Just HOW MUCH MATH does a trader need?

Hey everyone,

So, I want to become a derivatives trader; I major in Economics at a top 5 school, interned at Goldman (FICC division) last summer and will intern at JPM (Credit Derivates Marketing for Germany) this summer. My question to you is: Just how quantitatively able does one have to be to become a derivatives trader?

I have very high SAT Math Scores (790), and straight As in all quantitative econ courses, but I am certainly not a math genius or anything approaching that. Do you just have to have a good feeling for numbers, or what? In all my interviews, I was asked brainteaser questions which, although they were tricky, could be solved with easy mathematical methods taught in high school. So if they are using these sorts of questions in interviews, then does that mean that you don't actually have to be Albert Einstein?

People use to tell me that derivatives traders are "hardcore quants who breathe mathematics". So, how true is this statement??

 

I know nothing about derivative trading, though I know several derivatives traders who do quite well, who have a background similar to yours.

If you're looking to trade quantitative products at a bank, I'd highly recommend a solid, calculus-based probability course before graduation. Though I don't work specifically with derivatives, I do quant work at a hedge fund, and I feel that probability is the single most important course to my everyday work.

If you want more input on your original question, I'd highly recommend posting it at www.wilmott.com. This is an excellent message board; many of the posters will either be option traders themselves, or will interact with options traders every day. Highly recommended place to visit, if this is the business you're interested in.

 

"People use to tell me that derivatives traders are "hardcore quants who breathe mathematics". So, how true is this statement??"

Depends on the desk strategy. If you want to work in a quant arb. fund, then you will need to know how to program and live and breathe math.

other than that, as long as you are good with college math, you will be fine.

When trading, your models do not necessarily have to be "right" (unless you are doing stat arb trading). Your products will be priced according to the models that the market uses.

you just need to understand the underlying assumptions of the models and learn to nitpick what's generally right/wrong.

so if you want to get into deriv trading, you don't have to be a PHD but a good science background will def. help.

 

...unless u are a quant what is important is just that you have a familiarity with numbers...ie u can quickly add, subtract, and multiply in your head. it is helpful especially in the bond market to be able to quickly do things like convert ticks to basis points etc. That said, when i graduated from college i was horrible at things like that and became good at it with practice...i actually created a spreadsheet that randomly generated two decimal place numbers and i used to practice adding/subtracting a list of them as quickly as possible for ten minutes each night. But i am a bit insane.

 

did you create this topic to brag about you abilities? you should have no problem in a quant role. take a finance class in options and u should have a base for everythihng you need to know starting out.

 
did you create this topic to brag about you abilities? you should have no problem in a quant role. take a finance class in options and u should have a base for everythihng you need to know starting out.

These days, derivative and other exotic product areas are employing more and more PhD / MS in Financial Eng. types than ever. People in this subset will be very well tooled mathematically, and to some extent, this will represent your competition in the business. In this circumstance, there's nothing wrong with asking just how strong a background it takes to succeed.

 
Best Response
Bankenfanatiker:
Hey everyone,

So, I want to become a derivatives trader; I major in Economics at a top 5 school, interned at Goldman (FICC division) last summer and will intern at JPM (Credit Derivates Marketing for Germany) this summer. My question to you is: Just how quantitatively able does one have to be to become a derivatives trader?

I have very high SAT Math Scores (790), and straight As in all quantitative econ courses, but I am certainly not a math genius or anything approaching that. Do you just have to have a good feeling for numbers, or what? In all my interviews, I was asked brainteaser questions which, although they were tricky, could be solved with easy mathematical methods taught in high school. So if they are using these sorts of questions in interviews, then does that mean that you don't actually have to be Albert Einstein?

People use to tell me that derivatives traders are "hardcore quants who breathe mathematics". So, how true is this statement??

Wow. You are the WOAT.

