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RobinHood

Education and Your Niche

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I'm currently enrolling into college for 2009, and I've been thinking about this as it relates to my trading.

 

In his book Enhancing Trader Performance, Steenbarger discusses the "paramount concern" of finding a niche in the medical world. "After six weeks of pediatrics, six weeks of general surgery, six weeks of radiology, and six weeks of psychiatry, students begin to gain a sense for the kinds of medical practice that speak to their strength and interests"...

The importance of the niche being that "Success reflects the fit between the person and the performance field".

 

Unfortunately, I don't think this is possible in trading. For instance, I'm interested in economics, but how will I ever get to experience global macro trading without an ivy league degree?

 

At the moment I'm experimenting with much shorter time-frames and styles (e.g. scalping), which I'm enjoying. At the same time I'm studying economics in the hope that I will later be able to integrate that into my strategies.

 

Which brings me to something I've noticed. Many (not all) of the traders I admire most have formidable qualifications from prestigious schools.

E.g. Michael Marcus: PhD (Psychology)

Stanley Druckenmiller: Was enrolled in PhD (Economics)

Bruce Kovner: Was enrolled in PhD (Political Science) at Harvard

Jim Rogers: B.A and Masters from Oxford

Stevie Cohen: B.Ec from Wharton

Yra Praxis: Masters in Political Science, Economics major

 

and to throw in a scalper, Paul Rotter. Although there is no mention of his degree, he did work at a banks execution desk (a job one can safely assume to require higher institutional education).

 

Obviously college and success is not a causal relationship as there are exceptions, but I do think there is a strong correlation.

 

Is the advantage these guys have so great because of the way they were taught to acquire knowledge (from their institutions)?

Is it the network provided by elite colleges?

Is it simply the ease of finding high-level jobs (which allow you to discover your niche and study it more intensively than you ever could on your own) when coming from elite colleges?

their intelligence (something I believe one can vastly improve)?

 

This relates to my trading indirectly, because I'm considering completely changing my applications to college. Instead of applying to a 3-year Bachelors in Commerce degree at a university relatively close to me, I was thinking to apply to one of the best colleges in Australia (Melbourne University).

 

Due to my academic records not being high enough this would mean at least an extra year of studying "arts" (options include: psychology, economics, political science also) so I am able to get into their Commerce degree. I'm already late to college as it is (I tried to "make it on my own") having recently turned 20, but I don't wish for my mistakes to effect this decision (cutting losses).

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Don't ever let your lack of educational background limit you from doing the things you want in life. I know plenty of successful people without college degrees who have made it on their own. I never judge a person based on their educational background.... but rather what he/she does is what earns respect from me.

 

Graduating a good university does help in landing a job in a front office environment. Most of the people I have met in the institutional environment did graduate from a reputable university, interned in an investment, and landed a front office job. Most start out as assistants or junior traders. This is where they learn the ropes.... even those without any market understanding are able to pick it up in this environment within a year. Work 12 hours a day in this environment and you are bound to pick things up quickly. If you entered right after college, by the time you are 27-28 you are probably trading in 100 lots. Though there are quite alot who become burnt out and switch roles.

 

However, there are few without any college degrees working front office roles. I know plenty of brokers who do not have a college degree. Some eventually move to a trading job. So there are the exception.

 

Finding your niche is a matter of enough screen time and practice in my opinion. Its similar to a talented athlete but without the necessary training and facility he will never live up to his true potential. Whether you get a BA, MA, or PHD... I do not believe this is going to help you become a better trader. You might become a good economist/analyst.... but trading has nothing to do with the amount of higher education you receive. Its really about knowing yourself and controlling the nasty little habits we have of greed, fear, impatience, and lack of discipline.

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Focus a lot of your Optional requirements on classes in Psychology and Economics and you should have a good basis for trading. I have a B.S. in Marketing and was required to take Psychology and a lot of Economics- I have to say those classes have served me in greater benefit than my Marketing Degree in life thus far!

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Thankyou Soultrader. I agree with what your saying, but wanted to address one thing...

