Undergraduate to Sales and Trading

[Alex C]

I am new to this forum and I am not even sure if this is the right place to ask these questions, but hopefully I can learn something.

Well, first of all, I am in the first year of earning my 4-year degree in Applied Engineering Physics at Cornell. I have also recently decided that I may want to pursue getting into a "Sales and Trading" division at GS or another top bank (I know friends who have from the same major).

My specific question, however, is one that I am recieving different answers on.

Can I go straight into working in S & T right after my 4-year degree?
Or is a MBA or phD in something else needed?

I have heard of people working for 2 years, then getting an MBA. But I am pretty sure this is for more of actual banking, and not S and T.

For Sales and Trading, can I go straight to work after 4 years and not have to pursue further education?

Please correct me on anything that I appear to be misinformed on, because I very new to this and I am only a Frehsman at Cornell. I have also heard that I can get an internship next year?

I hope this forum is actually about what I am talking about!

Thanks for any replies.

 

[GoIllini]

Well, first of all, I am in the first year of earning my 4-year degree in Applied Engineering Physics at Cornell. I have also recently decided that I may want to pursue getting into a "Sales and Trading" division at GS or another top bank (I know friends who have from the same major).

Make sure you take a lot of econ, accy, and finance courses. A double major in Econ would be helpful and also set you up extremely well for grad school if you can get strong recs and good grades at the same time.

GS is difficult to get into- particularly because it has a lot of target schools ranging from SUNY to UVA to Ga. Tech to Illinois, and their interviewers are particularly good at picking out the best students from these programs, which you will have to compete against. The smartest 5 students from Georgia Tech are probably smarter than the smartest 5 from Cornell simply by virtue of program sizes, and these are the people you will compete against for an offer. The advantage of Cornell is that it is a target school for a larger number of investment banks that target fewer schools- like JP. Morgan, Morgan Stanley, and BarCap, so don't get your heart too set on Goldman.

Can I go straight into working in S & T right after my 4-year degree?
Or is a MBA or phD in something else needed?

You can absolutely go into Sales and Trading after your four-year degree. In fact, an MBA might hurt more than it will help on the trading floor. Not everyone gets to Sales and Trading directly- one other option is to go through research and land at a hedge fund after about three or four years. Getting into S&T is like Manhattan Paths or a trip down Pascal's triangle. You need to have about two or three different things go right, but they don't have to happen consecutively.

A financial engineering master's would help. So would an Econ or Math PhD if you want to be a quant.

 

[Alex C]

I do not have my heart set on GS, thankfully. I am just hoping to be at a large BB bank, not GS in particular.

So, if I understand correctly, you are saying that I don't need to pursue further education after a 4-year degree to get into S&T?

But a phD could help but I don't need it?

I am slightly confused, I am sorry.

edit: Maybe I can word my question better, what would be best for me to do after recieving my 4-year in AEP?
Will I have a better idea of what to do after I get into my Sophomore year and trry to get some Internships?

 

[GoIllini]

I do not have my heart set on GS, thankfully. I am just hoping to be at a large BB bank, not GS in particular.

So, if I understand correctly, you are saying that I don't need to pursue further education after a 4-year degree to get into S&T?

You don't have to, but it can be helpful. Something like 1/4 of the engineers who want to be in sales and trading wind up in sales and trading upon graduation. Something like 2/3 of the financial engineering master's students who want to go into a quant role at a trading desk wind up getting one.

But a phD could help but I don't need it?

I am slightly confused, I am sorry.

What I'm saying is that there's a decent chance the door to sales and trading will be open to you after graduating from your four year degree. But if it's not, you can go on to grad school, which gives you significantly increased chances at a sales and trading job.

edit: Maybe I can word my question better, what would be best for me to do after recieving my 4-year in AEP?
Will I have a better idea of what to do after I get into my Sophomore year and trry to get some Internships?

Typically, the bulge brackets hand out internships in the summer between Junior and Senior year, and you will receive an offer (or not) shortly after the completion of the internship. If you don't have an offer at that point, you should consider applying to grad schools.

