What level math is required in a finance career
How much quantitative education is necessary in a finance career? I am a rising junior finance econ major and my school only requires one calc course that is beyond easy to graduate with those degrees and the math is beyond easy in my major classes as well. Is level 1 calc really all one needs for a finance career? I am under the impression that I will never be a quant in my career but at this point the level of math intellect necessary to graduate seems far to easy.
When I say finance career I mean something markets related
Can you solve x+3=4? If yes, your math skills are good enough.
This.
But seriously, this.
Is the answer 1? Someone please confirm; I have an interview next week! :p
Algebraic geometry should just about cover you.
Looking back I would have taken a probabilities/combinatorics class - will help you kick butt on brainteasers and think about risk if you are interested in a hedge fund career in the future. Also just think it is a rather interesting topic.
If you know PERMDAS, you can do the math required for entry level IB (non-quant).
The way you can add WAY more value is if you take some Visual Basic/macros/advanced Excel training, and maybe C++ or some other useful programming languages (I'm sure other WSOers can recommend some good programmes). Personally I'm thinking I'll be starting CFA training to sit the test in December.
I think it's amazing how mathematical the finance major is considering the career requires simple math.
Do I need to love math if I want to make my career in Finance? (Originally Posted: 06/20/2017)
Cause, sometimes It drives me crazy that I don't understand some math decisions when I'm on a lecture. Besides, I can't spend 4 hours just for math, that why I thought maybe I just too choose another career path?
You need to tolerate it. The majority of math in finance is very easy.
You need to specify what part of finance you are interested in, some are more quant heavy than others
Math for Wall Street (i.e. IBD, S&T, Research) (Originally Posted: 02/05/2008)
I am a math major at a reputable university planning to pursue a career in finance. However, I am extremely struggling in my modern algebra course, which is very abstract and extremely theoretical. My question is: is a proof-based theoretical course like modern algebra even useful for Wall St. I am contemplating switching my major from pure math to applied math which deals with courses that are more concrete and material that is, quite frankly, legible to say the least! In doing such, I can by-pass this algebra course, as it is not required for applied math majors. Which degree is more attractive for financial firms: pure math or applied math? And furthermore, if I plan to study economics at the graduate level, will there be a need for modern algebra? Or in other words: is graduate level economics highly theoretical and abstract too? Thanx.
Investment banking requires only the most basic math, which is why BBs will pretty much accept people from any major (as long as they did well in whatever they studied). In fact, based on my observation, non-quants tend to be preferred on the IBD side.
S&T is a different story as some products and functions require a lot of quantitative muscle while others don't. If you're planning to go to a quant area (like equity or fixed income derivatives trading), you will generally be much better suited with a background in applied math as opposed to pure math. From what I've seen, pure math is really more of a signaling mechanism (i.e., if you've excelled in pure math at a reputable place, you are perceived as very smart) than a major that will actually serve you well on Wall St. So, if you're struggling with algebra, I would suggest you take more statistics and applied math courses instead.
As far as graduate economics is concerned, you don't need that much pure math at even the best places. This link pretty much sums it up:
http://gregmankiw.blogspot.com/2006/05/which-math-courses.html.
Feel free to PM me.
For S&T, if you plan on pricing options, you probably want to be able to handle a measure-theoretic approach to probability, and stochastic processes. Although these are "applied" (i.e. stats/probability), measure theory (i.e. lebesgue theory) is very abstract. Otherwise, math required is very minimal at most everywhere.
Mathematics required for career in banking? (Originally Posted: 09/26/2016)
How would I know I have the mathematical ability for a career in banking, particularly the math ability for a master's degree in finance?...
Very basic, usually no more than arithmetic in all honesty. For an MSF you'll need usually stats and calc I.
Excel does it all for you.
Math needed in different sections of finance/ business (Originally Posted: 09/25/2015)
Hi!
