What degree/master/phd would be the best for a trader?

[smallStops]

it seems John Arnold was lucky enough to have access to huge amount of capital which is vital for trading .the fact is that (due to his biography) he did not changed his 5k $ account into billions.he traded billions to make billions .

Even so, he has enough skills not to take billion account into few figures one.
I think Paulson last year took some billions down to a few hundred millions
and investors started to feel in droves.

 

[GloriaBrown]

Sound like your job is trader in FI?

Thread TL & DL

I say no degree other than you are smart enough to learn everything about finance yourself and understand how the industry works.

But if you must, I'd say a finance degree helps because it provides you with the background and theory necessary for you to jump right in with less catching up. A person who is totally green or who studied something else at uni will have to learn all this by themselves, such as all the terminology, how to read financial statements etc. So a degree will give you this background right away. But it can also give you biases because clearly stock prices are driven by sentiment and momentum and money flow, more so than the fundamentals more often than not, hence why "the market can stay irrational longer than u can stay solvent". Stubborn people who short based on "fundamentals" often get steam rolled because of this. "oh but AAPL is so undervalued and XYZ stock is 200 P/E so I'm shorting" then next day XYZ gaps up another 20%... "man so overvalued so I'm doubling down!".

I think in this modern age, a math or statistics degree will help too. You can approach trading with mathematical or statistical models to look for correlation and find trading strategies. These are much more advanced than mom and pop style buy and hold of what you know. This is rigorous statistically backed trading plans and what some of the top quant hedge funds use.

Then I think a computer science or programming experience can help with algorithmic trading. But before you can do that you still need a trading plan. Just being able to program something isn't helpful at all if you don't have the trading plan.

I don't think you really need advanced degrees except if the work or techniques you have used in those fields of study can be directly implemented in the trading plan. For example if you did machine learning work for your robotics research, you can probably apply that to your algo. Also, I've been around people with advanced degrees and one common thing I notice personality-wise is most of them are very confident in themselves (not in a good way) and are very linear thinking. I don't think these are particularly good traits of a human trader because it will often lead them to be stubborn too thinking they have everything figured out and they are the smartest in the room; and the last thing you need is to be stubborn in a losing trade. Unless they use this personality into developing an algorithm then that is helpful because an algo sticks to a trading plan and their skills are in programming a robust algo and their personality helps them get the job done (job being the programming or the statistical analysis).

Mostly, I think the super successful traders like billionnaire futures trader John Arnold, etc, have a winning combination of knowledge of the industry, knack of the trade, lots of guts and lots of luck. You don't need fancy education for any of it when you do 1000 lot NG futures and a few minutes later you walk away with 1% gain on the notional that you sell after. They are immediately a lot richer just because they make the right trade.

 

[GloriaBrown]

My imagination...doesn't mean John Arnold really do that...
my imagination is that the main edge of him is that he knows the few other dominate force in natural gas market, and you know...what happen...especially when the gas was shortage and the main direction is pretty clear...that makes a already godlike master being more godlike....

Thread TL & DL

I say no degree other than you are smart enough to learn everything about finance yourself and understand how the industry works.

But if you must, I'd say a finance degree helps because it provides you with the background and theory necessary for you to jump right in with less catching up. A person who is totally green or who studied something else at uni will have to learn all this by themselves, such as all the terminology, how to read financial statements etc. So a degree will give you this background right away. But it can also give you biases because clearly stock prices are driven by sentiment and momentum and money flow, more so than the fundamentals more often than not, hence why "the market can stay irrational longer than u can stay solvent". Stubborn people who short based on "fundamentals" often get steam rolled because of this. "oh but AAPL is so undervalued and XYZ stock is 200 P/E so I'm shorting" then next day XYZ gaps up another 20%... "man so overvalued so I'm doubling down!".

