Best bachelor degree for algorithmic trader position?

[Stelin]

Hi!

Im new here and Im gonna start this year the university, however Im not sure which degree to choose yet...

Since I was a child I was passionated about the trading world and Im convinced that this is what i want to be working in the future.

I had been reading the forums and it seems that nowadays is very important to have a strong programming and mathematics background in order to work in this field. Also it looks like that is very important to have a MFE or MBA as well.

In Spain, the degrees last 4 years, in most degrees there are some subjects that you are not going to use ever in your job, so that means you are losing the time...

I dont want to choose the wrong degree and neither lose the time learning useless subjects, so I need your help.

For now Im thinking about 3 options which are very attractive to me:

1) Degree in Applied Statistics - Linear Algebra, Calculus, Statistics, C++, SAS, SPSS, Matlab, Advanced Excel, SQL, a few subjets on economics and econometrics, etc...

2) Degree in Economics and Finances - Bilingual, microeconomics, finantial accounting, macroeconomics, econometrics, Linear algebra, corporate finance, risk management, derivatives markets, tons of law and history subjects about economics...

3) Degree in Mathemathics - More in depth Linear Algebra, Calculus, also programming in C++, Matlab, Geometrics, Physics (waves and mecanical), Scientific calculus, differential ecuations, Analisis, risk management, an quantitative finances subject, stocastic calculus...

I had been also reading the study plans for different engineering degrees, they have a strong mathematic component but there are a lot of subjets which are useless for my objetives and it also have a very weak/none economics/finances subjets in the study plan.

It is very important for me to choose the right path to follow and i hope you can help me. Thanks =)!

 

[Tsotne]

...in order to work in this field.

So you are going to get involved in quant profession. Then I would personally drop your second choice since the background of economics is harder to be turned into quant job than background of math. Third option looks most attractive if you want to pursue your career as a quant.

 

[Stelin]

First of all, thank you for your fast answer !^^

Well then I must be completelly wrong about what i knew about this field..., i thought it was more related to economics and finances but it looks like its not...
I love to read economics and finance newspaper like FT, the economist, etc..., however I thought that most of the things that were posted were more related to economics and finances fields instead of pure mathematics ones.
So another point that i have to take into consideration is if it is really this what i want to do because Im not sure if working as a trader is pure maths only... it looks a bit boring if it is only maths i think...

However im not sure yet about choosing applied statistics or pure maths degree..., Ive realised that the first option can also give me the option of changing to "Business Intelligence" or "Market research" fields, for just in the case that i change opinion. Actually Im quite good with programming languages, I dont know why, but it looks like i have natural talent for it like my teacher said :P

Well, now im wondering where can a graduate from Economics and finance work? In commercial banking? there is not any possibility for them to work in investment banking?

take a look to the prospectus please:
http://www.uam.es/ss/Satellite?blob...goBlobs&blobwhere=1242664315622&ssbinary=true

 

[Andy Nguyen]

Hey Stelin,
Welcome to Quantnet.
First, let me categorically state that it's extremely rare to be hired as an algo trader, or any trader with a bachelor degree. I don't know where you get that idea from but let's be realistic here.
A bachelor degree is like that everywhere. You can't spend four years studying one subject, be it math or computer science. Even then, I'm not sure if any schooling will prepare you to be a trader.
Your best bet may be to get a very hard core degree in Math/Stats/CS and have a very solid grounding on those subjects. Then get an internship, entry level job in one of these prop trading firms and do grunt works for few years to learn the rob. Then and only then, you will know if you can survive the environment and where your shortcomings are. You can decide if a graduate degree will help or not.

Take a look at this list. There are several free finance industry guides.
http://www.quantnet.com/master-reading-list-for-quants
http://www.quantnet.com/quant-job-advice-from-wall-street-executives/

 

[Stelin]

Hey Andy,
Thanks, this is really a great community ^^

I guess that a degree in mathematics is the best choice then, its a very hard core degree in both Maths/Stats/CS.
However I still got some doubts about the internships you are talking about, it is supposed that you need some economics/financial background if you want to get a job in one of these prop trading firms.

