Quantitative Trader Courses: How to Become a Quantitative Trader

Written by CFI Team

Do you have an educational background in mathematics or computer science? Are you looking for an innovative career that pays well? If the answer to these questions is yes, then you should consider becoming a quantitative trader.

What is a Quantitative Trader?

A quantitative trader, otherwise known as a quant, is an individual who uses mathematical models and analytics and automated trading to identify profitable trading opportunities. Quantitative traders typically use price and volume as data inputs to the mathematical models that they use as trading strategies.

The Role of Quantitative Trading in Finance

Over the years, quantitative trading has become more and more impactful in the world of finance. One way that quantitative trading plays a significant role in financial markets is by providing insights into trading methods, asset pricing, risk management, and portfolio optimization.

Quantitative traders can provide insights into trading methods by using mathematical models to analyze data from financial markets and determine what assets to sell or buy. Through mathematical models and analytics, quantitative traders can also identify potential financial risks. This, in turn, provides finance professionals with the information that they need to create optimal finance and investment portfolios for their clients.

Furthermore, automated quant trading strategies can analyze large amounts of data in real time. This is as opposed to former investors who used to conduct such tasks manually.

Because quant trading strategies can use automation, quantitative traders now have the ability to make precise, split-second business decisions. This has led to the rise of high-frequency trading. Through the use of mathematical models and computers, quantitative trading can also eliminate any emotion-driven trading decisions.

Quantitative Traders vs. Algorithmic Traders

Quantitative traders aren’t the only types of traders in finance. Another type of financial trading is algorithmic trading. Algorithmic traders use computer programs that follow set algorithms and other market conditions to make trade decisions.

While quantitative trading also uses computer programs and automated trading, quantitative traders predict market trends through the use of mathematical and statistical models along with quantitative trading strategies that they’ve developed themselves. This is as opposed to algorithmic traders who solely use algorithms to automatically place trades based on predetermined rules.

Algorithmic traders simply use if/then rules based on historical data to enter and exit trading positions and maximize profitability. This means that algorithmic trading strategies are predetermined. This also means that algorithmic traders don’t need to be nearly as educated or knowledgeable about mathematics as their quantitative trading peers.

Individuals who are interested in furthering their algorithmic trading careers should take algorithmic trading courses. Those who are interested in quantitative trading should get a mathematics, physics, finance, or engineering-based degree and acquire finance work experience along with taking quantitative trader courses and certifications.

Increased Demand for Skilled Quantitative Traders

Numerous factors have led to the growing demand for skilled quantitative traders. Some of these factors include the increase in computerization, automation, and the use of artificial intelligence (AI) and machine learning in the world of finance and trading. Other factors that led to the growing demand for quantitative traders are the growth of hedge funds and the increasing complexity of liquid and illiquid securities.

The need for traders, accountants, and sales reps to get access to pricing and risk models also increases the demand for quantitative traders. This, along with the search for market-neutral investment strategies.

How to Become a Quantitative Trader

Becoming a quantitative trader is no easy feat, as it takes time and dedication. Some of the key things that you’ll need to do to be qualified to become a quantitative trader include the following:

Receive the Proper Education

To become a quantitative trader, you must first receive the proper education. This typically includes a bachelor’s degree in either mathematics, theoretical physics, computer science, or electrical and electronic engineering. Depending on the type of quantitative trader job that you want, you may even need to receive a master’s degree in financial engineering (MFE).

Gain a Proper Understanding of the Major Components of Quantitative Trading

Once you’ve received the necessary education, the next step to becoming a quantitative trader is to make sure that you have a thorough understanding of the four major components of quantitative trading. These four components are strategic identification, backtesting, risk management, and trading executive systems.

Strategic identification is the process of finding a useful strategy that will allow you to determine what your trading frequency should be. Trading frequency is the number of trades that you should execute in a specific time period. The process of strategic identification includes researching different strategies to see which one best pairs with the current strategies employed by the business that you are working for.

Backtesting is the process of collecting financial data and comparing it to historical data sets to determine if your strategy was successful or not. Risk management is the process of using mathematical models and analytics to identify possible financial risks.

A trade execution system includes contacting a brokerage, automating trading processes, and minimizing transaction costs. This is the system that brokers use to send out the trades that were created from the strategies produced by the quant trader.

Image from CFI’s Introduction to Risk Management course

Get Professional Working Experience

Because quantitative trading is a competitive field, many companies and organizations prefer to hire candidates with relevant work experience on top of their education. Therefore, after receiving the necessary education, it might be best to get a finance internship at an investment bank or large corporation.

If you can, you should also try to get an entry-level finance job at hedge funds or financial institutions. For example, research analyst positions are typically entry-level.

Take Additional Courses and Certifications in Quantitative Trading

To demonstrate your knowledge and passion for trading, pursue quantitative trading certifications or take an additional quantitative trader course post-college. Some quantitative trader courses that you can take are outlined next in this article.

Quantitative Trader Courses

There are various courses and certifications that you can take to help you build your quantitative trading knowledge and skills. Some of these courses and certifications are outlined below.

