Mathematics

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hedron

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Someone was telling me that many traders have a background in mathematics. I'm curious as to what type of math is essential to trading?
 
Many traders don't have a background in maths. If you're into quants and inventing trading systems it would be necessary.
But in day to day trading it wouldn't make the slightest difference.
'Tho a good memory for numbers would be useful.
 
It isn't needed, the best mathematician in the world may be a useless trader
 
Problem with maths geniuses is they have grown up being top of the class, with an extremely rational mind; they can logically work out mathematics.

The market isn't a formula and is incredibly irrational=mental breakdown.
 
Chartsy said:
The market isn't a formula and is incredibly irrational=mental breakdown.
Click to expand...

This is actually a total myth. The market is only irrational to people who persist in trying to make a connection between NEWS releases and market reaction. The people who know what is what understand that the law of supply and demand and only the law of supply and demand determines what the market will do next...this concept will no doubt spawn an entirely new debate...whatever etc...:sleep:
 
Hotch said:
Yeah, nobody has ever made money from the markets using maths :LOL:
Click to expand...

This has to be sarcasm. George Soros

And in general, probabilities and statistics has little use in trading. I recall my cousin, who is quite the math guy himself (as well as a trader working on Wall Street for 10 years), telling me some of his research he did to open a hedge fund potentially. He said all academic research concluded all strategies based on mathematical derivatives or statistics failed. Oddly enough, his algorithm uses standard deviations. Who knows.
 
All you need is the ability to read and count and some good old common sense.

A PhD in math and economics is not required but desirable.

Programming knowledge is becoming a must.

If you have some good information nothing is required.
 
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ronblack said:
All you need is the ability to read and count and some good old common sense.

A PhD in math and economics is not required but desirable.

Programming knowledge is becoming a must.

If you have some good information nothing is required.
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This is a bit misleading -- desirable over what? I could say anything is desirable if I have in mind to compare it with something less desirable. Also, saying desirable is not a statement of best. Are you claiming a Ph.D. in math or economics is better than any other Ph.D. you could earn?

Are you sure a Ph.D. in philosophy (game theory), physics (learning how to model reality...), or engineering (signals & systems; machine learning; learning how to model reality) would not be superior over either degree? Do you need to know how to prove the fundamental theorem of calculus to apply calculus effectively? Physicists and engineers learn to use mathematics well without the concern of proving it. I desire the practical skills from physics or engineering over the abstract, pedantic approach by mathematicians.
 
debrox said:
This is a bit misleading -- desirable over what? I could say anything is desirable if I have in mind to compare it with something less desirable. Also, saying desirable is not a statement of best. Are you claiming a Ph.D. in math or economics is better than any other Ph.D. you could earn?

Are you sure a Ph.D. in philosophy (game theory), physics (learning how to model reality...), or engineering (signals & systems; machine learning; learning how to model reality) would not be superior over either degree? Do you need to know how to prove the fundamental theorem of calculus to apply calculus effectively? Physicists and engineers learn to use mathematics well without the concern of proving it. I desire the practical skills from physics or engineering over the abstract, pedantic approach by mathematicians.
Click to expand...

I'd think Physics is just as good, perhaps better than mathematics in terms of city desirability, but it depends on the role. As you mention it's exactly about the skills acquired from doing the PhD more than the knowledge set.

If you do a PhD in mathematics, you'll probably be well be practiced in logic and logical thinking, basic probability and expectation, attention to detail, perseverance in the face of failure, pattern recognition, focus, abstract thought, handling data, maybe programming experience, plus you can fairly quickly pick up any of the financial maths for options etc.

Well there are more, but those are the ones I can think of that are relevant to trading. I don't think a PhD in philosophy or history etc will give you as good a list of desirable skills, but I could be wrong. Physics will. Engineering, depends. Being pedantic is a good thing in trading anyway isn't it? ;)

Then again, some people have these skills without ever doing a PhD. And some people have other skills that are more useful to trading than those above. But those are harder to detect on a written CV.
 
it depends on what your doing...trader isn't really a very specific term...for example, if you work in structuring or general derivatives maths is usually essential...even then though it still depends. maths is just a tool. some make money using maths like Rentech or Winton, some don't. stuff like stats and prob is very useful as general skills but the question is badly phrased. anyone who says it isn't useful really doesn't have a ****ing clue though, it obviously isn't possible to break the market into a formula, but that doesn't matter in the slightest.
 
scose-no-doubt said:
Tripe2Win
Click to expand...

not a very thoughtful conversation, to think that statistics or familiarity with math is not important in trading, is an alarming conclusion, especially if you wish to be around to trade after a series of drawdowns ( a mathematical concept). Perhaps you would play BlackJack at a the casino without math (hardly likely), or go to the racetrack without a sense of your odds or your edge (hardly likely). trading taken seriously and actually studied and practiced relies on an ever deepening appreciation and respect for numbers, statistics, probability, expectation, definition of risk, etc. etc.
 
My post was in response to the thread and the likely flurry of people who say maths is useless... There have been many threads like this one in my time and they are generally as full of tripe as the rest of t2w
 
Well..... some traders are very successful with a deep understanding of maths
and some are very successful with the most basic of maths. They understand minus (-) is losing and plus (+) is winning.....That is the most important of all maths we need to know.
The answer is incredibly simple....Those who have been highly educated in maths
feel it is necessary because in their mind it's their edge.
Those that finished maths when they finished school don't want to think it's an
advantage because it's a pia to go to uni.
In Jack Schwager's book about half were highly educated and half were not highly educated. I could be wrong on the half,,,,I never did the maths.
 
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