A few noob questions

[domeface]

(sorry if this is in the wrong section or something, this seemed the most appropriate place)

Hey, first post here (though I've been lurking for a while).

I'm somewhat interested in Quant finance as a potential future career choice, but I am currently deeply ignorant of all but the most basic facts rumours about it as a career, so I'm posting in an attempt to become more enlightened.

A few things about myself: I've not started my undergrad or even picked a course / university yet, but I'd still like to know a bit more about this area to get off to the best start. My main interest in quantitative finance is that it seems to be one of the few areas outside of academia where 'proper' Maths is actually used, which is very appealing because I love maths. Believe it or not I am not motivated by the money, or at least not to the possibility of earning millions. The fact that it's relatively easy to get to six figures is appealing, but anything past say £200k (and that would be like, utterly awesome - I'd be perfectly happy with £100k) is of far less interest to me than the chance to use seriously advanced maths in a real-life context.

So the most important thing I need to know is really, how much maths (and how advanced is it) is actually involved in the day-to-day job of a quant? I'm aware that there are various different 'types' of quant, eg desk, research, developer etc - does the amount/level of math involved vary significantly between these?

Another thing I need to become more educated about is finance in general. Beyond the most basic understanding of company share prices, I am painfully ignorant of the workings of financial markets. I know literally nothing about foreign exchange or commodity markets or anything of that nature. However, I would desperately like to learn more about this. I don't expect anybody to teach me all this personally, but if you could point me to any 'idiot's guide' books on the subject or similar, that would be great.

Finally, how much relevance does Physics have outside of it requiring Mathematical techniques? The fact that Physics seems to be targeted at least as much if not more that Maths suggests there is something I'm missing, but I'm clueless as to what it might be.

So yeah, I would very much appreciate any answers to these questions or general advice for a total noob. Thanks for your time.

 

[Andy Nguyen]

Another thing I need to become more educated about is finance in general. Beyond the most basic understanding of company share prices, I am painfully ignorant of the workings of financial markets. I know literally nothing about foreign exchange or commodity markets or anything of that nature. However, I would desperately like to learn more about this. I don't expect anybody to teach me all this personally, but if you could point me to any 'idiot's guide' books on the subject or similar, that would be great.

I'm more than happy to oblige
https://www.quantnet.com/forum/thre...uants-mfe-financial-engineering-students.535/

 

[Barny]

I estimate you have around another 100 hours of reading and research to do before you get to the stage of asking questions. Hanging around this forum is a good start. Most of your questions are so vague and at such a rudimentary stage it's pretty hard to know how to answer them.

Physics is good because it teachers you how to solve problems. Learning maths for maths sake is great, but applying mathematical techniques to solve a problem in the real world is a little different.

 

[curltron]

I'm actually an Economics Major with a Math minor, but my assumption is that Physics Ph.Ds are targeted because their curriculum stresses heavily on using math to model real life phenomena. As far as what I've read from posters in the last few years, having a Physics Ph.D might not be not as essential to becoming a quant as it was thanks to Financial Engineering programs.

And as far as getting into Financial Engineering programs, I'm not having much trouble getting interviews with top schools despite the fact that I'm not a Physics/Engineering/CS major, but surely the Math minor is a contributing factor. Once you graduate with your undergrad, the CFA is a fairly cheap way (cheaper than many degrees) to get you up to speed with financial markets. There are also plenty of great books out there, many listed in that master thread.

Hull's Options, Futures and Other Derivatives is probably the best to see some of the math Quants use.
Lawrence Ball's Money, Banking, and Financial Markets is a very readable text I used that covers most of the relevant Macroeconomics and some Finance with very little math.

 

[Yike Lu]

Finally, how much relevance does Physics have outside of it requiring Mathematical techniques? The fact that Physics seems to be targeted at least as much if not more that Maths suggests there is something I'm missing, but I'm clueless as to what it might be.

There are several reasons:
1) Physics models must produce physically reasonable conclusions.
2) Physics is experimentally driven.
3) Physicists have a lot of exposure to CS, data analysis, and data processing due to the nature of the work, especially in high energy. LHC puts out ~10 Petabytes of data every year, and that's just the interesting events (there is pre-filtering).
4) Good physicists have good intuition.

