# Need help! Deciding what to study to become a trader!



## MycroftH (27 January 2015)

Hey guys, 

I’m a university student, studying Finance. I’ve decided that I want to become a trader, not sure about which type (stocks/commodities/forex etc). 
BEFORE, someone makes a smart comment about “Trading can only be learnt by trading or on-the-job” or “Just open an account and trade”… I WILL be starting an account and trading slowly. 

I need help deciding which units would be MOST beneficial to study, for a career in Trading, either for hedge funds or proprietary firms e.g. Optiver, whom I’ve heard many good things about.

If any professional traders could take a 2 minutes reading the unit descriptions below and suggest in order of importance (1-8) OR top 5 units to study; along with reasons. I would be very grateful.

Thank you in advance! 
*
ACST201 – Financial Modelling
AFIN270 – Stochastic methods in applied finance 
AFIN250 - Investments 
AFIN328- Financial Risk Management 
AFIN329 - Derivatives Instrument 
AFIN331 - Quantitative Modelling in Applied Finance 
AFIN353 - Advanced Corporate Finance 
AFIN352 - Applied Portfolio Management
*
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Financial Modelling - *ACST201*
This unit explores some basic concepts of finance, in particular: -price; yield; the relationship between price and yield; interest rate risk; reinvestment risk; duration and its uses; volatility; the contingent payments approach; arbitrage pricing theory; pricing forwards; futures and options. 
Financial mathematics to analyse transactions involving commonly used financial instruments in the context of the markets in which they are traded. 

Stochastic Methods in Applied Finance - *AFIN270*
This unit provides students with a more detailed insight and understanding of the valuation models introduced in earlier units and includes extensive use of Excel. The unit addresses a number of topics, within which theoretical models are developed and then explored further using Excel. These topics include random walks, martingales, ito calculus, and arbitrage.

Investments - *AFIN250*
The investment industry has experienced rapid change over the past three decades. Many of these changes in the investment environment are discussed in this unit. An important theme of the unit is that developed markets are near-informational-efficient - that higher expected returns only come by bearing greater investment risk. Throughout the unit a modern portfolio theory approach is applied, focussing on the implications of efficient diversification, in providing a proper measurement of risk and the risk-return relationship. The asset allocation choice is also considered in depth, as it is a primary determinant of the risk-return profile of the investment portfolio. In summary, the unit introduces the principles of valuation as applied to a broad range of asset classes including models of equity valuation, debt valuation, commodities, private equity, and alternative investments such as distressed securities and real estate.

Financial Risk Management - *AFIN328*
How to apply and evaluate the quantitative methods covered in the unit in analysing and managing portfolios as well as the risk arising from various financial investments. In particular, students are expected to be able to: examine and find optimal investments strategies with respect to risk and return; attain an excellent knowledge of the role and characteristics of international financial markets and institutions; understand the pricing of various financial products and how they can be used for hedging; evaluate econometric models for financial variables; and acquire an extensive knowledge on the major approaches to managing market, credit and operational risks. 

Derivatives Instrument - *AFIN329*
This unit explores the characteristics and pricing of derivatives. The importance of the principles of hedging and arbitrage in derivative pricing, is considered. Derivatives investigated include forwards, futures, options and various structured products. In particular, the unit covers non-standard securities and numerical methods.

Quantitative Modelling in Applied Finance - *AFIN331*
. This unit develops the modelling skills of students, with an applied focus complementing the overall applied focus of the degree. Quantitative modelling is widely practised throughout the finance industry, including in the areas of financial statement analysis, corporate finance, and risk management. In addition to developing students modelling skills, this approach also helps to advance students' understanding of the various theoretical issues on which these models are based.