I think in this modern age, a math or statistics degree will help too. You can approach trading with mathematical or statistical models to look for correlation and find trading strategies. These are much more advanced than mom and pop style buy and hold of what you know. This is rigorous statistically backed trading plans and what some of the top quant hedge funds use.

Then I think a computer science or programming experience can help with algorithmic trading. But before you can do that you still need a trading plan. Just being able to program something isn't helpful at all if you don't have the trading plan.

I don't think you really need advanced degrees except if the work or techniques you have used in those fields of study can be directly implemented in the trading plan. For example if you did machine learning work for your robotics research, you can probably apply that to your algo. Also, I've been around people with advanced degrees and one common thing I notice personality-wise is most of them are very confident in themselves (not in a good way) and are very linear thinking. I don't think these are particularly good traits of a human trader because it will often lead them to be stubborn too thinking they have everything figured out and they are the smartest in the room; and the last thing you need is to be stubborn in a losing trade. Unless they use this personality into developing an algorithm then that is helpful because an algo sticks to a trading plan and their skills are in programming a robust algo and their personality helps them get the job done (job being the programming or the statistical analysis).

Mostly, I think the super successful traders like billionnaire futures trader John Arnold, etc, have a winning combination of knowledge of the industry, knack of the trade, lots of guts and lots of luck. You don't need fancy education for any of it when you do 1000 lot NG futures and a few minutes later you walk away with 1% gain on the notional that you sell after. They are immediately a lot richer just because they make the right trade.

 

[butterfacetrader]

I think John Arnold had before he retired the fund one of the highest absolute and net-of-fees returns of all the hedge funds? Super speculator status and thats probably attributed to his use of super amounts of leverage in trading futures and winning more times than he loses doing it. Most other funds doing more conservative boring long/short strategies, etc, can't get those kinda returns. Those other funds probably only strive to slightly beat the benchmark index. Some even underperform.

People always complain about Paulson for one bad performance for one of his funds for one year. I think that was his gold fund last year. If you haven't noticed, gold took a beating in 2013 so anyone in that space took a beating. But I think he is still doing pretty well regardless for his other funds.

Yeah true, maybe Arnold 'has advantages' as you say that a retail investor cannot hope to replicate. But, lets just compare apples to apples, hedge fund manager to hedge fund manager. The fact he achieved such spectacular gain among the professionals should be a testament to the returns of his fund. It also shows that perhaps a retail investor focusing on what they know best (like Arnold's fund does with focusing only on trading energy products) and also using insane amounts of leverage, can lead to great success if things work out 100% for you in your favor; likewise it can also lead to quick down fall and complete loss of capital if things don't work for you, which is probably the more likely outcome, since futures are kinda zero sum and someone is bound to lose and swinging that kinda leverage takes a lot of balls.

 

[GloriaBrown]

yes, and I guess(base on my imagination which is not related to real) it is because natural gas is not a big market. There are only very few dominate forces, and he is one of these forces. As long as these few agree to do something ahead, any level of money can be made with super risky leverage and "back to the future" kind of "PREDICTION"(market control), may be the other few dominate force earn a lot too just John is well known but not others.

I imagine he closes down his fund mainly just because that would really stop any kind of investigation. It is also possible that he is so rich that he can just use his money to trade and much harder for any kind of investigation that way.

I think John Arnold had before he retired the fund one of the highest absolute and net-of-fees returns of all the hedge funds. Super speculator status and thats probably attributed to his use of super leverage in trading futures and winning more times than he loses doing it. Most other funds doing boring long/short, etc, can't get those kinda returns. They probably only strive to slightly beat the benchmark index. Some even underperform.

People always complain about Paulson for one bad performance for one of his funds for one year. I think that was his gold fund last year. If you haven't noticed, gold took a beating in 2013. But I think he is still doing pretty well regardless for his other funds.

