Math&Econ vs. Finance for Trading

Sorry if this question has come up a bit, but I'm at an important point in my development where I'm applying to target schools to get better recruitment. My heart is in trading. I feel that mathematics and economics relate to trading and/or quant roles more than any business major. And they are also extremely interesting to me.

Am I correct in my beliefs? It will also be much easier to transfer into targets as Math/Econ vs. transferring into top undergrad b-schools

Real important to me right now, as app deadlines are within the next 2 weeks. Thanks in advance fellas

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Comments (22)

Feb 13, 2012 - 9:18pm
djfiii, what's your opinion? Comment below:

Yes. If you know for sure trading is where you want to be, go with Math. You could really even skip out on the Econ and just focus entirely on Math. Depending on where you go to school you might be able to work in a Financial Engineering class or two, to demonstrate that interest in the application of Math to the financial markets.

  • 1
Feb 13, 2012 - 9:48pm
steve39, what's your opinion? Comment below:

Well yeah, the purpose of the second Economics major (and a possible Finance minor) would be to set me up in the future for a top MFin, MFE, or FinMath degree later on.

Feb 13, 2012 - 10:39pm
rynofrowan, what's your opinion? Comment below:

math fo shaw. econ is great though and if you keen on trading news etc this is great to have also, however can be imbibed OTJ

Moving tonnes of product. Making fat stacks.
Feb 13, 2012 - 10:52pm
rs12, what's your opinion? Comment below:

No doubt go with math. It's no wonder why you see so many engineers, physics majors, and those with a more technical background end up in finance. If you have your heart set on trading think about what type. Economics might be very useful if you are trading based off large macro-economic indicators (i.e. gdp, unemployment rates, and labor statistics). However if you want to become an interest rate trader....they love people who are more technical. It all depends, if you can double major econ/math you would diversify yourself even more. If you had to choose between the two, major in math and take a few econ courses. In your interview spinoff how you are extremely technical, but love the applications as a few other people mentioned above.

Success is my only option and failure is not
  • 2
Feb 13, 2012 - 11:01pm
optimus_prime, what's your opinion? Comment below:

Another vote for math...but unless you're "trading" exotics or highly structured stuff, you really don't need it as long as you can do mental math reasonably quickly. People here tend to really overrate it. I think I know a single credit/equity(non-derivs)/rates trader with a math degree.

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Feb 15, 2012 - 4:09pm
lambertoscar, what's your opinion? Comment below:

Voting for Math? Ummm I don't think anyone who replied here has done a math or econ undergrad. The goofballs here don't realize that the economics training at a target university is very different from average schools. Econ majors at Harvard (and other ivies) for example, get a solid foundation of real analysis, differential equations, time series analysis, stats and not to mention understand monetary economics, macro theory, micro, econometrics and so on, and learn languages like R, Stata, EViews etc. So infact I'd say if you are smart enough, do an econ first major, statistics second major and a minor in comp sci.

Math is overrated, pure math is totally inapplicable (algebraic topology? functional analysis? group theory?)... applied math is okay, and profs teaching financial math in applied math courses are usually mathematicians and have a severe lack of understanding of markets and the "need" for financial derivatives.

Mathies like to find explicit solutions to those PDEs or stochastic differential equations that are a consequence of a financial derivatives valuation. If you aren't looking for analytical solutions to a set of equations then you use numerical analysis, which is what is required in the industry. Rather than using numerical analysis from an applied math approach, I'd use time series econometric techniques any day, since economists tend not to stray away from the practicality of a problem as much as a mathematician does.

Anyway, you get the jist of it.

The masked avenger par sexellence
  • 2
Feb 15, 2012 - 5:42pm
protectedclass, what's your opinion? Comment below:

I don't think it really matters what you major in, just be good mental math, decent at programming, strong with prob/stats, and show a passion for financial markets. If you can accomplish all of those, it doesn't really matter. But to get the first round interview, I would recommend at least some sort of math related major(CS,EE/Physics, Applied Math, Economics+ something else, Finance + something else).