What´s the level of math needed in private equity, investment banking, hedge funds and consulting etc..? In which of these it´s needed the most (in terms of actually doing the job and getting it). My own guess would be hedge funds, but since i´ve never worked there (or in finance, since I´m in high school) I rely highly on your expertise. I understand that there are lots of different job descriptions in each of those fields, but I would appreciate if you could just give me the overall.
P.S Do you need any algebra/ geometry in finance at all, even remotely? I´m quite sure that you don´t need it at all, but you never know ;).
Thanks!
http://www.wallstreetoasis.com/blog/do-i-need-math-for-finance
What desk requires the most math that... (Originally Posted: 03/19/2010)
What trading desk requires the most math? That doesn't revolve around HFT? For example: Structured Credit Trading, derivatives,, etc!
Oh, also that would require only major in Math+ Economics major with a few Master level classes. Thus, none of the Ph.d in XXXXX,YYYYYYYY,ZZZZZ kind of jobs!
Highest mathematical operations in MSF/MFE and finance in general (Originally Posted: 10/23/2014)
Next semester will be my third semester as an MSF (counting the summer semester as my first). So far I've been having it rough with the quant, reviewing derivatives on the side, and currently learning integration and linear matrix algebra.
How actually useful will learning integrals and matrices be? Both next semester and in jobs? What other kind of math operations should I be learning? I do know I gotta do some partial derivatives sometime. What else? Also, is there any use for trig or imaginary numbers whatsoever? I find it hard to gather worksheets for practice which aren't loaded with cosine this,arctangent that. I do come from a liberal arts background where the only math I saw in college was a calculus I course that the professor gave Bs minimum so as to keep his job. And I got a B in that, in 2008, when I really shoulda had an F.
I'm also thinking of financial engineering if jobs are rough, to prove my quant mettle. What kind of math is needed there?
Math oriented jobs? (Originally Posted: 08/22/2010)
What are the jobs that are more math oriented? I am working on a B.S. in a quantitative field though I am not planning on getting a phD or Masters.
Actuary Quants (Prob need math +compsci if not getting a masters) HS Teacher trader analyst game warden military etc...
Hello Remember that kid in elementary school who always had a pencil and calculator nearby, and while the rest of us drew pictures, read comic books or played cards, that kid was happily crunching numbers -- for fun. Fast forward 20 years or so, and it turns out that kid probably has one of best careers around today, according to an exclusive new study of the nation's best and worst jobs. Compiling research on 200 different positions, this year's JobsRated.com report ranks mathematician as the country's best job, followed by actuary and statistician -- three jobs for which a calculator and solitude are prerequisites. On the opposite end of the spectrum, the Monty Python troupe made famous the song, "I'm a lumberjack and I'm OK." Unfortunately, our study finds that lumberjacks have the nation's worst job, followed by dairy farmers and taxi drivers, which seems to bear out the old grade-school adage that "it's better to earn a living with your head rather than with your hands." Of course, it doesn't take much effort to determine that mathematician is a more attractive job to most people than lumberjack. But ranking 200 jobs from best to worst is no easy feat. To compile this year's report, researchers relied on five criteria to compare jobs as different as librarian and sheet metal worker. Those criteria: stress, physical demands, hiring outlook, compensation and work environment (for more info on scoring, visit http://www.careercast.com/jobs/content/JobsRated_Methodology ). If advanced equations aren't your strong suit, however, there are plenty of other jobs that score well, too. After the top three math-oriented careers, the rest of the top 10 read like a who's who of well-educated professions: 1. Mathematician Applies mathematical theories and formulas to teach or solve problems in a business, educational, or industrial climate. 2. Actuary Interprets statistics to determine probabilities of accidents, sickness, and death, and loss of property from theft and natural disasters. 3. Statistician Tabulates, analyzes, and interprets the numeric results of experiments and surveys.
Hope this Helps Thanks http://www.fintel.us/
You don't need advanced math for 90% of financial jobs. Stats is helpful. I haven't taken math since high school and had a lot of anxiety taking it again. maths tutor in Melbourne was great, patient, funny, explained everything to me and made the sessions fun which made the time go by fast.