 

My maths is ok, I can score well on GMAT andsimilar tests, but my degree was not in a very mathematical subject. Most of the traders my company seems to be hiring have strong backgrounds and was told this is the way it will be going for the future.

Soo maybe I should do something about it now, I am working on the desk as an analyst and will be a trader soon, but will my life soan be short if i dont have a stronger maths background. Do I need to go and gain a depper understanding, if so to what level. As many of the structured products I hear require a good mathematical understanding, is this the case for the traders or just the structurers

 
random99:
As many of the structured products I hear require a good mathematical understanding, is this the case for the traders or just the structurers

even more so for the traders as they actually manage the positions underlying the structured product.
structuring has a sales element to it, whereas trading (in exotics) is mostly risk management (greeks) and dealing with models and systems.

 

"So is there a point where appearing "too quant" (i.e. taking too many advanced math/programming/modelling classes) would relegate someone to a quant role? "

no. not at the undergrad level.

 

Thanks for the replies. I asked because the Penn career placement website shows math majors becoming actuaries/technicians and engineering majors becoming technology analysts (which I assume is some kind of IT support role at a bank.)

The real banking jobs went to int relations, polisci, econ, philosophy and history majors. (Granted, many of them had double degrees with Wharton.) I thought maybe majoring in something liberal artsy and taking a few math classes might be better than doing a full-blown quant major.

What's the highest level of math you guys have found useful as traders? Differential Eqs?

 

One of the reasons people with those majors end up with the 'real banking jobs' as you put it is because they for obvious reasons were able to get higher GPA's. Don't forgot your GPA is the most important factor especially when looking for 1st round interviews.

If I'm not mistaken, you need single-multi var calculus and maybe 2 probability/stat courses. I think that should put you on track.

 

OK, thanks eecs.

On another note, I read on somewhere on this forum about a well rounded education being important (I think this refers to liberal arts, though I can't imagine how that would apply to trading.) Thoughts on that? If I had to transfer into the 'CAS' I'd be a math/econ joint major with a stats concentration. How does that compare to financial engineering for trading?

 

I was a math major, took graduate math classes in numerical analysis, real analysis, pde. You can interview for whatever you are interested in. I interviewed for "quant" positions because I thought they would be interesting. Too much math does not work against you though, especially as an undergraduate. I realized I was much more interested in derivative trading than on the quant side, and am now on a prop desk.

 

That would be one intense online class if there was one for Calc III. Just a word to the wise; having done 5 out of those 6 classes, you should have blown through Calc I np if your going to try to teach yourself Calc III & the multivariable courses. Easily the hardest class I took in college. Diff equations would be good also, but that's paired with linear algebra most of the time.

Ace all your PE interview questions with the WSO Private Equity Prep Pack: http://www.wallstreetoasis.com/guide/private-equity-interview-prep-questions
 

It's said that such traders can do mathematics for a Singularity and divide Fractals down to one dimension.

^ If you don't get that joke, you don't have the math skills.

On a more realistic note, not every hot shot trader has great math skills, it's more about the ability to do math on the spot, simple stuff like probabilities, adding multiplying and subtracting decimals and fractions....that kind of stuff.

Think good poker players who can calculate pot odds/implied odds in their head; not Albert Einstein math on a chalk board.

If you're talking about certain kinds of "Quant" trading at HF and prop shops, it's a bit of a different story, but by no means do Quant desks make more than your average desk. Those jobs are more go to the chalk board and develop algorithms using mathematical principles. They aren't the type of traders you think of when you think of trading either, it's a different kind of job.

