How true, Equalizer, I agree with you. If we really analyze the work of a âQuantâ, we shall be amazed as to how much understanding and in-depth knowledge one is required to know of these trading markets. Quoted from the Wikipedia: âA quantitative analyst is a person who works in the financial markets developing mathematical models to assist the activities of traders and risk managers within banks and other large corporate institutions. Throughout the industry, such professionals are known as quants.â If Quants need to be successful in their field, they need to know the markets and the experience earned from trading shall definitely help them.
OK here is the deal. Quants are losers. They are a bunch of math and science nerds that don't have the balls to actually trade themselves but think they are still smarter than everyone else and can figure the market out through complicated math and science equations. As far as im concerned I have no idea how complex math and science could possibly help you in trading the markets better. Like one guy stated trading is not a pure science like math and science. It is at best a social science. How is a math equation going to help me figure out where soybeans are going next week? Can it forcast the weather? Can it walk out in the bean field and judge the crop? Can it talk to other traders and see what there feelings are on the market? Can it judge market sentiment? I think not! This whole quant/physics analysis has gone far enough! Get it out of your head! Its not going to help you in trading! You should all just pack up and leave chicago and new york and try to find the cure for cancer or something. Leave the money making to us! That is all have a great weekend! GO BEARS!
Did you just ask how math and science can forecast weather? Wow. You do understand that in an actual investment operation, there are more parts than just "trading" right?
Yes I understand that and if thats all you want to do is be some bitch basically working for an investment firm that doesn't care about you at all then a quant might be a good choice but if you want to actually trade for yourself and be your own boss then I would not recommend the whole math science thing.
I guess you are right. Why bother with making actual money when you can "be your own boss" and "trade for yourself." I mean, what were those geeks thinking taking $250k-$500k jobs and those "portfolio managers" running a billions of dollars taking home millions a year.... I dont' see why we don't all just quit our jobs and trade retail! I'm sold. Putting in my notice tomorrow. Gonna be my own boss!
Young trader may be making a point. You are operating on one financial level; he is on another level. Let me be more specific. Your price range and Mark's are a little different. So are the roles and and Mark assign to quants. This limitation is not one that the retail trader faces. The retail trader also moves to higher ground early in his amateur career. See John Parker's and Hubert Sentor's decription of when the crossover occurs for being required to have a seat on one of the Chicago exchanges, for example. Where the rubber meets the road is the point where similar bases are used to understand just how large the amateur's % is compared to the locked in quant's corporate share. Read the journalist turned writer renditions of how the dole out of working capital is determined. There is a thread going on 12 traders and their wealth is small (pegged at milions of either wealth or annual returns-- who knows. These people were unknown and just make up the contents of a book that is being churned on ET for some reason. The range of what they do is very different than Mark's decription of the limitations of the Quants. Neither deal with the major matter of markets and particular how to make money by extracting what is offered. Were a person to review the literature and then consider a particular orientation (that of a person with a neutral bias) he would then see that the posibilities as described by Mark are skewed considerably with respect to bias. Mark's CUPS would not change this. I find that quants work other (additional) turf and deal with other (additional) matters than mentioned in Mark's 15 pager. And they have a neutral bias to do this other stuff. Young may see that quants are "contained" by limitations that do not bound amateurs. By drawing two graphs one for quants and the other for the larger group Young mentions, anyone can get the idea that there is a crossover. An example of this is the attrition of quants from their first employment to their subsequent avocations. What is it like to be a trader who is on the right side of the crossover. Consider the quants. it is more of the same old. Their dole is going to be determined by the same formula as the first day of their employment doing what they have always done. As pointed out it is in propartion to proximity to the money and swimming up stream is not commmon since different bags of tricks are used. When I started trading 10% of the stocks were run by pros. Today 75% are run by pros. I notice my money velocity time base reference has been cut in half to yield the same money velocity. I am to the right of the crossover. When You you at the "size" of things as advocated by Kahn of Barrons web site weekly. It gets apparent that one graph is algebraic (degree between 2 and 4) and the other graph is exponential (the exponent is related to turns per year, probably). So there is no choice ever on the table anyways. That brings up the critical path for anyone. This takes a some thinkng. FATKAT did it in his first post. The bottom line is the bottom line. So why did Mark quit being a quant in the financial industry. Why did Derman quit? How come Farmer is writing "stories" on big blocks do not move the markets in his old age? As has been referenced, quant originated products are largely in the fixed income arena and subtended by credit derivatives and hybrids. Painters who do floors avoid one thing. So as the quants back out of the corner, they cover their tracks with another layer of what they do. The demand for guys to paint their way out of corners is not going to be very persistent. The exponentially based careers of amateurs bode well for several reasons. It is good to not have bling (See bublication Trader's Monthly) while you are learning to develop an exponential curve. The first two thirds are kin of flat comparitably speaking. The last third, as we all know, is unbelievable and astonishing (See my large ignore list). The way to exponential is as follows: 1. Be sure to be able to see the markets. 