In this article we will see what are the study paths that a trader must face in order to learn.
The trader’s job is one of the few highly professional jobs that in fact does not require a specific educational qualification but the development of skills that require a lot of time and dedication to be fully learned. However, within the world of finance, an academic preparation of no small importance is required at high levels, especially in the field of banking trading.
Within banking environments, the trader’s work is different from how we imagine it, much more standardized than one might believe, while as regards proprietary trading (prop trading) the situation is markedly different and certainly more extreme. In this article we will see which course of study is recommended to become a trader, which requires, in addition to technical preparation, also a mental preparation that could be decisive in the final result.
Let’s see together what is the ideal path for the training of a high-level trader and then take a cue from the latter and understand how it is possible to replicate this model, which in many cases is not very achievable except with efforts aimed at improving one’s training.
The training of the ideal trader
Let’s start with what is called a curriculum. In the banking sector, the trader is a person who has high-level academic training as a fundamental, if not discriminating, requirement. By high-level academic training we do not mean only the basic preparation, but also the University in which the academic course is completed could be decisive in some cases.
Very famous universities could be a significant plus as a sign of a certain reliability in the academic path, even if in practice this could be irrelevant. Let’s say that with the same skills, intellectual gifts and personal gifts, between two candidates for a position related to trading, the one who has completed an academic career within a notoriously elitist university is usually preferred (such as London School of Economics or Oxford).
Sure, the course of study does not certify the skills, on the contrary, it is only a good business card if we take this case as an example. Academic training, always at a high level, is valid only if a master’s degree or other specialization course is also obtained, or even a real doctorate in scientific-economic or mathematical-statistical subjects. In practice, if you have a PhD in Quantitative Finance from the LSE, you probably have a good chance of being considered among the most attractive profiles for investment banks.
Not everyone can afford certain types of study course and this in the long run is not even a guarantee for obtaining results, so much so that banking trading, especially after the Lehman crisis, has been very standardized and not very "personalised". such as proprietary trading with a hedge fund or directly with a prop trading firm. The ideal would be a high-calibre academic profile, accompanied by practical skills proven directly on the market, therefore with a certified track record that gives real authority to one’s academic path.
This absolutely does not mean that pursuing an academic path without practice is something completely useless, on the contrary, the opposite is not good either, i.e. only practice and no academic training. As far as training is concerned, therefore, the target of theoretical preparation is the highest level academic one, accompanied by a track record that certifies one’s skills as a trader.
What to study to approach an excellent level of education
We’ve seen the ideal profile, now we need to figure out how to approach that profile. First of all, if we want to tackle this training course and achieve tangible results, the subjects of our study will be those relating to actual operations, but theoretically, to have good results on a practical level we must have a good theoretical framework. Surely it is necessary to study the fundamentals of macroeconomics, therefore the functioning of the financial market, the main components and players who actually decide the fate of a financial system.
For example, for a trader to know how interest rates work, how inflation moves, the links between the various macroeconomic components is absolutely fundamental and we could even define it as a duty. Furthermore, a good practical level of training can also be achieved with the study of more technical subjects such as technical analysis, therefore by studying the various methods of reading the graphs and in terms of contents, ideas, books, there is a truly vast.
This phase of study, even if not practical, serves to make us understand the environment in which the trader moves, a fundamental step if we want to do this job. In essence, the study of academic texts is highly recommended as it is fundamental for training in the economic-financial field, in practice it is a fundamental requirement. After studying academic texts, such as macroeconomics manuals, financial systems manuals and monetary economics, one can move on to more in-depth studies that approach practice, then one can move on to technical analysis manuals and books that describe the various styles of trading.
What is the training course for
The training course, in addition to providing the basic tools to work in this area, is essential for creating the forma mentis suitable for being a trader. The fact of continuously studying, reading and receiving information means that the training path is truly to be understood as such, i.e. one becomes aware of the fact that we are training, that we are completing a path to reach a goal and this part of the training is very useful for forming the right psychological approach to the profession.
When it comes to practice, obviously after the theory, you will have a serious approach to trading, unlike many cases in which one hopes to learn the profession in a short time, passing directly to practice completely snubbing all the fundamental basis of the matter. What does the lack of theoretical foundations entail? Quite simply one does not have the "shoulders covered" by the evolution of this work, ie the markets change and the trader must adapt to these changes. The trader can only adapt well if he has solid training foundations, those that allow the trader to evolve with the markets and that allow survival in the long term.
As it should be, training in this area is never too much, therefore distrust towards those who promise a result in a short time, especially without an adequate training base, is more than logical and above all lawful. Therefore, tackling a training course starting from the basics is a fundamental requirement for successfully achieving the goal, which is to make trading your job.
Original article published on Money.it Italy 2023-03-09 08:56:00. Original title: Trading, cosa studiare per imparare