 

Mathematical ability is so massively overrated by college grads. The most baller prop trader I know at a BB (brings in massive PnL for the firm) told me to "stop fucking around over useless crap" when I asked him whether stochastic calculus was any use for his job. Yes, having an intrinsic intuition for probability/quick numerical calculation is useful, but every single parameter you need to know (e.g. Greeks, correlations etc) are all programmed in to software, and all you really need to understand is how the stuff moves around, NOT the equations. Some traders definitely prefer to know the structure of the equations to get their head around it, some won't even touch that stuff - it all depends on your own style. Even for the most exotic trading desk, knowing anything more than high school probability/stats/calculus/differential equations is not really required - anything else can be learned on the job. Also, remember that most of the models/maths written in finance books is either completely irrelevant or just fundamentally wrong (it IS written by academics, at the end of the day).

Unless you intend on going into algo/quant trading (Where you will actually be involved in model building), I would say don't get caught up in trying to learn too much sophisticated mathematics.

 

I agree in general but

"Even for the most exotic trading desk, knowing anything more than high school probability/stats/calculus/differential equations is not really required"

this is not true, especially if you ever aspire to run one of these desks. Differential equations is not high school math, btw.

 

Diff eqns are high school in UK system if you take certain a-levels. OK, I'll conceed that on the exotics you probably need more, but honestly as long as you can understand (not solve, particularly) PDEs, stochastics, bit of probabiility theory, you'll be fine (that's straight from the mouth of a future colleague who is the head of an exotics desk).

 

"but honestly as long as you can understand (not solve, particularly) PDEs, stochastics, bit of probabiility theory, you'll be fine (that's straight from the mouth of a future colleague who is the head of an exotics desk)."

Sure, but this is above high school math. In terms of the exotics desk heads that I know, about half have phd's in some sort of hard science, and the rest still get it. either way, more than high school math is req'd in certain gigs.

in other roles though, if you can add quickly in eighths you'll be good to go.

 

awesome, thanks a lot! One more question. How much computer science is required? I know a few of my friends trading in hedge funds in hong kong have been using C++, but is really advanced computer science language required? thanks so much!

 

C++/Java will be next to useless in the trading floor.. unless you wanna be a full blown quant (in which case you'll need a PhD or MFE) Excel/VBA will be more important..

re your original qn. it depends on what you wanna trade.. if you're doing derivatives take real/de/stoch in that order. linear is fun too. if you wanna do prop/quant strategies time-series econometrics is more important. and of course if you wanna do macro switch to economics and forget the (advanced) math.

and be warned its likely you will never use any of these on the job..

 
MrSunKing:
C++/Java will be next to useless in the trading floor.. unless you wanna be a full blown quant (in which case you'll need a PhD or MFE) Excel/VBA will be more important..

re your original qn. it depends on what you wanna trade.. if you're doing derivatives take real/de/stoch in that order. linear is fun too. if you wanna do prop/quant strategies time-series econometrics is more important. and of course if you wanna do macro switch to economics and forget the (advanced) math.

and be warned its likely you will never use any of these on the job..

THIS! Simply cannot emphasize this enough. Everything else in these 'quant-dick riding' threads is just noise.

 

I talked to one of my friends who was trading in hk. He told me that all he used was vba excel. My friends working at hedge funds in china were using c++ for trading algorithms. Now they are undergraduate interns, so i don't know what kind of programming is used higher up in the firms.

thanks everyone for your replies.

 

Hey MF7791,

I'm a recent graduate of the college at Penn (guess when I graduated) and am on a trading desk at bb now. I was an econ and psci major, and I can tell you that in general, the math you need is pretty minimal. As long as you've taken up to math 104 (which Im pretty sure you need to at Wharton), you should be fine. More math can always be helpful, but the desks that require much higher level math are almost always exclusively for quants, mainly because those of us not in M&T or just engineering/their equivalents at other schools aren't smart enough for the desks, no matter how many math classes we've taken. Like everyone else said, being good at excel and knowing VBA can be helpful, but also not necessary (especially if know the record macro function). Just concentrate in finance and some other bullshit concentration in wharton, network really well, get good grades, and you'll be as well off as anyone in your class. PM me if you have more questions.

