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How to get into Quantitative Finance

Quantitative Finance Careers

If it so happens that you lie somewhere at that special cusp where the thought of handling money matters, and complicated calculations, brings a smile to your face, you may be one to look into a career in quantitative finance.

What do quantitative financiers do? Well, to start with, they are lovingly called “quants” by friends, coworkers, and friendly coworkers.

On paper, they are quantitative analysts, associated with the well-being of financial firms and especially banks.

Okay, so what do quants do?

These guys are trained to look at large data and use their mathematical wizardry to decode finance patterns using mathematical models.

They use all that, and more, to analyse and assess financial markets and securities.

They are extremely useful in finding out fair pricing of financial derivatives and building financial portfolios for risk management in investments.

In layman speak, investments are constantly influenced by various external factors like changing economies, market trends, and even the weather.

In such a dynamic environment, if you could find a sort of “fortune teller” who could give you an educated estimate of the risks involved in a particular investment, your risk management worries would be solved.

This fortune teller aka quant would use statistics to model out how the various ups and downs would depreciate or appreciate an investment. Hence, would it be worth the risk.

What kind of skills do Quantitative Analysts need?

Killer maths and stats skills are a given. Your job will certainly need you to create strategies/models to analyse data. Statistics will help you gain insight into the data.

Besides, you will need all kinds of financial training to make sensible interpretations. And of course, the tools to translate complicated numbers into meaning.

So, here are some of the hard skills that will come handy for such a job description.

– Technological and computational skills along with a healthy knowledge of computer programming in C++, Java, Python, etc. Expertise in object oriented programming will help you update and optimise your models.

– Financial concepts like future contracts, swaps, options, and derivative pricing, risk management, portfolio management, hedging, statistical arbitrage, algorithmic trading, etc. As a quant, you will get the chance to specialize in specific areas under the broad umbrella of investments.

– Statistical expertise covering advanced topics like stochastic calculus.

– Mathematical acumen including topics like calculus, linear algebra, matrix equations, computational math, Monte Carlo simulations, numerical algorithms, etc.

As a quant, you will also need certain soft skills to make use of the resources that surround you in an organization. Communication is an art and a boon in this job.

You will need a healthy amount of interaction and collaboration with your core finance coworkers for knowledge sharing.

Your job description will also demand sharp vigilance of market trends as they are big influencers in the design of financial models. Hence, a capacity to do sensible goal oriented research is a must.

Quants should also be excellent problem solvers, testing out their models, visualizing their dependence on other known/unknown factors that may affect the performance of investments, and hence validating them.

What should you do to get into Quantitative Finance?

A fundamental training in financial concepts and/or mathematics is a necessary requirement. So, an undergraduate degree in these areas will help if you want an entry-level position in an organization and train to be an analyst on the job.

A lot of employers seek advanced degrees to ensure a good grasp of research in their quants.

A Master’s degree in a quantitative field like Mathematics or Statistics, or rigorous programming training in Computer Science, and certainly a mix of both in specialized programs like Financial Engineering or simply Finance.

The explosion of complexities in trading has also boosted the need for even further advanced degrees among candidates who will be responsible for identifying and minimizing risks and help estimate the value of investments.

Thus, a PhD degree in a quantitative, finance, accounting, or even scientific backgrounds like Physics can be useful in gaining entry into this field.

Of course, employers do also prefer some form of practical knowledge through either work experience or internships.

Many universities and institutions offer specific certifications towards this profession. A CFA certification, offered by the CFA Institute, is a definite plus as well.

Here are a few programs that can give you an edge.

Certificate in Quantitative Finance (CQF) offered with an e-learning option by the Fitch Group. The six-month program covers basic finance, risk and return, equities and currency derivatives, fixed income and commodities, credit products and risk, and more.

Financial Risk Management (FRM) offered by the Global Association of Risk Professionals is an excellent resource for individuals seeking to gain entry into the world of risk management, a concept integral to the job description of a quantitative analyst.

– The Indian Institute of Quantitative Finance offers many certifications, in partnership with leading investment banks and financial firms, including Wall Street. Some of the online certifications are listed in the table below.

Certificate Program in Quantitative Finance and Risk Management (CP-QFRM) in 6 months Certificate Program in Applied Mathematical Finance (CP-AMF) in 320 hours Certificate Program in Algorithmic Training (CP-AT) in 3 months or Post Graduate Program in Algorithmic Trading (PGP-AT) in 6 months
Certificate Program in Derivatives Valuation and Risk Management (CP-DVRA) in 150 hours Certificate Program in VBA Programming for Finance in 50 hours Certificate Program in Python Programming for Finance in 30 hours

– Master’s in Quantitative Finance and Risk Management by Rensselaer Polytechnic Institute

– MSc in Quantitative Finance – Econometrics and Management Science by Erasmus University Rotterdam

– MSc/PG Diploma in Quantitative Finance offered by University of Strathclyde Business School

And many more…

Besides, there are many online and self-study resources available to develop your expertise.

Many niche blogs provide detailed list of books and other reading material for a rigorous training in Numerical Methods, Mathematical computation, programming, and Statistics.

Job Titles and Prospects in Quantitative Finance

Job titles such as Quantitative Analyst can make an average of over 8 lakh Rupees per year, in India. The best jobs are obviously available in Wall Street with salaries close to a $100,000.

Actuaries, Financial Analysts, etc are close relatives of this job title.

As far as job growth is concerned, analysts may see over 10% rise in demand in the next decade, according to the Bureau of Labor Statistics in USA.
So, if you want to become a quant, dust off the abacus and get crunching and cranking your grey cells.

And meanwhile, follow our blogs for more information and related topics. Here are some for starters.

CFA or MBA: Which is better?

Financial Analyst careers in India and abroad

Careers in Finance in India

Investment Banking Careers

Masters in Financial Engineering (MFE) in Singapore for a career in Finance

Master in Finance (MS/MFin/MSc) vs MBA

Newbie’s guide to career options in Analytics

How to kickstart a career in Data Science

Best online courses in data science, machine learning

Sources: 1, 2, 3, 4, 5, 6

Every student and MBA aspirant MUST watch this (unusual) video.

Rakhi Acharyya
About Rakhi Acharyya
Rakhi is a freelance writer, a Physics PhD from Michigan State University, an ex-teacher and a former employee of Corporate America. Follow her on Twitter.

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