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Education for trading?..why?

  1. If 90% fail, then why do these banks and hedge funds require a

    damn 4.0 just to be considered? Everyone knows, EVEN mark

    douglas, author of Trading in the Zone says that education

    doesn't mean sh-t when it comes to trading. Even engineers,

    doctors, and other highly educated people fail at trading all the

    time. So 9 in 10 Harvard, Ivy league grads are going to fail this

    year. Everyone makes the damn analogy to baseball and how

    athletes do so well in this business, why not just go out and hire

    a bunch of football and basketball players to be traders, instead

    of the smuck who got an "A" on his pointless english essay?

    Anyone with the disipline, money management, edge, and

    emotional control can be a successful trader. A stay at home mom

    could have just as good a chance if not better than the Harvard

  2. I have *my* answer to this question...

    I firmly believe that when someone is between the age of 13-21, their true "profession", their job, is to excel at school. If they can't bear down and do their job well, there's no reason for me to think that they'll suddenly become superstars after school.

    That's not to say people who struggled in school can't possibly do well... of course they can.

    But that's not my problem. I don't need to be the one that gives them a chance. I want the employee that's most likely to succeed in this new professional career, and that's going to be the person who also succeed in their academic career.
  3. If everyone at the company performed well in school then they want others who performed well because they assume that others like them will benefit the company. Its a "safe" bet.

    Also, if you performed well in school it means you enjoyed many of the properties and challenges associated with it. School and corporate environments have a lot in common.

    I hated school and i am happy hedgefunds and banks have those requirements because I know exactly where I don't want to be. :D
  4. Interesting post. I share your sentiment. I don't know the answer to your question, but here are a couple of thoughts. (Lest anyone accuse me of sour grapes, I confess up front to having an excessive number of letters after my name.)

    At this moment in time, highly educated people run the world. If people don't need a degree to do difficult things, then what are the fancy degrees of the world-runners really worth? Nobody likes to think their efforts could have been more easily achieved, or that maybe they are not so smart, and any plumber have done what they are doing (just an example--no offense to any plumbers-- there are plenty of smart ones, and we need them badly!)

    People who have earned an advanced degree, or a 4.0, have jumped through a lot of hoops--other people's hoops. They are tenacious, and will keep at an assigned task through thick and thin. If you want to hire someone who will jump through your hoops, and keep jumping through them, without protesting, you pick someone whom you already know is able to do this.

    As much as we profess support for diversity, many of us like to be surrounded by people who are like us. I'm generalizing a bit here, so again, I don't mean any specific offense to anyone. But just observe people and their friends. They wear the same clothes, have the same politics, go to the same schools, clubs and churches, have the same haircut, same weight, same level of education, and make about the same amount of money. So it follows that people with 4.0's and impressive degrees might like to hang out with other people like themselves.

    I'm always amazed at people who are so unquestioning of these values about education. Some of them begin saving for their child's college education and choosing Ivy league schools while he is still in utero. They don't even know this kid. What if the kid wants to start a business, study the primates in Africa, become a rock star or artist or take some other unconventional route? What if he has learning disabilities or is mentally impaired?

    Formal education opens many wonderful worlds, but it also encourages conformity. I wonder where the world would be now if John Adams, Marie Curie, Winston Churchill or Ludwig van Beethoven had been conformists.
  5. Couldn't agree more with you drcha
  6. I seriously doubt that these highly educated types actually trade in hedge funds. My guess is these people are hired mainly for research and the sell side of the business.
    The problem with school education is that it teaches you that if you study hard you get great marks, which does not translate well to markets and trading. No matter how much you focus or work hard there will always be a certain percentage of your trades that will be losses (depending on you risk to reward setup). For people who are used to getting great marks their whole life it can be incredibly hard to get used to being wrong on a regular basis in the markets. My guess is that someone who did not do great at school is better prepared to face the markets than someone who did great.
  7. I for one don't accept the theory that there are *any* downsides to excellence in formal education. I don't agree that formal education implies conformity.

    I have a 3.95 GPA in comp sci from the top public university in the nation, and also a graduate degree from the top engineering university in the nation.

    I know many peers who've also done well in school. The best students were rarely the ones with thick glasses, zero imagination, and no social life. The best students were interesting, informed, and thinkers in every sense... I'd attribute their success to intelligence, but just as importantly the ability to focus with laser-like intensity, and prioritize their life as needed to getting tasks done.

    Again, I'm certain there are people who will thrive professionally even if they had a 2.0 in school... just as I'm certain there are people who did well in school who will be utter failures professionally.

    But in this field, we're all about statistics and probability, right? The probabilities of an excellent student becoming an excellent professional are higher.
  8. At first I didn't agree but the more I think about it the more correct that statement seems. Thanks for that alternative perspective.
  9. Unfortunatelly, it's true. The school system imposes rules that everyone has to follow and excellence within that system requires conformity. That's also the reason why a lot of business leaders and historical figures never excelled in their formal education.