 

If you're already a senior, I would almost say its too late. Recruiting is either happening right now for some firms, or has already finished up for other firms. And overall, getting onto a trading desk is going to be brutal this year. If I were you, I would try to either land a job somewhere that is somewhat market-focused, or look at applying to grad schools. Prop shops are also another possibility, but they are extremely competitive to get into as well (at least the legitimate ones)

 

Wait are you a junior or senior?

"Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
 

Don't worry about minoring in finance. You can pick up a book or google something, and it would be worth about the same coming out of college into a trading environment. Take note, the Volker rule is disseminating all trading at BBs sooner rather than later, so you'll need to step your networking game up and get to it if you plan to get into a prop shop. That will be the only place where you'll be able to find any possibility of being a trader. However, you might want to consider research or sales as an alternative if you aren't sure about trading 100% but just want to be on the street. Good luck. NETWORK!!!

If you ain't buy side what are you doing on Wall St.? Gimme something good sport...
 

So you are graduating early?

Do yourself a favor, delay graduation until December, so that you can participate in SA recruiting in the winter and get a summer internship. Those are you only chances.

Spend a little extra money today and increase your job prospects by 100x.

"Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
 
Gekko21:
So you are graduating early?

Do yourself a favor, delay graduation until December, so that you can participate in SA recruiting in the winter and get a summer internship. Those are you only chances.

Spend a little extra money today and increase your job prospects by 100x.

Really appreciate your help, its not that im graduating early, its that i have a 2 semester sequence that has to be taken consecutively, so its either spring/summer or fall/spring, and I dont really want to spend another year in college. If i land an internship during the school year at a local branch could that help? or are there any internships in the fall? thanks a ot

 

Would you rather spend another year in college and at least have a shot of getting on a trading desk? Or graduate on time and have virtually no shot? Not saying that there is a right or wrong answer here, but you need to figure out what is most important to you. All I can tell you that is that it will be extremely difficult to get on a trading desk if you graduate this summer, with or without the Merrill branch office internship. However, if you can land a part-time gig during school, and you start networking hard asap, you may actually have a pretty good shot to land a decent internship for next summer.

 

There is no trading at local ML offices. If you go that route in hopes of trading, you are doomed. You'd have a better chance being a full time clerk at a prop (there are people who never went to college that are full time clerks @ props) and then try to move up from there, than doing some shitty local PWM in hopes of moving towards trading.

 
HasAJob:
"The hours are not a problem and that is why I am interested in trading."

This doesn't make sense.

it means that the hours involved with working in investment banking are not the problem and i know that traders also work many hours per week so that i am still interested in trading despite the hours

"Look, you're my best friend, so don't take this the wrong way. In twenty years, if you're still livin' here, comin' over to my house to watch the Patriots games, still workin' construction, I'll fuckin' kill you. That's not a threat, that's a fact.
 

i just read an interview about a quant trader (who at the time was trading for a BB bank) who said that even for him, it took a year to become profitable. and i believe he was doing complex stat arb algo trading which requires a high level of math.

i've done countless hours of reading on discretionary trading with a lot of different technical indicators, even tried pure price action and i am skeptical of average joes claiming to make a living trading in those ways. they claim to have the edge or a profitable system but i am skeptical of them.

i'm sure there are the lucky few who have succeeded but i believe that most of the truly profitable traders are trading for or have traded for institutions and reputable/prestigious prop firms and i believe they are looking for people highly competent in math.

this is just based on my observations and is pure speculation.

 

Math is important but not to the extent the books will have you think. Firstly, trading is a very broad field where a multitude of strategies can give you an edge. Trading profits are generated by exploiting inefficiencies. If everyone in the market took a pure quant approach, then the non-quant guys would be raking in dough as they would exploit opportunities the quant guys don't see. Its important for markets to have heterogeneous participants.

Secondly, the instruments traded by many BB desks require completely different approaches. If you join a high frequency equities trading desk, you bet you will need comp sci/stat/math skills. However, if you join the distressed desk, you will not be doing math beyond stuff you learned in high school.

