Talkiing about Fixed Income as a whole, how quantitative is it? I know there are more quantitative products within it (cds, cdo) and less quantitative (high yielding), but on average, how much quantitative knowledge would a trader need? And on a daily basis, how do traders make use of this knowledge? (the more details, the better!)
I've read somewhere here that FI requites Multivariable Calculus, a little bit of Linear Algebra, Statistics, but my question is more about how this kind of knowledge is used by traders on a daily basis.
Thanks!
I'd be quite interested in this too.
It depends. I worked in credit analytics for a number of years and when it comes to corporate bonds, it can get heavily quantitative- moreso than many structured products. One of the main relative value comparisons- oas- depends on a lattice pricing model, and the traders constantly need to keep track of credit delta and rates delta to hedge their risk.
So in general, fixed income is more complicated in the traditional quant sense than equities. The catch is that fixed income derivatives tend to make things less complicated while equity derivatives tend to get more complicated on the math front.
IlliniProgrammer hits it on the head, in the exotics space, equities gets very math involved because there are so many different underlyings
Good question here. I'll intern in S&T this summer and I was wondering how quantitative was FI sales as I am more interested in sales rather than trading. Equity sales sounded more fun to me at first but now I think it would be good to get exposure to a more technical product (e.g. ABS, commodity derivatives).
Any ideas?
Is fixed income trading quantitative intensive? (Originally Posted: 06/21/2011)
I am about to do a master degree in quantitative finance in a Ivy League school. I was thinking about becoming a trader after graduation but I really know close to nothing about the role. Based on my recent reading, an equity trader has to negotiate with the sales under high time pressure and at the same time make smart market judgement, which I do not think I would be quick enough to do.
I hope to know whether fixed income trading is different from equity trading or whether there's a field in trading that has less time pressure and quantitative training could give me an edge.
Thanks!
You should probably go play LAX if you want to be on the FI desk. Get a bunch of Vineyard Vines ties and talk about Lax'in and your frat all day.
All joke aside, it depends on the desk and their use case. At a HF i would imagine its very quant, at a S&T desk i think it can vary
grab the education first; i would imagine fixed income trading is more pressure intensive but not as much as the equity side
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