If you focus on maintaining a GPA at least one standard deviation above average and focus on doing some undergraduate research all the way up until the fall of your Junior year, you can maximize your chances of getting into a financial engineering program or getting a sales and trading job offer.

 

[Alex C]

Thank you very much!
So as I understand it, at the point after an internship when I know if I have a job offer is when I can decide whether or not I need further education

If I do not get an offer at that point, I can get a Master's in F.E. and then try to get into S&T again afterwards.

If I do get an offer at that time, I don't need to worry about getting a master's/phD because I have the job.

Thank you very much, I am pretty sure I understand now!

 

[IlyaKEightSix]

I would also recommend statistics as an alternative to an MFE. Here's the breakdown IMO:

MFE: Teaches you to value complex derivatives. Uses C++ (if it's a good program).
Statistics: Drops the complex derivatives aspect and replaces it with more focus on analyzing large amounts of data. Plus, it doesn't put you at risk for getting burnt by a quant fund that hates to see finance on resumes. Uses R (and maybe SAS).

Here at Rutgers, there's a bit of an intersection.

 

[Andy Nguyen]

I would also recommend statistics as an alternative to an MFE. Here's the breakdown IMO:

MFE: Teaches you to value complex derivatives that are highly illiquid and thereby not used for trading, but for institutions who want to make specialized bets.

Ilya,
I know you love to get yourself into bad spots by putting foot in mouth but your statement is ridiculous. You have never been in an MFE program so shouldn't make any post about what they teach. Stick to what you know, which is what you learn in your Stat program.

I hate to call out people but for the sake of Quantnet being a place where people can get accurate and reliable information, please don't do us a disservice by giving misleading and bad advice.

What "illiquid complex derivatives" are you talking about? No MFE program teaches securities that are based on a correlation between temporary of the ocean and the pork barrel price. Instead, they teach CDS, bonds, fixed income derivatives, interest rate swaps, etc. Do you call these illiquid?

 

[IlyaKEightSix]

My apologies. I guess the "complex derivative"=>"illiquid" is not always true, but only sometimes.

I edited my original statement.

 

[GoIllini]

Thank you very much!
So as I understand it, at the point after an internship when I know if I have a job offer is when I can decide whether or not I need further education

If I do not get an offer at that point, I can get a Master's in F.E. and then try to get into S&T again afterwards.

If I do get an offer at that time, I don't need to worry about getting a master's/phD because I have the job.

Thank you very much, I am pretty sure I understand now!

Exactly. That's the strategy I would follow if I had to do everything over again.

Also, remember to make friends with some math, engineering, and econ profs. You will need three letters of reference to get into grad school, preferably at least one from a math or stats prof if you're coming straight out of undergrad.

I'm personally a big fan of an engineering undergrad degree and I think you're making the right move with that. If there's a slump in the financial sector, you can always work for a manufacturer and go back and get an MSFE. A double-major in Econ or Applied Math would also help your case for trading and/or grad school, but I don't want to take away the precious little free time an engineering major has left.

 

[Alex C]

The double-major would be tough, but it is something I am considering.
Also, if I ended up getting my Masters in FE, would there ever be a need to get a phD in anything after that? Or would that be as far as I needed to go?

Thanks so much everyone, this forum is of great quality and advice.

 

[chaoticrambler]

From what I have understood so far, to become a trader, PhD is not at all required (and kinda discouraged). But if you want to modelling and become a proper quant, PhD is a big help.

In the whole world, the only job you absolutely NEED a PhD is in academia.

 

[Alex C]

Okay thank you!

Because I am new to finance topics in general. What is the difference between a proper quant and a trader in terms of hours and salary/bonuses? (I am pretty sure I know the difference in what they actually do.)

 

[Andy Nguyen]

Take a look at the free guide a top of my Master reading list for Quants, MFE - QuantNetwork - Financial Engineering Forum

This would give you a flavor of the quant side of things. I have a sense that what you are after is more into a MBA bend than an MFE flavor.

 

[Alex C]

Thank you, I will read through that now.
Is what you are saying is that you think that I want to be a trader and not an actual "quant"?

Do you know the difference in hours/salary between the two?