Thirdly, you might look at the financial tomes and get scared by the pricing models on there. While a trader needs to be very familiar with them and understand what drives a product's pricing, it is not your job to code or maintain models. You have dedicated quant guys on the desks whose job is to provide you with those tools so you can do your job which is to manage risks, make markets, generate client flow, and extract profits from inefficiencies presented day-to-day.

Hope that helped.

 

Would you say that most derivative traders have arts backgrounds?..In my opinion, most traders with arts backgrounds cannot value option or don´t know much about Black Scholes formula etc.

I doubt that most traders with arts backgronds can be good commodities traders or derivative traders.

 
Mont:

the fact I worked in cash equities...which requires zero maths.

I mean you said it yourself. There are many products (especially on sell side S&T) that don't require strong math skills as opposed to strong qualitative skills. Cash equities is one. Others include more vanilla fixed income products such as treasuries and corporate bonds. Also salestrading most products is pretty non-quantitative.

 

Thanks for the reply Peyo, I suppose this is the issue I hold..the products I find interesting are perhaps slighly further up the quantatitive scale, I don't have any challenges with stats as ppl have said on here, nor have I had any difficulties with regards to the financial and derivative math that I have covered in my degree. It's just I've seen these french guys who come from the ecoles doing engineering/maths etc.. taking up the equity derivs trading positions etc... It has just made me question my strengths etc.. I am more of a macro person, and want to trade EM Rates/CDS...so will see....

Cheers

 
Mont:

Does anyone have any adivce on how to improve mental maths in interviews. Do interviews for trading positions usually consist of mental maths/teasers etc.?

I've had ones that were very much math based and others that were totally fit based. It's tough to say for sure, depends on the shop and the traders that interview you.

 

Experience - not really. But I read a discussion on the matter few months ago, as becoming a trader is a goal of mine, and I can give you a few insights. Assuming the test is something similar to what I read about, you should check tradertest.org to have a peek at some tests of that type. Mind you, the content there was recommended for people who are taking the test at Optiver, because they seem to be old-fashioned and filter out candidates with Three (?) tests before an interview. A good read on the matter could be anything regarding the Trachtenberg System but that is up to how much time you have. I have a whole book and am willing to share, so feel free to hit me up (it is a .pdf). Other than that, you do not have to be a mathematics genius to pass it - it is more of a trial for your concentration under pressure and limited amount of time.

 

options traders need to know basic calculus concepts. statistics and probability is helpful for understanding the role of luck and how to size bets. lots of math is no guarantee of success, there are thousands of phds hunting for miniscule signals using the same techniques...

 

No, math geeks are prevalent when you're talking about stat-arb programs that calculate fair value, up/down volume, etc. It's just basically complex reversion to the mean trading but they like to hire PhDs that don't know how to trade to crunch numbers so that they can average in when the odds favor a reversion trade. Picking up pennies in front of bulldozers is all it is.

 

Growing this discussion though (hopefully redeem it a touch); I WOULD like to ask a question in regards to say Option traders...

It's been covered ad nausium that math is needed, but thinking about it a touch more deeply, how much familiarity with calculus is required (as opposed to 'knowledge' per se). What I mean is calculus is a very broad and deep topic, what EXACTLY does the trader require for day to day success? I mean I understand the role of the Greeks etc, but most must (if you're in a BB at least) use a pricing model that is externally auditable as per compliance reqs (and most likely not developed by the trader) so they're more of a plug and player and if you're given a model you can just tweak your understanding of the topic to the actual behaviour of the pricing model. I get the trader needs to cross-check the model with their own understanding so they are comfortable with taking the risk, but largely speaking you'd be learning that as a newbie from your team...

 

Only went up to Calc II myself and trying to teach myself Linear Algebra. You don't need to be excellent at math, but it certainly doesn't hurt. What you really need is discipline and a sound trading strategy.

