Academic achievers = Better traders?

Hi folks,

I know a lot of books written about trading say that there are no correlation. But if you notice, big multinational companies usually requires high CGPA for graduate positions and in some positions that needs experience they still look for high academic grades to fill the roles.

So we can conclude that they think that high grades = better employees. My question to you all is, do you think there are any correlation between academic grades and trading success??

EDIT: Answers to the question can be found in the first 3 page for now. Thank you folks.

Being a student is a skill set, just like being a trader/investor is.

Do the two go hand in hand?
Not at all, investing in general has fooled the so called brightest people in our society and taken their money over and over.

Doctors, lawyers, accountants...etc etc

Major firms just follow the age old concept of a person coming from a good college will make a good employee because of work ethic. If they went to a great school and earned good grades then they must work hard hence they will work hard for us.

Sadly this line of thought has shown the financial industry its flaws with the large amounts of fraud and government bailouts due to failing business practices.

Its the main reason why profitable independent traders scare the hell out of the big financial firms because we don't need them. An everyday Joe with the right mindset and discipline/dedication can net a large income.

Nassem Taleb says:

Statistical and applied probabilistic knowledge is the core of knowledge; statistics is what tells you if something is true, false, or merely anecdotal; it is the "logic of science"; it is the instrument of risk-taking; it is the applied tools of epistemology.

So is there any correlation between academic grades and trading success?Yes ,success comes with knowledge.

Knowledge is free in today's information age
That theory would be true in the past but in the present times you can learn anything online. Its up to you

Knowledge is only useful if it is structured well by the user, something our education system lacks in teaching.... Being knowledgeable doesn't mean good exam takers if the person only know how to use knowledge practically.

During uni I can say all I do before exams is memorize. He who memorize better score better. Now I don't say it is a bad thing because corporations hire base on grades, including roles for corporate traders.(In fact these bunch are usually the top in their class)

On the other hand, having traded for a while, I can't find too many reason why average academic skills can't trade profitably... Since most trading style don't require intensive short term memory and high concentration skills needed to memorize. But the catch is, as I said big corporations usually wants them.

After trading for a while the education requirement for institutional traders seems like just another hoop to jump through.

Education is really starting to remind me of the 'good old boys club' mentality.


Traders go to good schools and get their high paying jobs. They grow up and mature then turn into the hirer/interviewer/recruiter. Who do they look for when it comes time to hire? They look for someone who is like them because they were successful and those are the traits needed for the job.

I don't believe in this methodology, but psychologically it has been proven that we like people who are more like us.

Think about it... when you first meet someone and they have the same name as you. All other things constant and equal you instantly have positive feelings for them. These are the type of positive mental associations our mind makes.

I have a really really simple system that I shared with a few people. All the ones that were recent graduates didn't make it. Curiously, one of the people was a girl with 2 PhDs (one in Maths and another in Economics), she was apparently working in the risk assessment team of a well known financial institution, and was already planning for her 3rd PhD at the time. This girl was the biggest failure I've seen. Only really lasted less than a week in which she tripled her grant for her 3rd PhD, and then blew it all off. Evidently she was risking way too much in a proper n00b way, one thing is for sure though... It was one hell of a ride (emotionally). Eventually following this loss, she got upset with me and went to Glasgow to take a course in "Economics and Exchange Rate Forecasting" -.- who the fuck does that? Seriously, that uni will just suck up her money and they won't probably be able to teach her about real TRADING.

In contrast, the only person who was able to use the system very well, although graduated, it is more mature as a person as he is quite focused on his career. This guy not only understood everything very well, but has recently made a discovery of a nice addition to the system that on its own is already excellent. We have no losses, literally.

So I think that the grades or your academic background don't really matter as much as the emotions and psychology of trading. Because the guys that failed, they failed precisely on this. They've all shown a nice understanding of maths and "ideal economic fundamentals", but they've also shown a MASSIVE lack of control for their own reactions. They couldn't follow simple entry rules and even after failing they kept on doing the same.

There were even patterns in their behavior and by that I could sense which way the whole thing was going. For instance, most graduates, at some point during the tutoring when I mentioned how the market was a rough place and emotions this emotions that, psychology bla bla... They've all shown a really arrogant attitude, like: Yeah, sure... It's rough for you and for the others, but I'm smart, this is piece of cake for me just let me get the basics, I'm special. I made myself always available for tutoring or giving an opinion about a particular move they'd be unsure about. They would contact me a lot in the beginning and then they would go silent... (really common pattern - they all did this) - what was happening here was that, they decided to step on their own and increasing the trade values over my recommendations and ignoring the entry rules... Soon enough, BOOM! First wake up call! Their reaction varies, some recognize what they did, some blame me, some call in the middle of the shit and I have to help them manage cutting their losses.