    Some examples:

    Winston Churchill
    Independent and rebellious by nature, Churchill generally did poorly in school, for which he was punished.

    Albert Einstein
    In his early teens, Einstein attended the Luitpold Gymnasium. His father intended for him to pursue electrical engineering, but Einstein clashed with authorities and resented the school regimen. He later wrote that the spirit of learning and creative thought were lost in strict rote learning.

    Nicola Tesla
    Some sources say he received Baccalaureate degrees from the university at Graz.[16][17][18] However, the university claims that he did not receive a degree and did not continue beyond the first semester of his third year, during which he stopped attending lectures.

    George S. Paton
    The Academy compelled him to repeat his first "plebe" year after doing poorly in mathematics. He repeated his plebe year with honors, and was appointed Cadet Adjutant (the second highest position for a cadet) eventually graduating in 1909 instead of 1908 and receiving his commission as a cavalry officer.

    Some of the more recent ones:

    George Soros

    George W Bush
    Although he attended Harvard Business School, he characterized himself as an average student.

    Dick Cheney
    He attended Yale University, but, as he stated, "[he] flunked out."
  10. Would you like to see a list of excellent scientists and businessmen who excelled in their formal education? It's a long list.

    Failing in school is not a death sentence, and excellence is not a golden ticket for life. Your list is just a reminder of that.

    But it is absolutely a meaningful sample point for a person's likelihood of future success... even more so for a recent graduate.
  11. Interestingly enough the statistics show otherwise (at least for MBAs). MBAs with 3.85+ GPAs statistically end up making less money over the course of their careers than MBAs with around 3.3-3.5 GPAs.

    Go figure.
  12. I'd love to see a paper on this, especially one that digs into covariant factors. I'm assuming this is all at the same institution/same time frame, as well, so that grading policy isn't an issue.
  13. Do you have a link to those stats GF? Sounds like an interesting study
  14. Heech,

    I don't think formal education implies conformity, either, only that it encourages conformity. You are absolutely correct that many well educated high achievers are able to think outside the box and achieve greatness. I'm merely suggesting that an open mind is an important asset, and that formal education does not necessarily cultivate innovation.
  15. Memorizing a book and studying and getting a college degree doesnt make you successful. People with common sense have been shown to be more successful in business, trading etc. than most with college degrees. The only thing wrong with this is most people have no common sense, or at least never use it if they indeed have it.
  16. From my experience its because these firms get so many emails, phone calls, resumes, etc from guys wanting to work at the firm that they would have no way of possibly interviewing all of them so they need a way to weed out people and a college education is the easiest way to do that.

    I for one have thought about the true benifits of a college education in this business and can honestly say I can't think of one good thing that formal education brings to the table.

    College grads (especially ivy leagues) tend to over think the market and just don't have that street fighter mentality. School binds you by rules and strict ways on how to do things as well as instilling in you that there is authority that you must listen to and they tell you what to do. Trading has very little rules and to a point you make your own rules as well as your own decisions. You are the quarterback the coach and the referee.

    If I were hiring traders I would look for guys with common sense, street smarts, ability to read people, etc. As those are the most helpful assets to a trader imo.
  17. Education for Trading

    Ed for trading deals mostly with building a replacement for the first recourse a person turns to while beginning to learn to trade.

    The first mental recourse is the kind of stuff and the mental orientation most of the posters in this thread turn to to comment here. On 16APR I had written 25 pages on a trading opportunity and I turned to the subject of "Learning Failure" for the next 10 pages I wrote that day.

    I found two drills that needed to be done:

    1. Write 100 words on where you are.

    2. Write 100 words on the workaround for where you are.

    There were 100 "Learning Failure" items to deal with. So the drills amount to writing 20,000 words to get the the place where "Learning Failure" might be dealt with. This is 40 typed pages. I do 3500 words a day as a rule, so it would take a week of reflection and documentation.

    I've taught, formally, from 5th grade to post doctoral on the subject of trading. In higher Education my focus was in four fields, though: Bus Admin and Finance, Architecture, Psychiatry, and the Environment when it came into being.

    Students run the gamut. For trading an average fifth grade can do it if she/he has a WSJ subcription and a laptop. In the 60's I remember Glennie Close and Reeve Lindberg taking geometry and Reeve's dad and his engineeers did a proof on thri-secting an angle on a d size engineeering drawing. The kids figured out the errors in the long proof. At that time thier contemporaies took a course called "Enviromental Math and we wnet to the NYSE on 29OCT each year. They plotted their daily TA charts and the the "Seven Keys to Value" of NYSE fame. Each student got 25 copies of 10 annual reports and we had a wall of alphabetical shelving. FA was used to pick stocks for plotting using TA. The S&P Eastern regional director provided free a full brokerage service with daily service (his kid was a student). Crystals also grew for four of the six shapes from the center of the room and out the door and down the hall ways. We used string and straws over and over. These were children of wealthy families so they came in all sizes. The 5th graders were just the same children of wealthy Hollywood types.