Im afraid that the degree in pure mathematics doesnt have enough subjects in economics / finances and due the lack of this knowledge I will have some troubles finding an opportunity to get an internship in the financial world...

So i was wondering if i should take some economics subjets in a second degree in order to have more chances to achieve my goals or actually a degree in pure mathematics with good marks is enough?

Maybe Im wrong and actually the Hedge Funds prepare you in these fields or maybe it is not necesary for a quant job...

I would also like to ask some information about working in Hong Kong, actually its my dream to have a job there in a Hedge fund, I speak spanish, english (low level) and chinese, is it possible to get an internship there?

So, the best thing I can actually do is Degree in Mathematics + MSc Financial Mathematics + internships? or its better to gain some working experience before taking the master?

 

[Connor]

Algo trading is heavy in programming, and if that is what you really want to do then you would be better off with getting a degree in computer science.

I would recommend doing the mathematics or statistics degree and as you mentioned, a second degree in economics. Do a few internships during you degrees and then decide what you want next. Still interested in algo? Get a masters in computational finance or computer science. If not you are prepared for a number of jobs.

 

[Joy Pathak]

There is really no such thing as an "algo trader". The only place you can really call yourself an 'algo trader' is if you work in a prop trading firm and you develop your strategy/algorithm, implement it (coding), and launch it(asset allocation/execute).

I was offered an internship in algo trading at a hedge fund and a market making shop.

From what I learn't from them, this is how "Algo Trading" works at a Hedge fund (or any place basically).

You have PhD Strategists/researchers who usually have degrees in Physics/Mathematics who come up with ideas and then research and develop algorithms based on these ideas. These algorithms are then backtested by the research team and tweaked and send to the Quant Developers.
The quant developers(expert programmers) are the ones who implement these algorithms and then optimize the code to the best of their abilities. The algorithms have to be interfaced on some platform(TT usually) and the programmers take care of this part.
Then come the "Traders" who work on asset allocation and execute these algorithms onto the market at specific times depending on the parameters stated in the algorithm in terms of volatility and so on. Most algorithms I have seen are market neutral so the trader's job is to just launch the algorithms onto the market when they open and then sort of "baby sit" or allocate asset to it accordingly in a risk management framework.
Many a times it is a circular process. The traders since they are locked into the markets, will come up with ideas on trading and will talk with the PhD strategists who will refine and turn the idea into an algorithm, and the process starts again. From the few funds I interviewed at and got offers from it seems like the smallest number of algorithms(robots) a fund has run is around 800 so everyone is usually pretty busy. I recently saw one trader launch/manage/monitor more than 100 algorithms in the european markets.

There ARE exceptions to what I stated. I am just speaking from experience. I was working with a hedge fund last semester where it was just a trader/quant developer who were doing the algorithm trading. The trader came up with ideas and concepts and the quant developer would implement them. I have also met people who do ALL three at hedge funds(Silos) and they have had PhD's in EE/Math from MIT/Berkeley and Georgia Tech. The triple hitters are almost always people who have done significant math and programming for a minimum of 5-10 years.

So, the question is what part do you want to be? (My internship was assisting the researchers/strategists with back-testing at a hedge fund and another at a market making shop as a trader assistant basically).

 

[Joy Pathak]

From what you have said, the PhD Strategists/researchers route appeals to me more, while I am also open to doing some programming by the side to build up my experience. You mentioned degrees in Physics/Math for this position, will a Masters or PhD in CS be as relevant and sought after? How does degrees such as MFE or MS in computational finance compare to the more academic degrees above?

Based on your internship, which of the two do you think is looked upon more favorably in terms of employment for this field: proficiency in more than one area (eg. double masters in CS and Math) or concentration in one area (eg. PhD in CS)? Thank you for your time!

From what I have seen, MFE MSCF, MFM, etc, in QR have support roles mostly assisting the PhD's. It would be very hard for anyone with only a Masters to surpass a PhD in the research area. I highly doubt PhD's in QR will let a MFE get promoted above another PhD. So, as an MFE you will almost always be in a support role. The places I spoke to said they "listen" to everyone when it comes to ideas and strategies in the firm. The PhDs have the say if the idea should be looked into more deeply or not. I am sure the Research positions pay significantly too as an MFE. The strategists do have the most relaxed job I would say. They come in at 10-11am and some even work from home at times. They are ALWAYS busy, but it is more relaxed. The Quant developers usually might be on call 24 hours if you're working at a shop that trades globally. The stress with quant developer would be less to I would assume although I have no exposure to them. The traders have the highest stress which would be obvious and usually work the longest hours even if they work in shifts in a 24 hr fund.