Advanced Corporate Finance - *AFIN353*
This unit challenges the student to consider a comprehensive set of factors that influence organisations in their payout, investment and finance decisions within a dynamic framework. The decision might reflect the personality of a CEO, the composition of competitors or expectations about fluctuations in the economy. In this sense, students need to be able to appreciate the differences between theory and practice. Further, students are encouraged to read academic and professional finance journals and the business sections in the daily press. By the end of the unit students should understand: the theoretical and practical implications of the multifaceted nature of risk; the different issues (including flexibility) to be considered, and the different approaches (including real options) available, in valuing risky projects; issues in determining capital structure; the theory and methods used in assessing the costs and benefits of mergers and acquisitions; and the link between corporate governance and finance.

Applied Portfolio Management - *AFIN352*
This unit provides students with the analytical skills and techniques required to effectively manage diversified portfolios of securities. The unit prepares students for asset allocation management and performance assessment of diversified portfolios. Issues relating to the management of portfolios containing options, futures and other derivatives will also be reviewed. After completing this unit students have greater knowledge for effective portfolio management and an increased awareness of potential practical problems in implementation. 


Thank you for your time and advice!


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## tech/a (27 January 2015)

Trading is generally minutes to days.
I'd say very little of any of the material will be of any use to a trader.


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## Boggo (27 January 2015)

> Applied Portfolio Management - AFIN352
> This unit provides students with the analytical skills and techniques required to effectively manage diversified portfolios of securities. The unit prepares students for asset allocation management and performance assessment of diversified portfolios. Issues relating to the management of portfolios containing options, futures and other derivatives will also be reviewed. After completing this unit students have greater knowledge for effective portfolio management and an increased awareness of potential practical problems in implementation.




1. Save as much money as you can in a year.

2. Open an account with a broker.

3. Read newspaper/magazine/online comments written by the people who have completed-
ACST201 – Financial Modelling
AFIN270 – Stochastic methods in applied finance
AFIN250 - Investments
AFIN328- Financial Risk Management
AFIN329 - Derivatives Instrument
AFIN331 - Quantitative Modelling in Applied Finance
AFIN353 - Advanced Corporate Finance

4. Buy stocks etc based on their recommendations

5. When you have lost 50% of your account stop trading, sell everything.

6. Work out what went wrong by going back over each trade paying particular attention to the losing ones.

7. Start trading again, regain your losses as you follow your plan, you have now passed AFIN352.

8. Watch your bank balance grow.

Alternatively, get a good pass in all of the above, get a job with a bank and monitor all their financial planners to ensure that they are selling the banks products.
When you have done that for five years call yourself an experienced investor and start writing articles and newsletters.
Get a lot of subscribers to believe you and the go to item 8 above.


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## Trembling Hand (27 January 2015)

Set up a email an alert like this one,

http://www.seek.com.au/jobs-in-bank...wordRelevance&searchFrom=advanced&searchType=

You will get an idea about what is available and what they are looking for. The units you have listed would help for a gig at something like Optiver but be warned I think their glory days are long past. They were hiring hand over fist a few years ago and handing out Ferraris to whoever walked through the door. Think that game has pasted them now.

If you are looking at a prop shop there is two ways. Get into one of their trainee programs learning how to spread bonds etc. So anything along that line helps. Or just teach yourself to trade and walk in as a backed trader. Not much in what you have listed will help in that.

For Hedgefund work...... You have to be something special. Phd in Physics or something way out there.


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## MycroftH (27 January 2015)

Thanks so much for the info guys, but still I'm suprised to hear that NONE of the units of study will help with a trading career. I would have thought risk management (AFIN328) or investments (AFIN250) or perhaps derivatives instrument (AFIN329), would have been somewhat useful.

I'm shocked to hear, that we learn at university is absolutely useless...


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## skc (27 January 2015)

MycroftH said:


> I'm shocked to hear, that we learn at university is absolutely useless...




What makes you jump to that conclusion? The units you've listed are all somewhat marginally useful for trading, but they are all essential if you want a career in *finance* (of which trading is but a small part).