 

[atreides]

(sorry if this is in the wrong section or something, this seemed the most appropriate place)
Another thing I need to become more educated about is finance in general. Beyond the most basic understanding of company share prices, I am painfully ignorant of the workings of financial markets. I know literally nothing about foreign exchange or commodity markets or anything of that nature. However, I would desperately like to learn more about this. I don't expect anybody to teach me all this personally, but if you could point me to any 'idiot's guide' books on the subject or similar, that would be great.

This will give you a bird's eye view of the industry, major players, areas, etc.. The Complete Guide to Capital Markets...

 

[TRAB]

Domeface, read My Life as a Quant: Reflections on Physics and Finance by Emanuel Derman

 

[domeface]

Andy Nguyen: Haha yeah I have seen that thread before, but it doesn't seem to have exactly the sort of thing I'm looking for; skimming through the 'general reading on wall street' section (everything else seems either too advanced, too specific or both), it seems mostly like they're the kind of books aimed at the mass-market, more for entertainment than education? Of course this is only my ignorant opinion after a relatively brief glance, so if I'm off the mark here please tell me.

Barny: yeah haha that's sort of what I'm trying to do now, I want to get all of the basic 'groundwork' so to speak out of the way so I can move onto learning more about the more advanced stuff.

Barny, curltron, Yike Lu: ahh I see, so is it more just that Physics shows a general ability to apply mathematical principles to modelling the real world rather than specific Physics knowledge being especially relevant?

curltron: thanks for all the info, all that sort of degree / formal education stuff is something I'm looking into a lot atm as well. As for your reading recommendations, interesting though they do look, I'm afraid they're somewhat out of my price-range right now :S but I'll definitely give both of them a look as more advanced references in the future.

atreides: that looks like a very useful (and even affordable) book, and its description as a reference for those with no prior onowledge in finance seems perfect. My only concern is that it also seems to be geared more towards career-changers with relatively advanced mathematical and computer knowledge. Given that I have no further than high-school level math (although I would be very happy to teach myself further subjects if they are simple enough to do so) and more or less zero knowledge of programming etc, am I likely to be able to understand most of the book? If so I'll definitely order it, it looks to be very useful indeed.

TRAB: Thanks, I'll give it a look. Again though is that aimed more at aspiring quants as a sort of career guide or os it more to inform and sntertain the general public with a quant's life?

Thank you all for taking the time to answer my questions. I very much appreciate it.

 

[Barny]

Barny, curltron, Yike Lu: ahh I see, so is it more just that Physics shows a general ability to apply mathematical principles to modelling the real world rather than specific Physics knowledge being especially relevant?

Yes, and in actual fact doing physics to work in finance is a hindrance. If you want to work in finance, do something finance specific. Otherwise you'll have to spend your time learning physics instead. Some of the skills might be transferable, but so are the skills you'd learn doing financial modelling.

 

[domeface]

Yes, and in actual fact doing physics to work in finance is a hindrance. If you want to work in finance, do something finance specific. Otherwise you'll have to spend your time learning physics instead. Some of the skills might be transferable, but so are the skills you'd learn doing financial modelling.

Oh okay I see. Does this apply to all levels of education or more just Postgraduate and onward study? Becase I have gathered te general impression that it seems to be preferrable to do a more 'general' undergrad degree (eg maths, physics etc) rather than a more 'specialised' vocational degree (eg financial maths), allowing you to specialise later with an MFE or similar. Is this only becuasPe it is seen as too early to make up your mind when picking an undergraduate degree, or is it genuinely advantageous to do it this way, and if so, why is this?

Thanks again for your time.

 

[atreides]

atreides: that looks like a very useful (and even affordable) book, and its description as a reference for those with no prior onowledge in finance seems perfect. My only concern is that it also seems to be geared more towards career-changers with relatively advanced mathematical and computer knowledge. Given that I have no further than high-school level math (although I would be very happy to teach myself further subjects if they are simple enough to do so) and more or less zero knowledge of programming etc, am I likely to be able to understand most of the book? If so I'll definitely order it, it looks to be very useful indeed.