Yeah true, maybe Arnold 'has advantages' as you say that a retail investor cannot hope to replicate. But, lets just compare apples to apples, hedge fund manager to hedge fund manager. The fact he achieved such spectacular gain among the professionals should be a testament to the returns of his fund. It also shows that perhaps a retail investor focusing on what he knows best (like Arnold's fund does with energy products) and also using insane amounts of leverage, can lead to great success if things work out for you; likewise it can lead to quick down fall and complete loss of capital if it doesn't work for you, since futures are kinda zero sum and someone is bound to lose.

 

[butterfacetrader]

yes, and I guess(base on my imagination which is not related to real) it is because natural gas is not a big market. There are only very few dominate forces, and he is one of these forces. As long as these few agree to do something ahead, any level of money can be made with super risky leverage and "back to the future" kind of "PREDICTION"(market control), may be the other few dominate force earn a lot too just John is well known but not others.

I imagine he closes down his fund mainly just because that would really stop any kind of investigation. It is also possible that he is so rich that he can just use his money to trade and much harder for any kind of investigation that way.

Its a niche market for sure. But I think its also about focusing on what you know. He was working for Enron before so he knows the energy space and he stuck with it. Maybe he took advantage of the energy space situation with a move away to diversify from crude as energy source. NG was growing in popularity back then as a move away from crude so speculators probably made lots of money in the process with energy producers hedging production using the financial markets and futures, etc.

Well i dont know about that. At least I would say that if I were in his position, and after 10 years and starting with a <10M net worth and growing that to billions, and I'm still under 40 years old, I'd quit right away just like he did too. I think he is smart. He knew when to fold. Hes had a great winning streak, and maybe its skill, maybe its luck, but it really doesn't matter. If you're up on the poker table, in a game where the odds are stacked against you for the house to win, you should probably consider cashing out and thats what he did. I would have cashed out like he did for exactly the reason that there is no point risking anything anymore. He is a billionnaire. He can buy a yacht and go travel the world. No point risking any more money (his and his investors) and his reputation staying in the market.

 

[GloriaBrown]

(below is just my imagination and nothing related to the real person John)I think he is the perfect textbook example of how to be the best FI trader and retire before 40, but not an example for retail trader who doesn't work for FI. For traders in ibanks, it is kind of not secret that those ibanks dominate the market, it is just about when they do something together. Well, the other markets are much bigger so even few ibanks group together for a "project" sometimes, they may lose a battle while the other few financial power may be on the another side. So it is hard for other FI traders to be as successful as John since his playground is much smaller and I can imagine there are much few chance the dominate forces separate into few groups and fight with each other. I think the real hard part is...can he be not caught before he is dead

For no insider news/no control market kind, I think James Harris Simons is the king. I believe he and his company really uses math+stats+tech to beat the market.

Its a niche market for sure. But I think its also about focusing on what you know. He was working for Enron before so he knows the energy space and he stuck with it. Maybe he took advantage of the energy space situation with a move away to diversify from crude as energy source. NG was growing in popularity back then as a move away from crude so speculators probably made lots of money in the process with energy producers hedging production using the financial markets and futures, etc.

Well i dont know about that. At least I would say that if I were in his position, and after 10 years and starting with a <10M net worth and growing that to billions, and I'm still under 40 years old, I'd quit right away just like he did too. I think he is smart. He knew when to fold. Hes had a great winning streak, and maybe its skill, maybe its luck, but it really doesn't matter. If you're up on the poker table, in a game where the odds are stacked against you for the house to win, you should probably consider cashing out and thats what he did. I would have cashed out like he did for exactly the reason that there is no point risking anything anymore. He is a billionnaire. He can buy a yacht and go travel the world. No point risking any more money (his and his investors) and his reputation staying in the market.