 

[GoIllini]

From what I have understood so far, to become a trader, PhD is not at all required (and kinda discouraged). But if you want to modelling and become a proper quant, PhD is a big help.

It's certainly not required, but I wouldn't say it's discouraged, and a PhD from a really strong school can sometimes make you more competitive for a very quantitative role.

Most PhDs at Investment Banks will tell you that it's not worth six years of your life to get a PhD if you want to be quant. Then again, the firm I worked for (before it capitulated in September) supposedly ONLY hired PhDs for quantitative roles.

Is what you are saying is that you think that I want to be a trader and not an actual "quant"?

Do you know the difference in hours/salary between the two?

It really, really, depends.

Some traders and quants work only 40 hours a week. This was certainly the experience I had at a clearing firm in Chicago. The traders there made good money, too. Here at a typical major investment bank, the quants in our research and institutional portfolio consulting groups also only work 40-50 hours a week. It's a relatively nice low-stress life and I'm sure they make a lot more than folks in academia, but most of them can't afford a Park Avenue penthouse. They get to do a lot of interesting highly intellectual work.

The quants on the trading floor have much more stressful jobs and earn more. They tend to keep longer hours, too- one quant developer I know works 70 hours/week. IMHO, portfolio/research quant jobs are totally underrated by students because they don't sound quite as cool as being a desk quant, but the work is essentially similar- just in smaller volumes and at a lower stress level. It leaves you just as eligible to go work for a hedge fund, too- though you would typically be more in asset management than trading.

Most engineering students (I was one of them) will take a look at 70 hour weeks, laugh, and say, "Pish posh, that's easy!" Keep in mind that you don't get summers off and only three weeks of vacation per year.

 

[chaoticrambler]

It's certainly not required, but I wouldn't say it's discouraged, and a PhD from a really strong school can sometimes make you more competitive for a very quantitative role.

Most PhDs at Investment Banks will tell you that it's not worth six years of your life to get a PhD if you want to be quant. Then again, the firm I worked for (before it capitulated in September) supposedly ONLY hired PhDs for quantitative roles.

I am differentiating between traders and FO quants who sit next to traders on the floor.

For a trader, PhD is not a big advantage (and folks at Wilmott say it is discouraged). Traders need a skill set different from quants.

For any quant roles, and of course hedge fund positions, PhD is definite edge (and sometimes required).

 

[Alex C]

Thanks everyone for all the answers!

Overall, I think that I am overthinking this for the stage that I am at. Most of these decisions can only be made once I am offered interviews.

For now I will focus on completing my UG degree and then getting a masters in FE.

From there, I will make my own decisions based on what is available.

Thanks everyone, I feel a lot less nervous.

 

[WilliamY]

It's inspiring to see so many proactive freshmen and sophomores visiting this forum and having their doubts and questions cleared.

 

[alain]

I have also recently decided that I may want to pursue getting into a "Sales and Trading" division at GS or another top bank (I know friends who have from the same major).

If you have friends already in, keep then close and make sure they can hook you up. That'll be better than MFE, MBA, PhD, etc.

 

[GoIllini]

If you have friends already in, keep then close and make sure they can hook you up. That'll be better than MFE, MBA, PhD, etc.

Agreed, but I'd also note that friends can't change the fact that you need to be at a certain level of technical and professional competence to meet the prereqs for a job. At least that's the way it works in technology. I've met people who weren't technically competent with a BE in Comp. E., but were technically competent after they went back for an MS in CS.

A general engineering degree does not do everything it can to prepare you to be a trader. If the OP's friends can't get him in after his undergrad, he shouldn't be discouraged; rather, he should go back and get an MFE.

One last note is that it is my understanding that the most common reason for engineers getting turned down for sales & trading and work at investment banks in general is that they don't come off as aggressive or decisive enough. The good news is that aggressiveness can be a learned skill. I was awfully quiet when I arrived as a programmer at an investment bank, but the IT staff here is about 1.5 standard deviations more aggressive than typical programmers would be, and I've gotten used to being more aggressive.

If anyone out there is an engineer who wants to go into sales and trading, find the most aggressive people that you would consider good influences and hang out with them.