson:

I am surprised no one brought this one up.


"Game Theory", it's probably the most important aspect of economics for a trader.
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Probability theory will really get this.

I found Applied Experimental Economics and Game Theory were a tad less mathematically rigorous than the actual math class.
 
Quote from bwolinsky:

He's going to miss insights that will only be realized actually doing the major. I know there are those out there that went from teaching physics to being financial quants, but this is an exception. If you want detail, read <u>My Life as a Quant</U>. You'll find it's a very thankless job.

I acknowledge this is there, but it's covered in a Financial Economics setting. Quantum physics is physics, this is not finance. Quantum physics is something only a genius is going to understand, and there aren't many. In the context of finance, quantum physics is, by itself, far beyond the scope of any valuation.

You don't have to be that advanced at mathematics to be a succesful trader. If you understand probability theory (MAT 310), Econometrics (ECO390), and Empirical Analysis(ECO395), Mathematical Modeling for Economics (MAT350), these are absolutely the extent of the math behind all of finance. I guess you can see which classes I was in during college.

The only use for Black-Scholes is in its application. I seriously doubt there are even 1 in 1000 traders that could derive this formula in a room.

He didn't ask "How do I become a quant", he asked, "what college major is best for trading?".

The point I'm making is that if he wanted to be a trader, he's going to use the models already developed within the firm. Knowing how to use the models does not require that advanced level of understanding. I can't think of a single physics equation applicable to finance.

Calculus is one thing, but quantum physics is just that.
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multivariate heat equation is relevant to finance....
 
Quote from bwolinsky:

Probability theory will really get this.

I found Applied Experimental Economics and Game Theory were a tad less mathematically rigorous than the actual math class.
More...

Perhaps less mathematically rigorous, but having an educated "eagle's eye" perspective of a system is extremely important.
 
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