Not too sharp at math (Originally Posted: 02/07/2007)
Do you need to be exceptional at math to work in a HF? I'll be entering a BB this summer but I was a History and Political Science major. The highest level of math I ever took in college was calculus. I imagine I'll have accounting knowledge by the time I apply to Hedge Funds, but is my quantitative ability sufficient?
Is there a chance for people like me in Hedge Funds? I've read on here that HFs like DE Shaw and Citadel take math geniuses, but would I have a shot at any of these funds?
Also, what do non-math majors do in HF? Are they allowed to trade or do they just due diligence? I am looking to almost day-trade at a HF, is this possible at all?
Sorry for my ignorance.
Naa, not ignorance just a legit question. I'd like to know as well.
Before someone else says it, don't bother planning 2+ years into the future, especially as a junior in college. Your experience and relationships at the BB will be more important.
Also, you mentioned 2 large quant shops. You may not fit their culture, so don't be discouraged from entering the buyside.
I'm a senior who will be starting full time this summer. Sorry, I should have been clearer.
A lot of analysts I have spoken to are entering buyside, but that doesn't really interest me all that much. Plus, I hear the private equity market may blow up soon. I've always been more interested in trading equity and so I feel like I will be unhappy doing buyside.
My worry is that my quantitative side isn't sufficient for Hedge Funds. I've read online that there are non-quant hedge funds. How do those work and what level of math do you need for those?
Don't rule out mutual funds. There is scope for interesting, profitable strategies within the mainstream, that won't require a math phd.
Forgive me for being ignornant since I work at a hedge fund, but when did "buyside" stop including hedge funds?
I'm sorry, I have been under the impression that private equity was pure buyside while Hedge Funds were more trading oriented. Is trading equity regarded as "buyside"? Or do Hedge Funds do more than just trading equity? Do they act like private equity shops on some instances and control management?
I know what private equity firms do, but I am fuzzy on what Hedge Funds do. I have always thought they were just "high risk" mutual fund traders. So they day-traded with other people's money. Is this incorrect?
I guess this is what happens when you are pre-law until a few months ago.
To the other individual- what level would a post-analyst enter at a Mutual Fund and how is compensation?
Sorry, but I would really appreciate your help.
as mentioned you're talking about two pretty quant places. most hedge funds require a solid analytical background which is not the same as math ability. if you're comfortable with basic algebra you should be fine in most places. there are a fair number of phds in this biz (Actually more likely physics than math) but its not a pre-req.
equity hedge fund analysts do a lot of stock analysis. sort of like supercharged equity research
agreed
What kind of stock analysis? DCF all day, or something a little more qualitative (event-driven i guess would fall under this?).
...hedge funds are buyside just like PE. Hedge funds are investment partnerships that manage money but do not have the same regulatory burder as mutual funds because they only take money from "qualified" (rich) investors. Some day-trade, some take long-term views...all trading strategies are represented within the world of hedge funds...what makes PE funds different is that their strategy is to buy controlling interests in public companies and try to alter the business to increase the equity value, often levering up the company (taking on debt) to do so.
This is an interesting thread...I graduated in 05 with a liberal arts degree and currently work in PE. After 16 months I have found that while I am not the most quanitatively adept person in the world I have been able to pick up complex financial modeling (LBO)through arduous labor. Your ability to excel in a lot of these industries is contingent upon your work ethic, inlcination to learn new things, and your ability to interact well with others. Wall Street math really isnt that complex...
the math knowledge required really depends on the strategy -- if you work hard, you can pick it up though (it's not rocket science).
as Bondarb mentioned, HFs are involved in various strategies -- some are multi-strategy funds and others are solely focused on one thing. example strategies include: risk arbitrage/event driven, high yield, bank debt, convertible arbitrage, high grade, cds...and the list goes on. some hedge funds also do PE or more asset-based investing (i.e. infrastructure funds).
What ebrandonj days is true; the required math can probably be picked up.
But that's not to say you should plan on picking it up after getting the job. In all likelihood, you won't get the job without demonstrating the necessary skills in your interviews, so you'll want to learn the math beforehand.
if you can add and multiply you are most likely good for most hf applications outside a real quant role.