In terms of usefulness to trading...these may be of some use:
ACST201 – Financial Modelling
AFIN270 – Stochastic methods in applied finance
AFIN329 - Derivatives Instrument
AFIN331 - Quantitative Modelling in Applied Finance

There are many approaches to trading. Some approaches involve 
- You valuing something, or 
- You understanding how others value something, or
- You evaluating if two or more instruments should be valued differently (e.g. arbitrage opportunity).

With some solid finance background it will help you with the above.

But if you are just going to trade some charts then these studies won't teach you anything as such.


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## McLovin (28 January 2015)

skc said:


> With some solid finance background it will help you with the above.




+1

Ultimately, university is how you get your first job unless you do something specific like law, medicine, accounting etc. The smartest guy I ever worked with was a BA from Oxford who majored in English lit. A genius who could also dissect Shakespeare, which made him great value after a few beers. He left banking and ended up working for Medicins sans Frontiers.


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## StockTrader010 (28 January 2015)

Take the Financial Risk Management course. It's all about managing risk.


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## tech/a (28 January 2015)

MycroftH said:


> Thanks so much for the info guys, but still I'm suprised to hear that NONE of the units of study will help with a trading career. I would have thought risk management (AFIN328) or investments (AFIN250) or perhaps derivatives instrument (AFIN329), would have been somewhat useful.
> 
> I'm shocked to hear, that we learn at university is absolutely useless...




Not useless

Just not necessary to be a successful trader.
Practical application of what we learn in what we do or want to do
Is spasmodic. But it does serve as a foundation which others don't
Have. Experience builds the rest.

Whatever you decide to choose be passionate in your study and
In anything you peruse in the future.
It will set you apart from others.

Good luck.
Enjoy the journey---make it memorable.


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## dutchie (28 January 2015)

MycroftH said:


> I'm shocked to hear, that we learn at university is absolutely useless...




Most university courses/subjects are useless in the practical world but they hopefully open your mind up to what is useful.

Go through the motions of getting a degree/qualification ( and thus a job) and that's when you will learn the useful stuff.

Don't worry too much about cherry picking the subjects - pick those that interest you the most!


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## Pnut (28 January 2015)

None of the Above.

1) First thing is to Learn about your inner demons Greed and Fear because they are your weakness.

2) Second thing is to find a plan that works.

3) The last thing is to follow the Plan.

Uni professors can't define your inner self, a trading plan that will work for you and your ability to follow the plan.

Obtain knowledge and wisdom and the money will come to you, you are only limited by time.
The Only professor who I know of that made a name for himself is Richard Donchain. You should try a survey at your Uni and see how many teachers are currently trading more then 1 or 2 trades a year. 

Hope this helps.
Pnut.


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## pixel (28 January 2015)

dutchie said:


> Most university courses/subjects are useless in the practical world but they hopefully open your mind up to what is useful.
> 
> Go through the motions of getting a degree/qualification ( and thus a job) and that's when you will learn the useful stuff.
> 
> Don't worry too much about cherry picking the subjects - pick those that interest you the most!




+1 what Dutchie said.
In my professional life, I've hired many a Graduate. One of my favourite interview questions: "Estimate the percentage, how much of what you learned at Uni may be directly useful in real life?"

Answers above 5% made me think twice. 20% and more count as a fail.


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## Ves (28 January 2015)

pixel said:


> +1 what Dutchie said.
> In my professional life, I've hired many a Graduate. One of my favourite interview questions: "Estimate the percentage, how much of what you learned at Uni may be directly useful in real life?"
> 
> Answers above 5% made me think twice. 20% and more count as a fail.



Perhaps not relevant to every single student,   but it was at university where I learned how to develop frameworks for critical thinking that enabled me to research,  problem solve,  analyse,  and apply data / knowledge etc.

It's not what you know,   but _how_ and _what_ you do with it.   A good university course should at least introduce you to critical thinking.

It also taught me to work hard to get the best grades I could (maybe pointless themselves),  but it encouraged my thirst for learning and knowledge (that I still have today) and for doing things accurately. 

I would say that 5% is a gross understatement.   But perhaps it was not the environment,  but what it inspired in me.