    Wharton, Harvard and MIT left the greatest mark on me in terms of interacting with students. Case studies DO bring out streets smarts. At Tech I wound up in a classroom that had teams working on a problem for 3 years running; it was handed off term to term. 2 1/2 hours defined it; one field trip got the data; and one field fix solved the problem. "out of the box" was the requirement and the long prior dwell time had to do with the 100 items mentioned above.

    Wharton solved the drug poisonng problem in three Modified Delphi sessions. It came down to one question: Is the product any good?

    What generates the first mental recourse of the posters here is found on three levels (as usual): coarse, medium and fine.

    Coarse: Home, School, Environment.

    Medium: a rainbow of personal aspects: Status in Life, Character, Orientation, Mind Set, What is Deemed Possible or Not, and Mistaken Acitivities and Astions.

    Fine: the topical breakout of Medium: there are 57 topics and this raises about 100 items whose status determines how a person's forst recourse arrives consciously and unconsciously to deal with events either analytically or intuitively.

    As we found out in 11APR09 issue of the Economist, stress causes disruption of analysis and intuiting. Humorously, we also found out decisions made, analytically or intuitively, are the opposite of what is required to be correct.

    Bottom line: if you do not know what you are doing, you WILL fuck up most of the time. Fortunately thrading intaday is largely zero sum so those who have good first mental recourse do not feel stress, do not get disrupted, and DO make the right decisions.

    Top schools winnow to get students. Top schools do problem solving with teams in a case study orientation (real life). Top schools bury the mental first recourse students arrive with.

    The other path is successful entrepreneurship. My custom is to attack unsolved problems with "C" corps and do TFSE's with listed "C" corps to create capital as fast as possible in the field. I prefer Marine lawyers and Marine CPA's who can deal. Dealing is how it happens. Dealing is a live case study with money attached.

    the first two books on alcohol production were mentioned. the second has transferred to people 14 million copies it turns out and 400,000 went out in four months. This is the definition of an entrepreneurial need at a given scale of application. Acohol production rate of increase is less than electronic texhnology which doubles in tech every 18 months (Sullivan); alcohol takes 48 months. You see the power law applying here.

    Schooling is a matter of choice: formal or informal. that is why I put in 5 years here to get an informal record on the global network. All kinds of people succeeded in learning to learn to trade. they now have NEW first mental recourses that simply preclude STRESS, DISRUPTION, WRONG ANALYSIS AND WRONG INTUITING. It is not "news". It is corporations, foundations and hospitals and always has been.


    It comes down to making a 100 choices on a 100 days.

    Q1. Why can't I see the market?

    Q3. How much do these platforms cost a month?

  18. I may have come across as someone who advocates that education is not that important and that was not my intention! If any young aspiring traders still at school are reading this thread I strongly recommend that they finish university with the best possible grades before embarking on a career in trading.
    I am against the current format in which the education is delivered and the system that is imposed on the children. It's been around too long and it does requires conformity to succeed. For example, a lot of people believe that Einstein would have never come up with his Theory of Relativity, which revolutionized our view of the world, had he joined and operated from within the scientific establishment.
  19. You have truly exceeded yourself with this post JH.
    Usually I simply have no idea what you are banging on about, but this post takes the cake.
    I have felt for some time that you call a different planet home, but after this posting I can see that you may not even be carbon based like the rest of us.

    Anyway, onward and upward.

  20. I think its a lot of things like motivation, competetiveness and other traits that have been mentioned here already, but the main thing these institutions seek is conformity within a certain culture they seeks to create of like minded individuals who aspire to be the best academically they can be. They are not seeking diversity. Goldman Sachs is such an example and indeed it is hard to argue with their success.

    Interestingly, some of the ruff and tumble banks--Bear Stearns for one--didn't base all their hiring decisions on grades and test scores. They were more interested in hiring the entreprenurial aggressive, and hungry types who wanted to make money above and beyond everything else. In fact, a pedigree from the best schools with high grades was looked less favorably then the kid from a broken (and poor) family who would work his ass off with to WIN with no silver spoon.

    For a recruitment manager, the safest bet is always going to be the Harvard grad with all the honors and high grades as opposed to the applicant with a less prestigious pedigree despite having a great GPA.
  21. The reason why education is a requirement is simply business thinking of the employer. Proper educated people are brainwashed for team playing. They are integrated into the system and don't tend to break rules. Rules are what will be set on them in order to implement them into a trading job and keep them there under strict monitoring. The industry is not looking for the best but for those who are easy to drive.
    The employer knows a good talented trader who is creative and equipped with the necessary discipline for success will not stay.