FOR THOSE OF YOU WHO STRUGGLE WITH MATH (Originally Posted: 01/14/2011)
http://www.khanacademy.org
Videos ranging from Arithmetic to Calculus and beyond BIWS style for FREE!
Created by a former hedge fund analyst who graduated from MIT undergrad and Harvard MBA.
Short Overview -
PBS Newshour - http://www.youtube.com/watch?v=HycjWQcAymQ
NPR Interview -
Thank you in advance for the Silver Banana's.
^_^
amazing resource, good find
don't have any SB left though, sorry
Woah. Great find, bookmarked.
Wow, I'm surprised you guys didn't know about this sooner. Khan Academy has been around a while now. It's definitely top notch stuff.
Cool
I've been using Khan Academy for ages. Awesome site.
PatrickJMT is also a great youtube source for math help.
yep phenomenal site. i used to be pretty average at math but i literally went through every video from basic addition to linear algebra and now i'm tutoring others.
Why would you even bother going through the addition and counting videos?
I'm almost done with the calc and linear algebra courses. His videos are of little use if you're taking a proof based course.
if its something like a series, i have to feel like i've done something from the very start till the very finish otherwise it just doesn't feel right
Fantastic, I didn't know about this site, SB for you. I happen to be decent when it comes to math, but I won't have the opportunity to take any math-specific classes in college (well, technically they count as math classes, but they're econ classes with a math focus).
I've follow Khan for a while now, I've even used some of his lectures to make my own presentations on B-school.
Excellent website. I have been using it for a while and it has helped me ace several exams.
I'm actually using it right now as I'm posting this message.
Vector Spaces... sigh....
Tactics for the math inhibited (Originally Posted: 07/27/2010)
Hello everyone,
I come from a liberal arts background, and discovered trading. Frankly, I love it, I have read numerous books on traders and feel that its a good fit for me. I've opened a few demo and live accounts, and am practicing (though not profitable yet). I am about to start on my finance MBA, not a top tier but a decent enough b-school. I am aiming either for a bank or a prop firm, with focus on currencies if possible.
My problem is this - I was never really much of a math guy. When I had to perform on math exams, I could ace them, but it was not my favorite subject by far. When I had to take the GMAT, I scored decently on quant, but it took a respectable amount of work.
Now, I have two years to pick up my math skills before my degree is finished and I get to deal with interview questions requiring me to calculate the volume of a rhinoceros while trying to open a window that is nailed shut. Honestly, I don't see quant trading as being my forte, yet it seems today that all the interviewers are expecting you to be one.
In my research, many very successful traders have made millions without being particularly good at math. Speculation has so many flavors - fundamental, technical, quant, pit, etc. Surely there's a way I can pitch myself so that I'm not required to be a math genius - after all, how many pit traders know how to solve differential equations? Any ideas on how I can best position myself for a career here? I love trading and I want to do it no matter what, even if it means I have to learn about laplace transforms. Hopefully not :)
Thanks for all the input in advance...
True, but most of the guys you're referencing did it in the old days. i.e pre black box algo dominance. The pit is dying and as soon as they figure out a way to get options "upstairs" the pits will die completely. You're a fool if you think pitching yourself someway will fool the pros. Most prop shops and trading arms look at guys with math, engineering and programming backgrounds. Being a "business guy" today is more harm then help.
The best way you can position yourself for a career in trading is to learn some math. You don't need an MS, but beware that many of your job competition will have PhDs and next to that an MBA is paltry, regardless of name brand.
If you're a liberal arts guy and not going to a Top5 MBA you'll have to network your ass off. But if you don't have at least some solid math skills it will be VERY VERY DIFFICULT.
I am glad you have confidence and don't doubt you will succeed at trading. Balls were and always will be the key. No amount of stats can create an appetite for risk, you either have it or you don't. Just remember that I told you NOW, so you're not kicking yourself LATER...taking a few classes in Time Series, Differential Equations, Stochastic Processes, Brownian Motion, Real Analysis, etc...or at least getting some exposure to them would help a lot.