 

Whether you get a BA, MA, or PHD... I do not believe this is going to help you become a better trader. You might become a good economist/analyst.... but trading has nothing to do with the amount of higher education you receive. Its really about knowing yourself and controlling the nasty little habits we have of greed, fear, impatience, and lack of discipline.

 

I do not believe this will directly cause you to be a better trader, because ultimately it is up to each of us how far we get (education can be acquired in other ways). However, under certain circumstances I do think it can have a huge indirect affect on your trading.

 

If I could go back in time and speak to myself I would tell myself to have concentrated on school, not because it would make me a better trader, but because had I done that I would be less than a year from 12-hour IB work day, in which I would be following the market. In such an environment, I would learn in a year what is going to take me years to learn now (through screen-time). To most this may sound like hell, but this is exactly what I'm after.

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I just graduated in may from the University of Nebraska with a triple major in Finance, Investments, and Banking...

 

And not one thing i learned in any class related 1 iota to trading or becoming a successful trader.

 

In fact every investment class I took I was frowned upon by my professors for my profession as if i was some kind of stantic devil worshiper.

 

Believe me, the education that helps is found on the internet, and in your own backtesting and live market action participation.

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Don't worry about starting school later than others. I didn't start my doctorate in psychology until I was well into my thirties. I was the second oldest in my class, but it didn't matter.

 

Developing a niche is important, as this is what gives you expertise. Note, though, that as you get more 'developed' in your niche, you become more narrow in your focus and in your knowldege. People who master a subject area become an expert in that area, but have little knowdge, skill, or ability in anything else. This is true in medicine, law, trading, real estate, cooking - any field.

 

One of the great things about college is that you have an opportunity to begin specializing (via a major, such as economics) but also the opportuinity to explore other fields, like psychology, biology, literature, history, etc.

 

What makes this important is that you can begin to see how other fields may compliment and even inform your field -- in other words, you can get important ideas from outside your field. And, this becomes more crucial the more you develop expertise in your niche (and narrow your focus). In clinical psychology, for example, the past 100+ years have been devoted to 'regulating' thoughts and emotions - the basic idea being that if I feel bad, I have to change or get rid of those unwanted feelings; otherwise, I can't be happy or productive. Well, 100+ years of trying to do this hasn't worked very well. About 15 years ago, a psychologist who happened to become interested in eastern religions took the idea of accepting one's suffering and began a line of research. One simple idea from outside the field has spawned an entirely new approach to psychology which is quite robust in helping people to make changes (and is also very useful in performance activities like sport and trading). More importantly, it is turning the whole field on it's head.

 

In my case, psychology and trading are tightly intertwined. I am a trader and also a psychologist. I wouldn't be nearly the trader I am without the psychology. And, because i work with traders on improving their trading performance through trading psycholgy, my trading is critical to my work as a psychologist.

 

So, if you are interested in economics, go persue it. You never know where it will lead. As a well-known US professor, Joseph Campbell, used to advise his students, "Follow your bliss."

 

With respect to the Ivy League - they have a definate advantage, but not every top-level person comes from the Ivy League. In fact, most don't, so don't worry about that.

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Robinhood I think from the outside it appears as though those who come from University or College have some big advantage. You know what, they do. But it's not in the form of knowledge or experience as most of what they learn can be learned through ones own desire for knowledge. The Internet is great for that. The Uni and College students advantage is contacts. Their institutions they came from have phone numbers and personal relationships with big firms.

 

I have had countless discussions with guys who have come from big name Uni's such as Melbourne and Monash who were doing business/economics/finance related subjects. I have not done any business related course at Uni/College but spent countless hours learning the subjects myself from reading and researching. One thing just about every one said to me was that half the things I would speak to them about economically, they had very limited knowledge about. They said many times they would touch on a subject at the surface but no go further in depth due to needing to move on to the next thing.

 

It's almost like they are given samples of every area so then they can apply for a job they want in the area that appealed the most. I have also spoken to a number of business managers/owners who do in fact hire many graduates for jobs. They all say that when the grads come on board with their business they have to train them up from the very beginning because they don't have the necessary knowledge to go straight into the job. They understand a few basic things but not enough to come in from day one and do their job well.