2. Have the platforms you use (about 4 at this point) be able to show blank space on the right of all price and volume charts,including indicators. 3. Use modern defaults for indicators. For instance do not use the DJIA since it is lagging. indexarb.com does not deal with drift. 4. Do not use probability since it is not necessary. The making money game has no rules for what a person has to do. People who use probability when it is not necessary are playing by a rule that is not a rule that works well for making money. 5. Always trade from the vantage point that you know you know at all times. The common way to deal with this is to use powerful variables (not one dimensional variables) and to operate in a binary mode. 6. Understand totally and completely that money is only made in markets by price movement over time. The crayola test shows what is being offered. 7. You must be on the right side of the market to make money. 8. Start as small as possible and only enlarge your accounts with profits. What you are doing is building something. It is your mind. Think of how you will be required to present your model to a production person. He will bring it back to you so you can use it in your routine. The routine has four parts: monitor, analysis, decision making and taking timely action. Insert: Here is some humor: What does Nitro recommend be part of an automated system? Hint, read The Predictors, they screwed it up the same way. 9. Trade slow intruments first (3 to 4 day cycle that used to be 6 to 8 days): leveraged instruments, second (40 trdes a day) and large blocks of capital on 4 to 6 week cycles. You keep doing one and two when you begin three. All of this is out of necessity as a consequence of acquired knowledge and skills. 10. Don't look for corners as you paint; this is an infinity edge paint job so there aren't any corners.
The kid may be trying to make a point. However ignorant, we can ascribe the stupidity of that point to youthful arrogance. I'm not entirely sure what your excuse is. Nevermind an excuse, I'm not even entirely sure what your point is. Perhaps the laymen will read your 'prose' (for the lack of a better term) and be convinced that you posses some esoteric knowledge, but be assured that you simply lack the facility to write clearly. The inability of express a clear thought is not at all the mark of a genus, but of a simpleton.
Hey sjfan wake up call! As an independent trader I dont have to express my thoughts clearly because im the boss and the buck stops with me! The quants do have to express thoughts clearly, yet another reason why you would not want to be one! Also you don't have to be a genius to be a good trader (I have a 3.0 gpa in high school and make money consistantly). As for you quiting your job to trade retail I don't know if I would jump right into the jungle of the markets if I were you. Maybe you could start small and make a few trades during your lunch hour at your "Big Investment Firm" Sorry to be so negative about the whole deal but im getting really sick and tired of everyone thinking there is a holy grail out there in trading because there isn't. It takes balls, hard work, ability to think on your feet and read market sentiment, etc. And that can't be done through complex math or a super computer!
First, if you are still in HS (and I wouldn't brag about 3.0 gpa really), then please, for the love of god, listen.... there are things traded that aren't stocks, options on stocks, futures on stocks, or commodities. And you also make the mistake of thinking that I don't trade. But that's alright. So, here's a bit to hopefully broaden your horizon a little. Whereas Jack is an idiot ,I think you are just a bit misguided. Hell, I didn't know about half the stuff that's traded until much much much later on. For example, I trade something called synthetic tranches. They are very complicated derivatives. Each night, every dealing desk on the street runs these VERY complicated algorithm that computes the mark-to-market price of the contracts, the delta sensitivies (so we can hedge our books and do other assorted things), and various hedging exercises. We can't trade these things without pricing quants. If the traded spread goes from 250 to 300, I can't even figure out how much money I've made without running a lot of calculations (full of calculus and matrix algebra. We can't even understand these things without lots of math. Yet, billions change hand each day. Now, math may not be the holy grail (I don't believe in a holy grail), but math is useful. It's analytical discipline. It's also allows rigorious analysis of very complicated instruments and trades. With the exception of specialized quant investment groups, general quant is about being able to understand your positions, figure out your optimal risk budget, and how to express certain views in the most favorable way.
GS has it all wrong having quants work on structured products, modeling credit risks, and finding anomalies. They need to get a few 3.0 high school graduates or GED equivalents who can "think on their feet" and "read market sentiment". Pshh, as if increasing liquidity or complex products do anything for global finance. Its all about stocks baby. Researching vol skews? WTF will that tell you about where ABC is going to be in a week? Why is the term "vol" or "skew" even there? I don't know of this "vol" but all I knew is I love to skew some chicken shish kebabs after making $2000 per day in the market! BTW did you know the quants at DE Shaw and Renaissance, sit around marinating the chicken for the MDs all day. True story. Thats why quants suck. Stick it to the man! Be a retail trader! Trade stocks! Haven't you fellas read "Reminisces of a Stock Operator". Thats how it all should be. Stocks, balls, models and bottles. Ahhh.