Consider an MSF and think about what I wrote long and hard. The important thing is flexibility. It's very hard to break into trading without math and will only get harder. DEFINITELY open an account and show you can generate Alpha, this will be key for you so you can back your claims that a math background is not necessary.
Good luck. Just remember, you'll be sitting behind a screen (almost definitely) so many of the interpersonal skills and instincts you read about will be useless. Hope this helps.
Ugh, not the answer I was hoping to get, lol. Personally I've heard of enough stories of guys who to this day can make big bucks trading retail without knowing any math outside the four functions, but it seems that the big money is very algo oriented as you said, and this is the chess board the big boys play with, so it pays to know it.
One other option someone suggested to me is to break into trading from the sales side. At some banks sales people can apparently even execute small orders on their own. I think that my soft skills, if worked on, could make me a sales person faster than if I disappeared into quant land, though I think I share the same aversion to cold calling as everyone else does...
Also, what size of an account would be considered proper if I am to show profitability? Is anyone going to care if I have a mere $5000 that I'm working with?
Thanks for your thorough and helpful reply...
As a math and econ major, I'll definitely strive to take those math courses. However, doesn't Time-Series, ODE, Stochastic Process, and Brownian Motion belong to the realm of a Statistics major? In that sense, would you be far more effective to undertake a stats major?
$5K is fine. The size of the account doesn't matter It's about showing you have a strategy, can manage risk, know your market's volatility, can actually speak to an interviewer and make sense about what you are trying to do out there.
At this point (with all due respect) you seem a little bit like a dreamer, who is enamored with the idea of the big paycheck associated with being a trader. If you've done the research as you say you have, then you know math is unavoidable. If you want to be a sales guy that's cool too. But if you say you want it, you gotta do what's necessary, math is necessary. Again, I'm not trying to insult you...just get you to think.
Anyone who wants to trade for the long haul has to have nerves of steel and lots of determination. Essentially, you gotta laugh in the face of adversity and be able to take a good punch to the jaw from time to time. Being that we live in volatile times, you might have to develop a great chin.
The point is, get good at it. No class, no internship, no soft skills are going to make up for rolling up your sleeves and getting dirty. So keep doing what you have been, read, learn...but trade...especially with your own cash. Run a search on the subject, this site's got some nice posts on the subject. Some people might tell you to keep doing demos, my opinion is that only your own money at risk, will teach you how to manage it.
Last and most important. Trading opinions are like assholes. Everybody's got one. Figure out what works for you. Again, good luck.
algorithmic trading is far from "dominant". Go down the list of top earners last year trading and you'll find many more discretionary guys then you will quants.
OP, You need to learn some math. I would suggest calc and stats. Maybe beef it up. Math is not your strong suit so you are not going to be doing anything exotic. Focus on equities or commodities or something like that. Not everyone who trades is some math wizard. I think some of the people on this board think you need PhD level math or you cannot work in finance. Total bullshit. Yes, there is a lot of algo and black box crap going on and you know what, they hire very high end math and programming types. You want to be a trader, not a programmer. Focus on that.
I think all this obsession with math is a foreign thing. Not saying you do not need to know math, but the level of math being advocated on this board is ridiculous.
@Bondarb based on your comment here and our several interactions, I'm guessing you were a fan of Trader Monthly (as was I). If you haven't read The Zeroes yet, pick it up. You'll laugh your ass off.
I've been meaning to do a full review for the site, I just haven't gotten to it yet.
Thanks again to all for your insights...
My research has told me that there are different ways of developing a trading edge, and quant is just one part of the picture. It seems to me that many banks have various exotic instruments they are packaging and selling, on top of increased program trading, which is probably why the demand for quant and programming skills has increased. That said, I guess it is always a good idea to have the best skill set possible when entering the job market.