This is not a deal breaker...I'm sure you could probably understand at least 75% of the book on a first read

 

[JulianT]

For the most part, specialization starts in the undergraduate level. You don't necessarily have to do a financial math degree, however, if you know that that is what you want to do, then why not? You get to learn more about the stuff you wish to learn about, and avoid taking classes you don't care for as much. Knowing what you want to do in your undergrad is often a huge advantage, since you can pretty much work your way to getting where you want to be, while many are still lost. You can get there faster, and tilt the tables in your favor.

That being said, I would start a general undergrad degree in math/physics/cs, and see which you enjoy most. the jump from early calculus to real analysis is non negligible (whether it is strictly useful for financial math is another question).

 

[Barny]

Oh okay I see. Does this apply to all levels of education or more just Postgraduate and onward study? Becase I have gathered te general impression that it seems to be preferrable to do a more 'general' undergrad degree (eg maths, physics etc) rather than a more 'specialised' vocational degree (eg financial maths), allowing you to specialise later with an MFE or similar. Is this only becuasPe it is seen as too early to make up your mind when picking an undergraduate degree, or is it genuinely advantageous to do it this way, and if so, why is this?

Thanks again for your time.

The best possible preparation you can do is a mathematics undergrad, where you learn both pure and applied topics and don't stick too rigidly to probability and statistics.

Think:

Real Analysis
Complex Analysis
Group Theory
Differential Equations
Numerical Analysis
etc.

Once you have this background, you can easily move into other areas (financial maths, computing) etc.

 

[Yike Lu]

I believe financial math specialization programs in undergrad are at this point of overall dubious quality. I mean come on, many MFEs are of dubious quality. I think THAT is the warning against specializing in this field in undergrad. If/when the field becomes mature enough that undergrad programs have more uniformly good quality, would I recommend it.

Julian is absolutely right about the benefits however, I'd just be very cautious about taking such a path. Caveat emptor here.

As far as physics - yes, most of us tend not to get our heads lost in the clouds and those that do at least still have their feet lightly on the ground. Specific physics knowledge is indeed not too relevant. It's the training, mindset, plus the intelligence pre-filter.

 

[Ken Abbott]

I believe financial math specialization programs in undergrad are at this point of overall dubious quality. I mean come on, many MFEs are of dubious quality. I think THAT is the warning against specializing in this field in undergrad. If/when the field becomes mature enough that undergrad programs have more uniformly good quality, would I recommend it.

I agree. If you're a very good student, get an education first. Learn a trade later. If your education is good, learning a trade won't be that hard (provided, of course that you take some preparatory courses, like those in math).

Also: be forewarned. Quant Finance programs in 2012 (notice I'm hesitant to call it engineering - engineers build bridges and design circuits) are starting to look like e-commerce programs in 2000...

 

[Zeuge]

Also: be forewarned. Quant Finance programs in 2012 (notice I'm hesitant to call it engineering - engineers build bridges and design circuits) are starting to look like e-commerce programs in 2000...

What kind of grad degree would you recommend for someone who wants to break into quant finance?

 

[Ken Abbott]

Statistics worked for me. Although (full disclosure) I'm pretty far from being a real quant. On a really, really good day when I'm thinking very clearly, I might generously be considered a 4th or 5th rate quant.

 

[Zeuge]

Do you see a growing job market in risk concurrent with the worsening job market in trading? Would a graduate degree confer any benefit in the job search if you already have a quantitative degree from a 'target school'?

 

[Ken Abbott]

The risk team at my firm is several times the size it was a few years ago.

Experience trumps graduate study, every time. I tell people it's always better to go to graduate school after getting experience. You'll find your motivation to be much, much different. I had the good fortune of learning things one week and applying them the next, since I was going to school at night.

 

[domeface]

This is not a deal breaker...I'm sure you could probably understand at least 75% of the book on a first read

I've managed to find a sample with the first few chapters online, and it does seem very easy to understand and extremely informative. I'll probably be ordering it very soon, thanks for the recommendation.

Also: be forewarned. Quant Finance programs in 2012 (notice I'm hesitant to call it engineering - engineers build bridges and design circuits) are starting to look like e-commerce programs in 2000...

Pardon my ignorance, but I was still learning to count in 2000; what was significant about e-commerce programs then?