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Becoming a trader: MBA vs. MFE
- Thread starter speric
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quantitative skills aside, i think MBA is better in providing "softer" skills. there are many names for those skills - confidence, cockiness, balls, you name it - but nevertheless, for traders they are very important.
traditionally, MFEs are perceived to be more introvert.
that said, with MFE degree becoming ever more popular, i would be not surprised at all to see more traders with MFE background.
traditionally, MFEs are perceived to be more introvert.
that said, with MFE degree becoming ever more popular, i would be not surprised at all to see more traders with MFE background.
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Yesterday I visited Citi with Baruch's undergraduate Wall Street Careers Program. One of the panelists was a quant - his background was mathematics and computer science.
He said that most of his work was related to programming and model building, but the natural progression to be a trader on his team was to start out in his role. I'm not sure how the hierarchy differs from one firm to another, but it would make sense to me to "produce" your traders through this learning process.
He said that most of his work was related to programming and model building, but the natural progression to be a trader on his team was to start out in his role. I'm not sure how the hierarchy differs from one firm to another, but it would make sense to me to "produce" your traders through this learning process.
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You may want to take a look at a very similar thread
https://www.quantnet.com/threads/mfe-to-trader.290/
https://www.quantnet.com/threads/mfe-to-trader.290/
That's an excellent thread Andy, thanks.
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I don't think it is an MBA vs an MFE issue of whether someone will progress to a "trader" in their organization or any other senior position but more of an issue is their "whole person" personality traits.
The "whole person", the sum of their life experiences, learning ability, work ethic, personality, contacts, and political ability, get evaluated by management and if you add more value then the other people trying to get the same job, it's yours. There have been many studies to suggest that technical knowledge is responsible for less then 25% of your career success, even in technical positions.
My suggestion is to try to be knowledgeable and actively involved in as many fields as possible to build and refine the "whole person" view. As a student it is easy to join in activities and clubs at campus but most MFE students do not. I remember when our famous ex-President of Quantnet, Jimmy "the Phoenix" Chin called me to attend meetings of the Graduate Student organization, we were looked on as novelties as they had not seen any involvement from the MFE students.
If you believe you are too busy to attend non academic events now that you are students, how will you find the time later when you are working 10-12 hours, have a family waiting for you at home and each event cost real money to attend? Playing on your company basketball team or a night out with your workmates once a week will further progress your careers then your ability to recite the solution to BS equation.... which you should know by now anyway....
The "whole person", the sum of their life experiences, learning ability, work ethic, personality, contacts, and political ability, get evaluated by management and if you add more value then the other people trying to get the same job, it's yours. There have been many studies to suggest that technical knowledge is responsible for less then 25% of your career success, even in technical positions.
My suggestion is to try to be knowledgeable and actively involved in as many fields as possible to build and refine the "whole person" view. As a student it is easy to join in activities and clubs at campus but most MFE students do not. I remember when our famous ex-President of Quantnet, Jimmy "the Phoenix" Chin called me to attend meetings of the Graduate Student organization, we were looked on as novelties as they had not seen any involvement from the MFE students.
If you believe you are too busy to attend non academic events now that you are students, how will you find the time later when you are working 10-12 hours, have a family waiting for you at home and each event cost real money to attend? Playing on your company basketball team or a night out with your workmates once a week will further progress your careers then your ability to recite the solution to BS equation.... which you should know by now anyway....
Well said
Well said.
Well said.
I don't think it is an MBA vs an MFE issue of whether someone will progress to a "trader" in their organization or any other senior position but more of an issue is their "whole person" personality traits.
The "whole person", the sum of their life experiences, learning ability, work ethic, personality, contacts, and political ability, get evaluated by management and if you add more value then the other people trying to get the same job, it's yours. There have been many studies to suggest that technical knowledge is responsible for less then 25% of your career success, even in technical positions.
My suggestion is to try to be knowledgeable and actively involved in as many fields as possible to build and refine the "whole person" view. As a student it is easy to join in activities and clubs at campus but most MFE students do not. I remember when our famous ex-President of Quantnet, Jimmy "the Phoenix" Chin called me to attend meetings of the Graduate Student organization, we were looked on as novelties as they had not seen any involvement from the MFE students.
If you believe you are too busy to attend non academic events now that you are students, how will you find the time later when you are working 10-12 hours, have a family waiting for you at home and each event cost real money to attend? Playing on your company basketball team or a night out with your workmates once a week will further progress your careers then your ability to recite the solution to BS equation.... which you should know by now anyway....
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To become a trader, you do not need a degree. You need to get into the training program of a company. A friend of mine went from being a software tester to trader in 2 years after getting into a company that provided 6-months trading training. He has no advanced degree.
I have heard similar stories. What company was that?
I agree, you don't need a degree to be a trader. I've heard about many Forex training programs where they teach you certain things to become a trader. They claim anyone can do it 
Another question is what makes you not being able to be a trader and here is where personality comes into play. No matter how much you know, but if you get scared every time your portfolio takes a 2-5% dive, you are not a trader personality And you have to make decisions fast.