Feb 15, 2012 - 10:21pm
Marked to Market, what's your opinion? Comment below:

To the original poster: do math. Math is impressive. Econ isn't.

To Lambertoscar: I did major in math. I work at a large hedge fund and am pretty quant. I have met a large number of harvard econ students and alums. None of those I have met, who majored only in economics without a secondary in some more quantitative field, seemed to have a deep understanding of any of the topics you mentioned. Broadly speaking, undergraduate economics majors, even at Harvard, are just not that quantitative.

Just so I know, which Harvard econ classes impart a sophisticated understanding of real analysis? Which econ classes which undergraduates actually take cover time series or econometrics in useful depth?

I'm not saying that being good at math is the only, or even best, way to get a job in trading out of undergrad. And I would be the first to admit that I know less about the economics major at Harvard than anyone who is or was an economics major at Harvard. However, in a vacuum, I have never met anyone who would be objectively more impressed by an undergraduate economics major than an undergraduate math major on an otherwise identical candidate.

Feb 16, 2012 - 2:16pm
steve39, what's your opinion? Comment below:

Follow up question:

I know that UVA, NYU, etc. are all targets because of their business majors. Shit even Baruch is considered a semi or mid-target. Everyone here seems to bash their CAS programs though.

Does that put me at a severe disadvantage then if I am going to a school such as NYU or UVA but major in Mathematics and Economics and am NOT apart of their business schools?

Feb 16, 2012 - 2:42pm
Bernankey, what's your opinion? Comment below:
steve39:
Follow up question:

I know that UVA, NYU, etc. are all targets because of their business majors. Shit even Baruch is considered a semi or mid-target. Everyone here seems to bash their CAS programs though.

Does that put me at a severe disadvantage then if I am going to a school such as NYU or UVA but major in Mathematics and Economics and am NOT apart of their business schools?

Baruch is a distant non-target...its a CUNY school thats one step up above a community college...Apparently they have a decent MFE program, but it ends with that...

The only poster worth reading is lambertoscar on this thread.

Feb 16, 2012 - 4:24pm
bcf2011, what's your opinion? Comment below:

Purely depends on what type of trading you want to do. If you want to work a prop firm quantitative skills are a must (ie math is good), but if you want to do S&T at a bb or something, showing an interest in finance and the markets is much more important (ie Finance at Wharton would be much, much better than just math at Penn's CAS for BB). Of course, math + finance is good if you want to do something with derivatives...but if you don't care, I don't think it matters as much. But guess I can't really say on programs at schools like NYU and UVA

Feb 16, 2012 - 5:08pm
FreezePops, what's your opinion? Comment below:
Econ majors at Harvard (and other ivies) for example, get a solid foundation of real analysis, differential equations, time series analysis, stats

This is not true. They may choose to take these courses as they are all prerequisites for phd programs, but it is by no means required. http://www.economics.harvard.edu/files/Requirements.pdf

You can get an econ concentration at Harvard without taking anything past calc 1 and econometrics (though it must be a bit watered down if linear algebra is not a per-requisite).

Feb 16, 2012 - 6:13pm
Marked to Market, what's your opinion? Comment below:

You can get an econ concentration at Harvard without taking anything past calc 1 and econometrics (though it must be a bit watered down if linear algebra is not a per-requisite)..

This is vastly more consistent with my experience of Harvard undergraduate economics majors than lambertoscar.

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Feb 16, 2012 - 7:06pm
lambertoscar, what's your opinion? Comment below:

Ummm, well I guess I am not referring to kids who met the basic requirements for their degree and graduated in econ. The poster sounds like he is driven, IF you are driven then economics allows you to focus on what matters. I mean you can do courses in financial economics (which will cover asset pricing), focus on econometrics and game theory (and not economic history or health economics) and still get a broad understanding of the rest of economics from the undergrad breadth requirements.

I personally know many econ majors who didn't get much out of their degree (they chose it as an alternative to political science), but I also know the geeky know-it-all econ majors who have a fantastic understanding of many subjects.

Bottom line, econ caters to the artsy and scientific types. Get advice from your undergrad advisor to express your line of interest that you'd like to pursue and couple it with a quant major.