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## darkhorse70 (28 January 2015)

Micro, I was in your shoes recently. I got kicked out but I might be going back this year. I had just learnt about trading in my final stages of uni, but to me uni killed the passion in studying. I learnt more about economics and the stock market by self research. In hindsight some subjects like statistics were useful. For example understanding sample testing and z scores and skewed data etc which is useful in back testing trading strategies.

However my heart wasn't in it so I couldn't continue in it. But Im sure it will give you a better understanding of fundamental stuff. Either way its a good way to meet woman haha. 

GL


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## tech/a (28 January 2015)

Kris
Son is a Doctor of Physics
Spent 10 yrs at UNI.

He and 2 others have just signed a deal with a leading White Goods Manufacturer.

http://www.adelaidenow.com.au/news/...-make-some-dough/story-fni6uo1m-1226796922933

His doctorate has lead him to Entrepreneurship and a mind that never ceases to amaze me.
*Not the sort of thing you can be involved with without that background.*

But as a parent I have to say that UNI settled Kris and his involvement with academics grounded his approach to life and matured him super quick.
Not only a great academic result but a tremendous personal one as well.

You just never know where your studies will lead you.


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## Ves (28 January 2015)

tech/a said:


> Kris
> Son is a Doctor of Physics
> Spent 10 yrs at UNI.
> 
> ...



Great story & post.  Good luck to Kris with this endeavour.


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## Wysiwyg (28 January 2015)

tech/a said:


> He and 2 others have just signed a deal with a leading White Goods Manufacturer.



That is fantastic news to read Tech/A. I think home automation has room to grow too. Just a thought.


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## pixel (28 January 2015)

pixel said:


> +1 what Dutchie said.
> In my professional life, I've hired many a Graduate. One of my favourite interview questions: "Estimate the percentage, how much of what you learned at Uni may be directly useful in real life?"
> 
> Answers above 5% made me think twice. 20% and more count as a fail.




PS: Don't get me wrong! I don't knock a University Education, nor do I discount the benefit of a degree.
My point is, a degree - the higher the honours, the better - will have taught you to study and become proficient in a subject matter, whatever that may be. What counts is the proven ability to immerse yourself into, and understand the essence of, a topic.

However, far too many graduates emerge from Uni with the belief "Now I've got it made; I know everything there is to know. Listen and I'll show you."


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## tech/a (28 January 2015)

> I think home automation has room to grow too. Just a thought




Yes Agree

However we are working on Trade Automation first.

I've employed Kris for a year to work on this and other projects. (Of course he has his own---pet projects).


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## MycroftH (28 January 2015)

Thanks so much for the advice guys. 

I think I'll seek a more practical approach, perhaps open a trading account and self-learn.

I've heard that starting in an Investment bank, like a broker and after-then learning to trade is better.
(from a ex-Goldman Sachs, JP morgan employee - Anton Kriel) 

Perhaps some units of study related to IB, hopefully getting work in an IB then eventually trying my luck at a prop shop or hedge fund.

I'm willing to put the hours necessary... 

Thanks again!


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## artist (28 January 2015)

MycroftH said:


> I need help deciding which units would be MOST beneficial to study, for a career in Trading, either for hedge funds or proprietary firms e.g. Optiver, whom I’ve heard many good things about.





Howard Bandy has posted this advice to darkhorse70 at post #13 on the thread Trading Ideas:

"Take courses in math through calculus and linear algebra, computer science using whichever languages the department recommends and course work through numerical analysis, data structures, and algorithm design, applied statistics using Bayesian methods, operations research courses in linear programming. Take a two semester sequence at the junior / senior / graduate level in modeling and simulation. Somewhere along the line, learn how analysis of non-stationary financial time series requires different tools and a different frame of mind than analysis of stationary data sets (like credit card data). "





 Beyond that, and for discretionary trading, I second what TH wrote above "Or just teach yourself to trade and walk in as a backed trader. Not much in what you have listed will help in that."


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