The other guy attitude had none of that. When I told him about the market's nature he was humbled. Every single doubt, he would ask and we were able to prevent some bad decisions because he trusted this much to tell me what he was thinking, what was he doing, and he even would send me the screenshots of his account when I'd ask him what positions he had opened. I really didn't care about how much or how little he had, so I pretty much just seen it as an account and told my views like if it was my account. This guy, came to understand the system to the point I'm no longer worried. Yet even today we send messages of "heads up to potential opportunities" to each other... much like if we'd be working together as professionals in the same office. And there's no stress.

Sorry, I guess that there must be a lot of typo up there but I'm really dying to have some breakfast. So I just came around and saw the thread and left here this response as quickly as I could.

Hope you guys are all doing well,

No.

Well I think this can be called creavity.They give you limited teaching in the schools.Rest is depends on you.Same with trading.You see thousands of indicators and experts in the forums.How many people are questioning :'' how probable is the RSI 30 oversold level?''Or ''How much random is the signal of an indicator ? In my opinion 80-90 percent of experts are incomplete.One has to investigate all this.But investigating requires some special study and knowledge.Good grasp of math and coding is big plus.

Thanks, excellent experiment. Obviously, in order to make it, one needs to humble. Befriend with the market instead of fighting it all the time.

People tend to subscribe to the philosophies that best suit their own interests. Whether you have a degree or not the market will still exist in the same way. The same opportunities will still be present, including the opportunity to learn, succeed. And the opportunity to try and fail.

I traded FX for six banks since 1995, after graduating university with a degree in Economics and Econometrics.

I had to throw everything I learnt in college out the window the very first year in my career.

I've seen junior traders who worked under me (with better grades) crash and burn, while only some of the more enterprising ones survived. Maybe having an enterprising spirit helped more? I don't know.

Speaking only for myself, I think I learned more about trading and risk taking from playing backgammon regularly than I ever did from college.

College is over-rated.

Too right mate
Familiar feeling there on the backgammon LOL

I hate that this is true. I think if I traveled 10 years into the future from the day I graduated and tried to apply for a trading job, I'd have been rejected outright.


True that, even tho it's hardly productive.

Anyways, in the previous companies I worked in, tried as I might to inject my own subjective evaluations when I was involved in the hiring process, but those damned hoops from HR kept getting in the way! LOL

That, and poker! LOL

But, I think backgammon is more appropriate since (to me) it teaches how to handle rapidly changing circumstances (dice throws).

Poker (to me) teaches only how to "game" your opponents, which is not always useful in a "transparent" market like forex...

(apologies to the thread-starter... I don't want to throw the discussion off too much)

IMO grades and academics are a crude way of measuring discipline

in that sense, yes, more disciplined individuals likely equates to better traders

Agreed it's a crude way. And that's what most recruiters look for, rightly or wrongly.

I would also think that discipline in keeping up with one's studying is not in the same ballpark as the discipline in cutting one's losses in a sour trading position (which require street smarts, not book smarts).

Agreed.

Student with good grades tend to work hard and likely to be disciplined. Trading requires hard work and dedication.

Thus, an a student with good grades is "more likely" to be a good trader/investor. But its cerainly not a necessary requirement.

A significant difference between trading and college is structure. In uni everything is laid out for the student. Everything from the series of classes they take to the form used for writing papers, doing research, etc. As one progresses through graduate school, more choice is allowed, but it's still heavily structured. If a student recognizes and understands how the game is played, then they can be successful with lots of work.

In trading there is no structure. A trader must create the entire system them self. This includes what hours to work, trading systems, mm systems, etc. I contend it's hard for everyone, but a few manage it, but even then they need guidance from someone who has done it.

Just an aside, whenever someone has told me that they got nothing from uni, I always tell them they're right. Just because you go it doesn't mean you'll learn anything and it sure as hell doesn't translate into some sort of universal truth about higher education.

A good degree in uni just means you know how to pass tests well. Learning how to pass tests with flying colours is just a skill like trading. It can be learnt.

Good at learning != good at thinking.

But if you had a choice to choose 10 traders for your hedge fund out of a pool of 1000 first class honours and 20000 2nd class uppers, why not pick form the 1000 first class fellas?

That's the logic.