That being said, the driven econ majors were the ones who "wanted" to get into grad school, so they met the honors requirements from their school and did advanced math courses since the pre-reqs for any top econ masters/phd program are sophisticated quantitative skills.

So just hang around with the kids who wanna do their phd, and instead get into trading. It's gold.

The masked avenger par sexellence
  • 3
Feb 16, 2012 - 7:56pm
djfiii, what's your opinion? Comment below:
lambertoscar:
Ummm, well I guess I am not referring to kids who met the basic requirements for their degree and graduated in econ. The poster sounds like he is driven, IF you are driven then economics allows you to focus on what matters. I mean you can do courses in financial economics (which will cover asset pricing), focus on econometrics and game theory (and not economic history or health economics) and still get a broad understanding of the rest of economics from the undergrad breadth requirements.

I personally know many econ majors who didn't get much out of their degree (they chose it as an alternative to political science), but I also know the geeky know-it-all econ majors who have a fantastic understanding of many subjects.

Bottom line, econ caters to the artsy and scientific types. Get advice from your undergrad advisor to express your line of interest that you'd like to pursue and couple it with a quant major.

That being said, the driven econ majors were the ones who "wanted" to get into grad school, so they met the honors requirements from their school and did advanced math courses since the pre-reqs for any top econ masters/phd program are sophisticated quantitative skills.

So just hang around with the kids who wanna do their phd, and instead get into trading. It's gold.

essentially, you've just agreed with everyone else. "focus on what matters" = "math".

  • 3
Feb 16, 2012 - 7:30pm
FreezePops, what's your opinion? Comment below:

Econ's a great major. There's no doubt about it. By itself though, it just isn't impressive. For me, it required something like 15 credits (+ general requirements) whereas a b.s. in pure mathematics required upwards of 60. In my mind, there's no reason not to do both.

Algebra was really the only class that seemed pointless to me, but it's worth suffering through to finish the major. I doubt most undergrad programs require algebraic topology, functional analysis or the like. These are all generally graduate level courses, even at "targets".

If the op was asking whether a graduate degree in pure mathematics or economics was more valuable, your advice would hold a little bit more weight.

Feb 16, 2012 - 10:38pm
Marked to Market, what's your opinion? Comment below:

Ummm, well I guess I am not referring to kids who met the basic requirements for their degree and graduated in econ. The poster sounds like he is driven, IF you are driven then economics allows you to focus on what matters. I mean you can do courses in financial economics (which will cover asset pricing), focus on econometrics and game theory (and not economic history or health economics) and still get a broad understanding of the rest of economics from the undergrad breadth requirements.

I personally know many econ majors who didn't get much out of their degree (they chose it as an alternative to political science), but I also know the geeky know-it-all econ majors who have a fantastic understanding of many subjects.

Bottom line, econ caters to the artsy and scientific types. Get advice from your undergrad advisor to express your line of interest that you'd like to pursue and couple it with a quant major.

That being said, the driven econ majors were the ones who "wanted" to get into grad school, so they met the honors requirements from their school and did advanced math courses since the pre-reqs for any top econ masters/phd program are sophisticated quantitative skills.

So just hang around with the kids who wanna do their phd, and instead get into trading. It's gold.

Like djfiii said, you just lost. You're attacking a ridiculous straw man and horribly misconstruing what many here have been writing if you're arguing against the position that everyone who studies economics is stupid. It just isn't as impressive as a standalone major, without considering other classes or qualifications or extracurriculars or particular schools, as math is. There are (probably) schools with good econ and bad math departments.

Also, just because I feel like everyone asks this question a lot, I'm going to go on a slight rant to attempt a partial answer to the time honored question "what, oh wise and powerful internet, should I major in?"

First, I'm going to tell you the question is stupid. Local factors such as your abilities and preferences dominate abstract considerations such as whether econ or math or (possibly) finance is "better". Broadly speaking, you should major in something which you are excited to study, are good at, and is taught well. Nobody on WSO knows what you are good at. We don't know (or care much) about individual professors and programs at your school. If you can't make this decision better than the fucking internet, you're pretty fucked.

