Rates vol trading
Is a mathematical econ major and cs minor enough background for rates/fx vol. can code in Python, c++, R.
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Ah, diving into the world of rates and FX vol trading, are we? Let's break it down based on the treasure trove of wisdom from Wall Street Oasis:
Mathematical Economics Major: This major gives you a solid foundation in economic theory, which is crucial for understanding the macroeconomic factors that influence rates and FX markets. It also equips you with the mathematical tools to model and analyze financial markets. Given the importance of understanding economic/fundamental data in rates and FX trading, as highlighted in the context, a mathematical econ major is definitely a strong background to have.
Computer Science Minor: This is like the cherry on top! A CS minor not only complements your econ major by providing you with essential programming skills but also makes you a more versatile candidate. The ability to code in Python, C++, and R, as you mentioned, is highly valued in the trading world. Python is widely used for data analysis, algorithmic trading, and machine learning applications. C++ is often used for high-frequency trading applications due to its speed and efficiency. R, while not as commonly used as Python, is still valuable for statistical analysis and data visualization.
Programming Skills in Python, C++, and R: These are golden tickets in the realm of quant trading. Python, in particular, is a versatile language with a rich ecosystem of libraries (like NumPy, pandas, and SciPy) that are perfect for quantitative finance tasks. C++ is prized for its performance in computationally intensive applications. R, with its strong suite of statistical packages, is excellent for data analysis and modeling.
Relevance to Rates/FX Vol Trading: Your background seems well-suited for rates and FX volatility trading. The ability to analyze economic data, coupled with strong programming skills, positions you well to develop and backtest trading strategies, perform statistical analysis, and build models for predicting market movements. The context suggests that understanding macroeconomic and statistical analysis is crucial in this field, and your education and skills align well with these requirements.
In conclusion, based on the insights from Wall Street Oasis, a mathematical economics major combined with a computer science minor, and proficiency in Python, C++, and R, provides a robust foundation for a career in rates and FX volatility trading. Your ability to code and understand complex economic concepts will be invaluable assets in this dynamic and challenging field. Keep honing those skills and maybe dive into some personal projects or online courses related to algo trading or quantitative finance to further stand out. Happy trading!
Sources: Majoring in Wall Street?, Macro: Rates and FX, BAML Front-office quant vs Prop Shop Trading, Best internships for Quant Trading?, Q&A - Quant with 2 yrs exp in Europe both buy/sell side
Yes definitely. FX vol at the bank i’m at does no coding (still a high level of maths involved ofc), whereas Rates vol does all of their analysis in python. So depends on the bank also
My worry is I’m definetly not competitive for quant trading, and I can code but not well enough for a SWE job. My math is good but nothing crazy where I go to school.
Do you think this is a good enough background for rates vol? Also, is this enough to compete against more quant people in the rates trading business?
I think your background is pretty perfect for Sell side trading. You need to know how to code, but nowhere near SWE level. And you need to be good at math, but not at the level of Quant Trading. As long as you meet these skills, they will just care that you are genuinely passionate about markets. I will say that in my intern class for Trading, at least 60% come from STEM backgrounds and even the finance kids seem to be more technical. So while you are competitive for the Rates Vol desk, I would expect some competition
this is interesting - it truly is bank to bank. I spent many years at a top bank (they still are) for both vanilla and exotic rates vol and while the math skills on the desk were extremely high, there was no coding used. If fact the technology used was quite literally just a pricing model - to me this is an asset class that if you know the math and the concepts very well it almost becomes an intuition for these guys to trade. The gamma/vega concepts really are not that difficult to understand well
Thanks for your help! May I ask which FICC desks has lower quant requirement than others? Really appreciate it!
Rates vol is so much more interesting than fx vol!! Just have a strong math skillset and be ready to prove it in interviews or conversations. On the sell-side the coding isnt necessary so much in my experience but will be valued much more if you want to go to a systematic shop (although I'd argue you would need an advanced degree for that anyway)
what do you mean strong math skillset. I'm a CS major.
Hey, I've interned at a FX Vol desk last year, but I'm thinking about making a shift and joining a Rates Vol desk this year. Can I PM you?
I am currently in a rates sales seat, and I just heard that some of the rates vol analysts at my bank are not getting promoted and are being pushed out. Our rates business has performed subpar compared to normal, but still interesting to hear as I have heard that rates vol trading is the most desired and impressive seat to have since I was an analyst (I was never smart enough to land a seat like this though haha) and that everyone went to become PMs after, so it’s a little disconcerting to see these analysts being asked to leave… makes me even more scared about the business. Granted this may not be a problem at the absolute top banks that have performed extremely well through recent volatility. For what it’s worth, this is still the most fun business I have gotten to be a part of, and would recommend it to anyone who enjoys a fast paced and intellectual career.
assuming not bb?
I work on a US rates vol desk (trade linear as well). That’s a good background for the job. Let me know if you have any questions. I think it is the perfect place for someone with strong quantitative and coding skills but that wasn’t winning math Olympiads or doing Leetcode hard questions when they were 5. Also not sure what the rates sales guy wanted to get across lol. Welcome to the industry buddy, when the desk underperforms heads roll, that’s just how it is.
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