 

[butterfacetrader]

(below is just my imagination and nothing related to the real person John)I think he is the perfect textbook example of how to be the best FI trader and retire before 40, but not an example for retail trader who doesn't work for FI. For traders in ibanks, it is kind of not secret that those ibanks dominate the market, it is just about when they do something together. Well, the other markets are much bigger so even few ibanks group together for a "project" sometimes, they may lose a battle while the other few financial power may be on the another side. So it is hard for other FI traders to be as successful as John since his playground is much smaller and I can imagine there are much few chance the dominate forces separate into few groups and fight with each other. I think the real hard part is...can he be not caught before he is dead

For no insider news/no control market kind, I think James Harris Simons is the king. I believe he and his company really uses math+stats+tech to beat the market.

Not everyone in the industry 'works together' as you say. They are actually competition. They say if you want a friend in wall street, get a dog. So, everyone is out for themselves. While some groups clearly work together whether to short or be long stocks, mostly its everyone for themselves at all times and its convenient for them to pack together. But if someone spots an opportunity to take other side of the trade to bet against everyone else, you can bet they will do it.

Rentech is a holy grail of what 'quants' and 'techies' (STEM.. science technology engineering, mathematics majors) can achieve and what they aspire to becoming. The idea that you can use stat models, look a bunch of numbers and have computers crunching numbers and doing trades autonomously is really cool I know. Quants will try to use technical skills, analytical skills, and technology (like HFT) to solve a market problem to earn a profit. This is great and it works and they get pretty decent return. The reason John Arnold's case is so striking is that I don't think he runs fancy HFTs or have a bunch of quants in his hedge fund. Just a bunch of guys with a good knowledge of the industry. And it goes to show maybe you really don't need all that fancy technical stuff. Trading on human instincts and the market being stochastic really means that anyone can do it short of all the technical stuff. You really need to ask whether that technical stuff is giving you a real edge. And maybe you don't need it if all you're doing is trying to buy low and sell high. Hence, why some studies show even stocks picked at random can beat a benchmark index or some hedge fund returns. Its because at the end of the day its all random and non-deterministic anyway. I'd rather be more lucky than smart in a market.

 

[butterfacetrader]

BTW, I don't know about your comment of "no market control" which is probably an unfounded statement. I don't know the inside details of the fund but if they are making markets across a variety of markets and arbitraging everything, you can bet they probably have market control of some sort. Plus, they have billions and you throw leverage on top of that, then they are swinging a lot of money and can likely move markets...

 

[GloriaBrown]

Not everyone in the industry 'works together' as you say. They are actually competition. They say if you want a friend in wall street, get a dog. So, everyone is out for themselves. While some groups clearly work together whether to short or be long stocks, mostly its everyone for themselves at all times and its convenient for them to pack together. But if someone spots an opportunity to take other side of the trade to bet against everyone else, you can bet they will do it.

Rentech is a holy grail of what 'quants' and 'techies' (STEM.. science technology engineering, mathematics majors) can achieve and what they aspire to becoming. The idea that you can use stat models, look a bunch of numbers and have computers crunching numbers and doing trades autonomously is really cool I know. Quants will try to use technical skills, analytical skills, and technology (like HFT) to solve a market problem to earn a profit. This is great and it works and they get pretty decent return. The reason John Arnold's case is so striking is that I don't think he runs fancy HFTs or have a bunch of quants in his hedge fund. Just a bunch of guys with a good knowledge of the industry. And it goes to show maybe you really don't need all that fancy technical stuff. Trading on human instincts and the market being stochastic really means that anyone can do it short of all the technical stuff. You really need to ask whether that technical stuff is giving you a real edge. And maybe you don't need it if all you're doing is trying to buy low and sell high. Hence, why some studies show even stocks picked at random can beat a benchmark index or some hedge fund returns. Its because at the end of the day its all random and non-deterministic anyway. I'd rather be more lucky than smart in a market.

I was in a main core OTC business for awhile, and honestly...they work together sometimes...yes there are a lot of people are just by themselves and fight by themselves, but the biggest ones...they work as a team sometimes for sure. Is it legal? Ha ha. Money is money. Even government needs those FI to make the city/country being what it is. as long as those FI don't always screw up the whole econ, gov doesn't care, as least the gov over here acts like that.