 

In reality, their information they have received is not something anyone can't find themselves on the net. However they do have the advantage of the paper saying they committed to something and the contacts they can use from the institution. Heck some companies will only consider graduates from certain colleges/Uni's because they make deals with them to do so in a learning program.

 

I do believe though that if you truly know what you are talking about and are committed to your chosen field, the person sitting at the opposite end of the desk doing the hiring will see that. In that case I think it would be hard for them to turn you down just because you don't have the piece of paper saying you have a degree. Unless of course it is something that has a regulatory body stating one must have certain qualifications, Doctors etc.

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Is the advantage these guys have so great because of the way they were taught to acquire knowledge (from their institutions)?

Is it the network provided by elite colleges?

 

Well first, very impressive thinking on your part overall in this post.

To the above, its the effect of networking plain and simple.

The quality of university is extremely overrated as far as actual knowledge gained. Most of the benefit is purely political, if someone takes calculus at MIT or community college obviously you view the person who took it at MIT better...however calculus is calculus. Its not as if there is hidden basic calculus knowledge at MIT.

As far as age, comeon...you are way better off judging from this post than some 18yo rich kid moron who goes to Harvard because he has to keep up with what mommy and daddy did money wise.

If I was 20 and from the land of oz I would get a degree in a math, statistics or computer science and get really passionate about whatever the biggest, hardcore competative sport is in australia...rugby? I don't know...Whatever that sport is it will give you the political edge on the opponent for a job, even if they went to a better school. For your own real knowledge take some game theory, programming, and bayesian probability classes if offered...certainly don't waste your time with an economics degree.

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OK, so I've organized my enrollments.

I put in Economics(Monash) as first preference, with the intent of majoring in econometrics & statistics.

 

My backup, in-case I'm not accepted, is a Bachelor of Science at Melbourne where I would study Psychology & Mathematics+Statistics / or Mathematical Physics. I would transfer to Commerce after a year.

 

I've checked and programming classes are not really an option (unless I enroll in software engineering, which defeats the purpose of me going to college in the first place). If it really is that useful, then I should have no trouble learning it on my own when I need to.

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econometrics & statistics would actually be your major? That is pretty cool, you wouldn't really get into that level of specialization here until grad school. Keep in mind though that econometrics may be the most boring subject man has yet to create..it should certainly give you a good toolbox to work with after school though. I would be pretty surprised if they don't have a few programming courses thrown in with that program.

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Yes, we can specialize right away here in Australia.

However, it seems this is slowly being phased out too. Melbourne University (one of the most prestigious college's here) is slowly implementing the same model you guys have in the US. General studies and then a specialization on a graduate level.

 

I don't think they'll let me straight into classes teaching C, assembler or algorithm design. Usually you start out with first year subjects like 'internet and the world', 'computers and the universe' and other silly things. Wont hurt to talk to staff once I'm in though.

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Yes, we can specialize right away here in Australia.

However, it seems this is slowly being phased out too. Melbourne University (one of the most prestigious college's here) is slowly implementing the same model you guys have in the US. General studies and then a specialization on a graduate level.

 

I don't think they'll let me straight into classes teaching C, assembler or algorithm design. Usually you start out with first year subjects like 'internet and the world', 'computers and the universe' and other silly things. Wont hurt to talk to staff once I'm in though.

 

Mate, you keep talking about "Melbourne University"? Never heard of them...

 

Did the University of Melbourne change its name or is this some new Aussie shorthand? ;)

 

Or are you talking about the for-profit scheme called Melbourne University Private?

 

Just wondering....

 

-fs

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No worries, mate. Just that if a Canadian talked about "Toronto University" instead of "U of T" or the "University of Toronto", I'd have the same reaction. :)

 

Anyhoo... to add something worthwhile to this thread, I'd like to ponder whether an MBA or Econ degree is truly useful for trading equities, futures, forex or options.

 

In this day and age, you'd be better off with a Computer Science or MIS degree, with core programming skills. Throw in a double major for Econ, and your all set. Can't say that the MBA would be useful, although if you're old school, it's a nice piece of paper to hang up on your wall or on your mantle.