 

This question is like saying - "Are athletes great pitchers?" ....sure...the ones that are great pitchers.

OP, do some research. There's all kinds of trading. Everything from what your buddy does in his Scottrade account after he gets an "idea" while reading a Yahoo article (pure speculation) all the way up to the genius-level quant strategies used at firms like AQR, RenTec, DE Shaw, & PDT.

How much math you need depends on where you fall in this spectrum.

"When you stop striving for perfection, you might as well be dead."
 

if you are interested in trading at a prop or hf...

you could look for global macro shops...

global macro is a fancy way of saying..."I can trade what I want, how I want, when I want"

 

Some people say that most desks aren't at all quant for the most you would do is punch numbers into a calc; other people say that you need VBA, stoc calc, and prob. One wonders...

 

Thanks for the update, I am from the UK, went to LSE and am in finance.

In this market he will struggle to get a job in S&T from those universities. If anything I would say it is more rigid in the UK; in the US people can ostensibly go to a less reputed university for a number of non academic reasons (fees, location etc.), in the UK if you go to a lower tier university then generally speaking, people will assume it is because you couldn't get in anywhere better.

The vast majority of people from LSE/oxbridge won't get jobs in S&T at the moment. Its not 2007 anymore, if the guy wants to work in S&T at a BB he should really consider going somewhere better, or doing a better degree (e.g. Durham Maths, although he can't do this). Oxbridge history would be better than Nottingham finance.

I stand by what I said, it will be a struggle for him to get a job at a BB in S&T from those universities.

 
anon56:
Thanks for the update, I am from the UK, went to LSE and am in finance.

In this market he will struggle to get a job in S&T from those universities. If anything I would say it is more rigid in the UK; in the US people can ostensibly go to a less reputed university for a number of non academic reasons (fees, location etc.), in the UK if you go to a lower tier university then generally speaking, people will assume it is because you couldn't get in anywhere better.

The vast majority of people from LSE/oxbridge won't get jobs in S&T at the moment. Its not 2007 anymore, if the guy wants to work in S&T at a BB he should really consider going somewhere better, or doing a better degree (e.g. Durham Maths, although he can't do this). Oxbridge history would be better than Nottingham finance.

I stand by what I said, it will be a struggle for him to get a job at a BB in S&T from those universities.

I would agree with you. From my time in the industry, I have clearly noticed that FO is dominated by Oxbridge, LSE, UCL and increasingly Warwick. From being an applicant, etc, I noticed that a 'few' people from Nottingham/Durham at ACs however the majority seemed to have faded away when the selection took place. So I think its more to do with the calibre of students being concentrated in the top 5/6 unviersities, rather than the university itself.

I would agree about the degree. I've said before, that he should really going for the most quantitative degree possibly. S&T is probably the hardest role to break into. Something like Government at LSE or PPE at Oxford would be far better for the inital screening stages.

I personally don't think Nottingham or Durham will detract much from a candidate who is good enough, when in reality, only Oxbridge/LSE/Imperial have daylight between themselves and the rest of the chasing pack. Its perfectly possible to make it into the industry from Durham if you're good enough. The drop in 'prestige' in the UK after Oxbridge is far larger than in the US after HYSP. In the UK, after Oxbridge, there is a considerable margin before you reach LSE, Imperial, UCL and Warwick, etc, which is why unless you're at Oxbridge, your university doesn't not have much weight in the UK (within reason)

Alimbo- You need to consider how you're going to signal to banks, that you're able to cope with trading if your highest attainment in anything remotely mathematical stops at GCSE level.

 
anon56:
Durham is toward the higher end of his list.

It's not necessarily, I just had the impression that the overall reputation of Durham was very high as a university and that it would give me a good shot. I, personally, would rather go to Nottingham (for reasons such as social life, proximity to home etc.), but I guess maybe it would be hard. I suppose getting into IBD would be a little easierl, I have been looking at that too.

