From PhD in Mathematics to Stock Trading Floors
The world of financial markets has opened many opportunities for a variety of professionals and people with different qualifications. One such qualification that has found tremendous scope is a PhD in Mathematics.
Even though math has always fascinated people, a few years back it was difficult for people to put their knowledge of statistics and probability to work. One could become a professor or conduct research – the opportunities were limited. However, things have changed since then as this knowledge has found tremendous demand in stock trading, and finance.
People with a doctorate in math are now frequently hired by finance companies and investment banks to help them build advanced algorithms used in making profits in the financial markets.
What Do They Do?
These PhDs with their knowledge of mathematics are able to apply their knowledge to build sophisticated models that would be out of bounds for any other trader or investment banker. There are plenty of opportunities for all including students, researchers as well as professors.
In fact, there has been a significant rise in the number of students taking up advanced education in mathematical finance.
These professionals or academicians have a plenty of options to choose from:
- As a quantitative trader, you could be involved in predicting the market trends, observing the market behavior, analyzing stock movements, and devising investment strategies for your employer.
- You could join as a financial analyst with a bank.
- You can also join brokerage firms, where you devise innovative financial instruments based on futures and options.
In all these roles, there is a high chance that you would be developing software running complicated algorithms to enable identifying opportunities quickly and banking on them.
These mathematicians also play a critical role in high-frequency trading which is generally characterized by following certain trading strategies, holding positions for less than one day, and frequent trading that could go up as much as thousands of times in a day.
Careers and Salaries
Math PhDs are hired by almost all finance and investment banking firms such as Goldman Sachs, and JP Morgan. They are also hired by large brokerage houses, consultancy firms such as McKinsey, and insurance firms.
On an average, quant professionals earn much more than many other banking and finance careers pay. In the US, the top companies such as Morgan Stanley, and Goldman Sachs pay salaries in the range of $200,000 to $250,000, which is way above the curve.
This is a specialized skill and not everyone is up to mark with understanding higher mathematics. What you need is a strong understanding of math combined with the ability to seamlessly applies this knowledge in the world of finance.