 

Thoughts?

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I think it depends on the type of trading.

 

scalping? Probably not economics.

 

global macro? politics, economics and statistics would help. Don't see how programming would help here.

 

Ah, so you don't see how having the ability to write and trade your own algorithmic trading programs would be useful to a future career? Curious...

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optional classes are of paramount importance in the american college system, I went to college on the states )im not american). And most of the material on the classes its pretty dry, unless you get a great professor. I found one of those professor and ended up as an AP on Bonds analysis and trading since I was on it since 16 with my granfather.

Look for optional courses on the subjects you are interested in, most of the times some of those optional classes are more interesting than the ones you are forced to take.

 

As it was mention the networking is by far one of the most important reasons to attend a good university. But if you are good at what you do, eventually you get where you want to go college or not

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yes in some countries you get the college education in a different manner, take for example my country argentina. A bachelor degree here takes at least 5 years and its a combination of a bachelors and masters on the USA. And you have only 2 optional subjects that grant you credits, you can take them all if youdlike but they wont take them into account when you go past those 2. And you have to give a thesis for the final stage

 

The funny thing? most of the best classes are optionals...

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Ah, so you don't see how having the ability to write and trade your own algorithmic trading programs would be useful to a future career? Curious...

Care to qualify your curiosity? I'm interested in why it would be useful, both for a scalper and global macro trader.

 

Apart from basic scripting in C# for back-testing and order management what else would a scalper need?

 

If you have some links in addition to your reply, that would be great too. I'm finding it quite difficult to find anything in-depth on algorithms.

 

Are you using the degree as a ticket to a job? Wouldn't Melbourne Uni be better in this regard?

Yes.

I do not have the grade average for Melbourne Commerce. I would have to do Science or Arts and then transfer, another 6months-1year of study.

 

Monash, although probably less competitive internationally, is just as strong domestically. Apart from Melbourne, it is the only other Uni here where Goldman is recruiting (not that this is necessarily where I'm aiming to work, but I interpret it as a positive sign) - a quick glance at their funds management team shows a majority from Monash too.

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Monash, although probably less competitive internationally, is just as strong domestically. Apart from Melbourne, it is the only other Uni here where Goldman is recruiting (not that this is necessarily where I'm aiming to work, but I interpret it as a positive sign) - a quick glance at their funds management team shows a majority from Monash too.

 

Well I would say you should really decide now if you want to trade your own capital or be like one of these guys. If you want to trade your own capital then a CS degree would be ideal, I mean at somepoint your going to want to do some programming so you may as well learn the nuts n bolts while getting a degree.

If you want to be like these fund managers then CS would be a bad idea since it will probly push you towards being a software developer for these guys as opposed to one of these guys.

Also you should be aware that economics sounds far more interesting before your in the class then when your taking the class. I would imagine if you sat down and digested Keynes and Hayek's two master works you would probly understand economics far deeper than someone with a BS in the subject. Kind of like with pyschology. I would imagine if you had an in depth conversation with 500 different people you would understand pyschology better than someone with an undergrad degree in the subject. It really depends what you want to do though as you can't put # of conversations or memorizing The Road to Surfdom on your resume.

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trade your own capital or be like one of these guys

Both. Not funds management (which I associate with bottom-up investing), but proprietary trading initially and then my own capital combined with OPM.

 

 

Also you should be aware that economics sounds far more interesting before your in the class then when your taking the class. I would imagine if you sat down and digested Keynes and Hayek's two master works you would probly understand economics far deeper than someone with a BS in the subject.

 

I will do that. My economic reading list also includes Von Mises & Adam smith.

Also, I actually read an undergraduate Psychology book a few months ago and found most of it inapplicable and useless to my trading. I forgot most of it now.

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Wow! RobinHood you sound like me when I was a teenager. I was always too busy eagerly reading non-fiction to even do my school work. I'm still unsure how I benefited from most of the reading I did back then.:)

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Actually, it helped a lot. All the reading and tinkering around in my head boosted my ACT score a lot.

 

Education is always beneficial in some way especially in the long run.

 

Edit:

this was just a random late night post

Edited by rock

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