 

S & T is harcer to break into from Durham, in comparison to if you were at (Oxbridge, LSE, UCL, Imperial, or Warwick) but if you're good enough your university will not hold you back which is something people often forget. At my firm, there is a few people from Durham, and on my internships/spring weeks in the past, there has always been 1 or 2 from Durham, so if you're good you'll make it. A masters really isn't neccessary, unless you're coming from a university far down the table, Durham is only slightly below LSE. Just focus on nailing the tests and assessment centres/interviews.

 

I'd say that something like 90% of the people I've met in BB S&T who studied in the UK went to Oxbridge, LSE, UCL, Imperial or Warwick. Various degrees, but mainly finance, economics, PPT, physics and engineering. I didn't go to uni in the UK so I don't know all the programs well, but I'm inclined to think that you'll be at a serious disadvantage if you don't go to any of these unis. However if you're good, get good internships and network well you can probably get in (I'm assuming those programs are not rubbish, like I said I don't really know all the unis). But if you can choose, go for one of the top 6 because there clearly is a huge step between those and the rest.

 

I think the math requirement is more about quick (not necessarily difficult) problem solving abilities that involve a lot of numbers all at once. Mathematical minds have a much better ability of remembering sequences and series which is particularly useful when putting through multiple trades or making a market in different securities.

 

Depends on the product. Quite a few of the mathematical routines you mentioned are used in derivatives pricing.

ambition is a state of permanent dissatisfaction with the present.
 

I have a feeling it's more of a way for traders to set some kind of formal barrier to entry and make themselves look more like a big deal than it is useful for practical purposes.

Not that math won't be useful to some desks, but the fact that even more vanilla desks won't even consider anybody without a quantish background is the biggest farce they have going, and they know it.

People from all walks of life have the skills to be great traders, whether or not they took advanced calculus.

 

First, if you're not a trader, pls refrain from commenting.

Second, being good at math reflects a general level of intelligence and analysis that has a positive correlation with trading ability. It's not a perfect correlation. So there are people good at math who can't trade, and people bad at math who can trade, but it helps. It is very hard to test for "good at trading" in an interview process. It is hard (but doable) to test for "good at math". That's how interviews work in general, they isolate variables which are correlated with future success and test for them.

Third, if there were that many gems out there, someone (in an efficient market) will take them and dominate, esp in trading which is very Darwinian. Trading has always been more meritocratic and it is harder for inefficient practices to take hold (compared to IB or consulting).

Interested in rebuttals.

(as a trader myself, it helps. It helps if I don't have to explain something to a junior more than once. It helps if someone doesn't make the same mistake twice. And it helps if you don't overfit or engage in falacious thinking.)

 

If you are working in Sales of more Structured products you might actually be doing some derivatives pricing yourself, in which case the more mathematical background can help show your analytical capability.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

Stupid question, but what exactly is sales in this context? Who do you work for? Who are you selling to? What are you selling? Etc. I periodically hear people mention sales, but I don't really know what sales is like in this industry.

 
econ:
Stupid question, but what exactly is sales in this context? Who do you work for? Who are you selling to? What are you selling? Etc. I periodically hear people mention sales, but I don't really know what sales is like in this industry.

This.

I win here, I win there...
 
econ:
Stupid question, but what exactly is sales in this context? Who do you work for? Who are you selling to? What are you selling? Etc. I periodically hear people mention sales, but I don't really know what sales is like in this industry.

Who do you work for? A bank (dealer).

Who are you selling to? Could be a wide range of clients. Usually its either Real Money (Pension Funds, etc), Corporates, Hedge Funds or Central Banks.

What are you selling? Huge range of products, you'd have to be more specific.

Jack: They’re all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard. -30 Rock
 

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Career Advancement Opportunities

March 2024 Investment Banking

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notes
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