Another question is what makes you not being able to be a trader
and here is where personality comes into play. No matter how much you know, but if you get scared every time your portfolio takes a 2-5% dive, you are not a trader personality And you have to make decisions fast.
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One of the many shops that do this type of commission trading
Lynx Capital Partners? (http://www.lynxtrading.com)
Someone found the ads on MonsterTrak and posted that it was a 100% commission + contribution was required. Its a prop Trader position. They are asking for $4,000.
I have no affiliation with this shop and don't know if they are good or bad. Just come across from another thread.
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Guys, don't mistake prop trading at the arcades with learning how to trade as part of a group at GS, Lehman, the HF's of the world, or with experienced speculators.
The FX and equity prop shops basically have your money as a "deposit" or as capital for a minority partner share in their firm and you are allowed to trade with large day leverage against the "deposit". This is basically the business model of the day trading shops that were popular in the late 90's. The shop makes commissions while you loose your shirt.....
This model is ridiculous as your 5K-10K-15K deposit will surely be eaten up by the drawdowns that are part of trading. Look at it this way, the SP averages 10% a year, and without experience, the rookie being the greatest trader the world has yet to discover will make 20% consistently the first couple of years. The rookie needs $50,000 to live on and at 20% profit, he/she will need an account leveraged to $300,000 to make a living considering some expenses. If you remember our talk, if a strategy is to make 20% annually, an average of draw down of 10% and a maximum draw of 20% should be expected (optimistically). Unless, the rookie starts with over about $50K, they will lose their money to commissions and the market draws not even considering the mistakes the inexperienced rookie will make.
The training of these shops is minimal..... The best equity prop shop that is well capitalized and does provide support but not necessarily the best commissions is Bright Trading. If you have to provide capital, it should be a red flag that the "job" in not what it seems, certainly not a training program leading to a trading career in a large firm with firm wide capital support.
Register at Elite Trader - The #1 Site for Active Traders and look at the thousand or so threads on prop trading before spending time or money........
The FX and equity prop shops basically have your money as a "deposit" or as capital for a minority partner share in their firm and you are allowed to trade with large day leverage against the "deposit". This is basically the business model of the day trading shops that were popular in the late 90's. The shop makes commissions while you loose your shirt.....
This model is ridiculous as your 5K-10K-15K deposit will surely be eaten up by the drawdowns that are part of trading. Look at it this way, the SP averages 10% a year, and without experience, the rookie being the greatest trader the world has yet to discover will make 20% consistently the first couple of years. The rookie needs $50,000 to live on and at 20% profit, he/she will need an account leveraged to $300,000 to make a living considering some expenses. If you remember our talk, if a strategy is to make 20% annually, an average of draw down of 10% and a maximum draw of 20% should be expected (optimistically). Unless, the rookie starts with over about $50K, they will lose their money to commissions and the market draws not even considering the mistakes the inexperienced rookie will make.
The training of these shops is minimal..... The best equity prop shop that is well capitalized and does provide support but not necessarily the best commissions is Bright Trading. If you have to provide capital, it should be a red flag that the "job" in not what it seems, certainly not a training program leading to a trading career in a large firm with firm wide capital support.
Register at Elite Trader - The #1 Site for Active Traders and look at the thousand or so threads on prop trading before spending time or money........
this..
Agreed.
However, depending what you trade and which market?
If we agree to trade in markets like HK, China (A or B Shares) and Australia, the returns of the past two years would be more than 50% in average based on the share prices. For example, BHP was below $20.00 (ASX) in 2005, then $30.00 in 2006, now is about $43-45. Similarly, some natural gas and coals producer stocks in HK and China have rose more than 100% over the year.
However, return of 20% would be a good return in a normal market. So, I reckon trader should be one who knows how to seize the market opportunities.
I think Gus can share his great experience but most people I talked to them did lose some money when they started trading. They said one has to pay tuition fee to learn how to trade!
Agreed.
However, depending what you trade and which market?
If we agree to trade in markets like HK, China (A or B Shares) and Australia, the returns of the past two years would be more than 50% in average based on the share prices. For example, BHP was below $20.00 (ASX) in 2005, then $30.00 in 2006, now is about $43-45. Similarly, some natural gas and coals producer stocks in HK and China have rose more than 100% over the year.
However, return of 20% would be a good return in a normal market. So, I reckon trader should be one who knows how to seize the market opportunities.
I think Gus can share his great experience but most people I talked to them did lose some money when they started trading. They said one has to pay tuition fee to learn how to trade!
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I don't remember his company's name, but it's in Philly.
I just watched "Pursuit of Happiness" the other day and when he asks "What do you do and how do I do it?" the broker replies "You have to be good at math and good with people."
Traders are a special breed.