1. Artificial Intelligence for Trading from Udacity

To work in the field of quantitative finance, you’ll need to know how to use advanced AI tools and programs. This is where the Artificial Intelligence for Trading course from Udacity comes in handy. In this course, you’ll have to use Python and AI to solve quantitative financial problems.

In this quantitative trader course, you’ll also learn about basic quantitative trading concepts such as trading signals, data processing, portfolio management, crunching historical data for trading strategies, and constructing multi-factor models. In addition, you’ll get a deep dive into quantitative aspects of portfolio optimizations, Smart Betas, alpha and risk analysis, and other advanced quantitative techniques.

This course will even teach you about natural language processing. By the end of this AI for trading course, you’ll create a model for an actual index, use large data sets for seeking alpha, and create a solid backtesting framework.

2. Quantitative Methods for Finance Professional Certificate from NYIF

The Quantitative Methods for Finance Professional Certificate from the New York Institute of Finance is one of the most comprehensive quantitative finance courses.

In this certification course, you’ll cover subject matters such as algebra and calculus for finance, probability theory, stochastic processes, statistics, regression analysis, VBA programming, Monte Carlo, and Lattice techniques. This course will also teach you desk-ready skills.

3. Mathematical Methods for Quantitative Finance from MIT

This course first covers mathematical methods for quantitative finance. For example, in this course, you’ll learn about probability theory and statistics, along with common distributions, CLT, LLN, asymptotic, statistical inference, hypothesis testing, econometrics, regression, and more.

Later on in this course, you’ll also learn complex topics such as Bernoulli trials, Markov processes, continuous time stochastic processes, linear algebra, and more.

4. Finance and Quantitative Modeling for Analysts from Wharton at the University of Pennsylvania

This quantitative trader course covers everything from quantitative models to spreadsheets and tools, to the basics of corporate finance. In this course, you’ll also learn how to use data and mathematical models to solve problems in finance and make predictions based on scientific methods.

5. Financial Engineering and Risk Management from Columbia

This Columbia quantitative trader course covers the topics of finance, economics, mathematics, statistics, engineering, and computer science. This course is great for anyone who is a quantitative trading beginner.

6. Oxford Algorithmic Trading Programme

The Oxford Algorithmic Trading Programme course combines quantitative finance and algorithmic trading. This quantitative trader course teaches you about classic and behavioral finance theory, systematic trading and how the industry functions, technical analysis and trading system design, and evaluation criteria for such models.

7. The Certificate in Quantitative Finance by CQF Institute

The Certificate in Quantitative Finance teaches individuals about the practical implementation of quantitative techniques. This certification program is online and starts twice a year, in January and June.

To receive the distinguished certification, you must either complete the program in full over the course of six months or divide the coursework into two levels and complete it in those two parts.

8. Undergraduate Mathematics, Theoretical Physics, Computer Science, and Electrical and Electronic Engineering Courses

For those interested in pursuing a quantitative trader career but have yet to receive an appropriate bachelor’s degree to do so, there’s still time. To pursue a career in quantitative trading, achieve a bachelor’s degree in mathematics, theoretical physics, computer science, or electrical and electronic engineering from a top school. Doing so will put you on the right path.

9. Master of Financial Engineering (MFE) Courses

For those who have already received an appropriate bachelor’s degree for a quantitative trading career from a top school and are looking for ways to make themselves a more competitive candidate for hire, pursue a master’s degree. A Master of Financial Engineering (MFE) degree will immediately improve your chances of getting hired as a quantitative trader.

Even if you can’t commit to a master’s degree program in financial engineering, consider taking some MFE classes. That way, you can at least still acquire some of the information and skills that the MFE program provides.

The Importance of Choosing the Right Quantitative Trader Course for Your Skill Level

While taking most quant courses can help you further your quantitative trading career, it’s important to remember that quantitative trading courses can vary in difficulty level.

For example, some quantitative trader courses are foundational-level classes and thus, for people who are just learning about the profession. Other common skill levels for quantitative trader courses include intermediate and advanced. To ensure that you’re learning the quantitative trader skills that you individually need to take your trading career to the next level, enroll in a quantitative course that matches your skill level.

Additional Resources for Quantitative Trading Courses

Outside of the standard quantitative trader course, there are many other resources that you can use to help you further your quantitative trading career. Here at the Corporate Finance Institute (CFI), we offer various resources and certification programs that can further your knowledge in financial analysis while simultaneously making you a better quant.

Some of the CFI resources that can be useful for quantitative traders include the following courses and resources:

Start Your Quantitative Trader Career Path Today

To become a quantitative trader, you must educate yourself by taking numerous mathematical, computer science, finance, physics, and engineering courses in pursuit of an appropriate bachelor’s and, even possibly, master’s degree. In addition, you’ll likely need to take some quantitative finance certification courses and gain some professional work experience in the field. Thus, the road to becoming a quantitative trader is not an easy one to take.

Despite how difficult it is to develop a career as a quantitative trader, the financial security and future possibilities that such a career provides make the pursuit more than worth it. Therefore, if you’re skilled in mathematics and are passionate about obtaining an innovative career with a future, quantitative trading may be for you.

So, what are you waiting for? Make good use of the suggested quant courses and start your quantitative trading career today.