My problem seems related to time management:,how much of a percent of my time should I devote to studying advanced math, versus getting screen time and learning to become a profitable trader, versus becoming proficient at the fundamentals, versus working on my sales skills so I can get in from the other side of the desk, etc. That is what is bothering me a little. I have time right now, so I need to know how to best budget it.
My guess is if you go to work or intern for a bank, you can't request specific desks because they make you rotate in the beginning. That would mean they expect you to know enough math to do derivatives even if you want to end up in foreign exchange, like I do.
Why do you need math? Just focus on the fundamentals.
Talked to 2 traders today. One at Morgan Stanley and another at Guggenheim. They said that trading and sales is more qualitative then quantitative. Take it for what its worth.
The problem with qualitative analysis is that it can be highly subjective at times.
Differential geometry is an absolute must
I found Complex Analysis to be particularly useful.
Math troubles (Originally Posted: 10/27/2015)
Hello all. I am a second year student at an ivy, and I must admit math is not my strong suit. I have made it up to Calculus 3, but I think I'm hitting a wall. I'm at the point where I am working hard just to pass this class. My gpa will take a hit from this, but in the long run I should be able to keep it above a 3.5 by avoiding too many quantitative classes.
I know that some quant jobs are not for me, but I am still set on IB. Will the fact that I can't make it through Calc 3 with strong performance (and therefore any Economics/quant type courses that require a good understanding of it) hinder my future career potential in finance? I know I can master excel and learn how to model, I just get kind of lost in trying to calculate the plane a given vector function is on.
You do not need calculus 3 for IB
I struggled in pre calc and have been ranked top tier in my IBD cohort (or at least so I'm told ...) every year. Excel does the math for you, and anything too esoteric (option values, etc.) will have been done before for you to repurpose or is on the internet. As long as you understand logic you'll be fine
Minima voluptatibus aspernatur sunt repellendus aut id. Et dolores blanditiis aliquid sed quis omnis exercitationem. Nisi aut libero saepe sed. Voluptate alias et consequatur temporibus natus vel ratione temporibus. Consectetur reprehenderit eveniet eos blanditiis. Itaque illum enim voluptatibus qui.
Excepturi quisquam voluptatum aut quasi eius incidunt soluta. Dolore ea et quia porro autem. Libero minima molestiae autem ea architecto non sit ut.
Quae numquam repellat aspernatur voluptatem quo non. Dolores et sit voluptas veniam nihil ut.
Id porro vel consequatur autem aliquam incidunt iste. Alias est ratione quia dolor aut id sit. Quod et atque dolores nisi esse et. Aut pariatur dolor optio facilis aut.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Odit voluptate quo quo omnis corporis eius nihil. Et sit sit et rerum.
Et suscipit debitis reiciendis officiis rerum quibusdam pariatur. Corporis consequuntur molestias iusto quis esse delectus aut. Iusto vitae quidem non ut rerum nobis ut nemo.
Provident aut sunt ad pariatur quia quos. Provident ea ea ea. Illum iste accusamus tenetur et.
Ut dolor optio repellendus porro. Assumenda quia cupiditate nostrum consequatur. Ut non quibusdam nesciunt neque. Et tempore sint praesentium alias temporibus est. Repellendus excepturi quos dolor fugit corporis qui dolores.
Ipsa cupiditate voluptas qui qui. Maiores et et iure odit. Ut nam maiores fugiat cupiditate laboriosam quos doloremque. Voluptas est sed eaque nesciunt. Tempore et et aliquam illum quos pariatur voluptatem. Quasi libero fugiat tenetur molestiae et.
Praesentium repellat recusandae ipsa non in. Deleniti voluptatem et est. Voluptates asperiores consequatur quis voluptatibus qui. Corporis quia rerum ratione nulla similique sequi aut. Aut doloremque pariatur enim ea quia quis.
Ratione debitis et mollitia tempore sed non. Eos modi cupiditate autem laborum ut qui. Quia quidem accusantium omnis sit voluptatem. Et eum aut exercitationem at id. Distinctio qui non rerum et inventore omnis necessitatibus. Ut adipisci corporis quam quia ut aut.