The strategists usually program in MATLAB, R, VBA, etc so if you want to go that route pick them up. They only build prototypes and do backtesting so you don't require some crazy programming.

I am not sure which degree is looked on as better. The best would be if you could be great at math/statistics and programming. The developers are usually CS majors. Just pick the one that interests you the most and then make sure you learn the required math and programming.

Also, I did not pick the algo trading internships so I cannot comment on that part. The place I did some work at previously was a very small shop and things were done a bit different there than what is the norm so it would not be fair to comment based on that.
I will be interning at a bank.

Also, remember structure of departments can differ SIGNIFICANTLY from place to place. My sample might be too small so take what I say accordingly.

 

[Joy Pathak]

Your replies have been most insightful ^^ I have just 2 more questions to satisfy my curiosity: Is it common practice for PhDs working in algo trading to pursue an educational career concurrently (ie. lecturing in universities)? I have heard that some graduate level courses on this topic are taught by "practitioners" so I suppose they are referring to this group of PhD strategists/researchers.

The next question may be a little unfounded but are women at a disadvantage when finding employment/internships in this area? I have actually read that women are, to quote, "rare as hen's teeth" in algo trading and that sure sounds quite intimidating. I do have confidence in my math/programming but it would be great to know that success here is not completely male dominated.

And of course, million thanks for sparing the time to answer my rookie questions :D

I do not have a detailed answer for the first question. All I can say is that the algo trading class at Baruch is taught by industry professionals who have PhD's. Maybe some other people can reply better to this.

I don't know anything about women in algo trading. Unfortunately I have not seen any yet.

 

[GoIllini]

Here's the way it typically works:

Top 20 CS/Comp. E program -> At least a few years of grunt work as a quant developer -> trader.

Also I've seen this:

Top 20 CS/Comp. E program -> Google or Amazon -> architect for the algo traders-> trader

The process is a lot longer than just the typical route of getting hired to be a TA and then working as a trader. But there's also a lot less risk, generally a little more dignity, and a lot more backup options if the bottom falls out of the market like it did in 2008.

The next question may be a little unfounded but are women at a disadvantage when finding employment/internships in this area? I have actually read that women are, to quote, "rare as hen's teeth" in algo trading and that sure sounds quite intimidating. I do have confidence in my math/programming but it would be great to know that success here is not completely male dominated.

I also have not seen any women in algo trading, yet. If the quant development world is any insight, most of the well-run major NYC investment banks do a lot to make sure women are not at a disadvantage. If anything, they might even have a bit of an advantage on the management track. Incidentally, in a five-session final interview round, there will probably be two women interviewing you. The four women I've worked with directly in quant development were all very strong programmers with exceptional people skills.

The wonderful thing about the programming world is that it all comes down to competence. The last guy who interviewed might have been in the same fraternity at Harvard as his interviewer and you might be from the University of Podunk, but if you can get the solution down to O(n log n) time and he solved in in O(N^2), and you can demonstrate that level of exceptionalism consistently through your interviews, it's really hard for them to rationalize that away. If you're a smart enough and creative enough programmer- a true black swan- it will come out in the interviews and you'll get the offer over the old drinking buddy - even if he's also brilliant- nine times out of ten.

On the job, you're going to be surrounded by some pretty smart people- folks who all have raw quantitative ability on par with a Physics PhD from a top twenty school. If you're truly exceptional- whether you're a guy, a girl, or if you have six arms and only communicate by clicking your tongue, people will take notice and move you into roles where you can provide more and more competitive advantage to the firm- and incidentally, roles whose pay reflects the competitive advantage you add. The Quant/FO Technology/Risk/Algo Trading world is a place where your ability to relate and talk about the Giants game isn't quite as important as just being a nice friendly person and being very good at what you do.