Second, I cannot think of a single top tier non-business school (without trying to start a debate about what is "top tier" or "target" or whatever the fuck) which offers "vocational" majors like finance or accounting at the undergraduate level. This should tell you something.

Unless you're a Wharton\(insert peer name here) undergrad, you probably shouldn't be majoring in finance unless you're too dumb to hack it in a real major or too good at something else for it to matter what you major in. I seriously can't think of anyone with a state school degree in accounting\finance outside of the back office I have ever met or worked with. The only caveat to this is that some pit traders I've met are not super academic and I never bothered asking where they went to school (they'd probably punch me), but then again I doubt they would be on some finance forum asking for advice on what to major in.

Somebody will probably bring up some uber-baller who went to their random state school and majored in finance, fine. I don't care. Steve Jobs dropped out of college and dropped acid, that doesn't mean that most people who dropped out of college and did acid could have been as successful as he was if only someone had looked beyond their non-target school, bad gpa and pathetic major choice.

Third, there are a couple of majors, such as engineering, CS, physics and math, which teach specific skills that are very hard to pick up on the job. People looking for HFT algo designers don't care that you have a deep understanding of ECB monetary policy. They want someone who gets hard at the thought of a hyper efficient search algorithm or shaving milliseconds off of code run time.

Outside of jobs which require these very specific skills, I strongly suspect most financial firms looking at undergraduate transcripts care far more about class room academic experience as an indicator of intelligence than out of some need to hire people with a specific background. Major in something that will make you look smart because you are good at it and enjoy it.

This may even extend to humanities, though they aren't as good a way to signal intelligence in general as "harder" subjects. However, many successful people I respect and some of whom I know personally, did major in the humanities (philosophy in particular), so I think the classic "don't major in the humanities" advice maybe a tad over bought. As I said though, I majored in math and I work with some fairly quant people, so take that with a grain of salt. No idea how the world looks if you're trying to get a job right now with a degree in history...

To summarize (very long post, sorry...kind of went off a bit there): make up your own damn mind about what to major in, you should know best. Major in a non-vocational subject. Choose something you're good at and which will impress others. Humanities may not be life ending major choices, people are kind of like lemmings on these things for some reason.

Feb 17, 2012 - 9:32am
lambertoscar, what's your opinion? Comment below:

I don't know how I lost, being a plain hard math major isn't great is my point. You shouldn't take math over econ... math in my opinion should always be a second major, since math is not a subject, it is a tool to tackle problems in the arts and sciences. This is something I can attest to, since I did a second major in math.

Do you even realize how hard is it to stand out as a math major in say harvard/mit/caltech or so? You got kids from International Math olympiads, programming competitions etc, russian kids, chinese kids, just complete monsters. You will most likely not be able to compete with them since they have gone to olympiad training camps in high school and they are almost at senior undergrad/grad level when they join in for their undergrad.

Ofcourse I'd be impressed with a math major from these places, but if you meet those kids, they are so damn focused that they wouldn't come on these stupid forums and ask career advice. Those kids are so smart that they'll pick up economics in like 5 months, due to the "mathematical maturity" that they acquire at a relatively young point.

So let's be real, you don't wanna compete with them... http://en.wikipedia.org/wiki/Gabriel_D._Carroll They will just destroy you, lucky for us they don't chase money usually and actually follow their passion. But RenTech does get these types... anyway get a realistic idea of your intellect, there are some people who are surreal about their abilities and get trapped towards the end of a program.

And yes, there are many "above average" people in trading, to break in i'd say its best to have a decent understanding of econ (lil finance) and know some stats (or math) as a second major.

Do understand that if you are absolutely brilliant, it doesn't matter what major you do, just follow your passion. If you are a mortal like me, then you gotta be tactful about your career path.

The masked avenger par sexellence
  • 2
Feb 18, 2012 - 11:32am
Marked to Market, what's your opinion? Comment below:

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Feb 18, 2012 - 12:57pm
canas15, what's your opinion? Comment below:

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