I just watched "Pursuit of Happiness" the other day and when he asks "What do you do and how do I do it?" the broker replies "You have to be good at math and good with people."
Traders are a special breed.
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Quant
A friend of mine started as a quant but later decided he would like to be a trader. So, he asked for
transfer but the bank asked him to join their new graduate program instead. At that time, he earned nearly 90K/yr as a new quant but he was willing to get a pay cut.
He joined the trading floor as a trading assistant after the new graduate program. I think when you talk to quant people they will tell you MFE or financial mathematics is a must to be a trader. On contrary, MBAs will tell you the same story.
I know alternate investment and hedge fund do like to hire people with good analytical skills, business sense and economic background. Please bear in mind, banks are not asking you to solve equation but they want their employees to protect their profits, and then making profits.
A friend of mine started as a quant but later decided he would like to be a trader. So, he asked for
transfer but the bank asked him to join their new graduate program instead. At that time, he earned nearly 90K/yr as a new quant but he was willing to get a pay cut.
He joined the trading floor as a trading assistant after the new graduate program. I think when you talk to quant people they will tell you MFE or financial mathematics is a must to be a trader. On contrary, MBAs will tell you the same story.
I know alternate investment and hedge fund do like to hire people with good analytical skills, business sense and economic background. Please bear in mind, banks are not asking you to solve equation but they want their employees to protect their profits, and then making profits.
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Where I work, all the traders on the convert desk have MBA. All the traders on the stat arb desk have technical degrees.
MBA has traditionally been the pool where banks get their S&T personnel but the trend is changing as pointed out by Tim Grant, MD at UBS. More traders will come from MFE, CS background where most of the trading is done electronically
Interview with Tim Grant- Head of UBS Delta Americas - QuantNetwork - Financial Engineering Forum
MBA has traditionally been the pool where banks get their S&T personnel but the trend is changing as pointed out by Tim Grant, MD at UBS. More traders will come from MFE, CS background where most of the trading is done electronically
Interview with Tim Grant- Head of UBS Delta Americas - QuantNetwork - Financial Engineering Forum
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Here is a post by Dominic I think is relevant to the discussion topic at hand
Trading is becoming increasingly quantitative and those seats are mostly being taken from MBAs.
The obvious factor is of course that they have a better intuition to the models, and can deal with more sophisticated products where there are better margins.
A more subtle one is that MFES cope with the IT interactions better than MBAs.
Also BlackSwan2 is not wrong that there are a lot of "support" MFEs, but I'd invite him to think what happens if you have that state for a few years.
Some of the support MFEs (desk quants, tactical developers, quants etc) will become traders simply because some show they have the right stuff and learn the business from their earlier work.
That will lead to a bit of a snowball effect since once you have MFE traders, they are more likely to hire other MFE traders.
I know already of some trading groups, where they'd flatly reject and MBA so hard that merely sending that sort of CV would damage my reputation with them.
My model predicts that the ratio of MBA to MFE entry level traders will drop hard over the next few years.
Also going, further, there is a niche market in MFEs in more customer facing roles, who can talk with more authority on the nature of complex products.
A substantial amount of sales is towards "advisors", be they advisors of pension funds, corporates or high net worth individuals.
They are mildly sophisticated, and sending a good sales-based MBA in to them may be exactly the wrong thing to do. They don't want to be sold to, they want their questions answered.
A nascent, but already substantial path for MFEs and MBAs is taking over the running of pension funds, or similar asset/liability structures of corporates. That's a mix of skills that you will look equally in the set of MFEs as MBAs.
Trading is becoming increasingly quantitative and those seats are mostly being taken from MBAs.
The obvious factor is of course that they have a better intuition to the models, and can deal with more sophisticated products where there are better margins.
A more subtle one is that MFES cope with the IT interactions better than MBAs.
Also BlackSwan2 is not wrong that there are a lot of "support" MFEs, but I'd invite him to think what happens if you have that state for a few years.
Some of the support MFEs (desk quants, tactical developers, quants etc) will become traders simply because some show they have the right stuff and learn the business from their earlier work.
That will lead to a bit of a snowball effect since once you have MFE traders, they are more likely to hire other MFE traders.
I know already of some trading groups, where they'd flatly reject and MBA so hard that merely sending that sort of CV would damage my reputation with them.
My model predicts that the ratio of MBA to MFE entry level traders will drop hard over the next few years.
Also going, further, there is a niche market in MFEs in more customer facing roles, who can talk with more authority on the nature of complex products.
A substantial amount of sales is towards "advisors", be they advisors of pension funds, corporates or high net worth individuals.
They are mildly sophisticated, and sending a good sales-based MBA in to them may be exactly the wrong thing to do. They don't want to be sold to, they want their questions answered.
A nascent, but already substantial path for MFEs and MBAs is taking over the running of pension funds, or similar asset/liability structures of corporates. That's a mix of skills that you will look equally in the set of MFEs as MBAs.
