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Ask HN: Good resources for learning+getting into Finance / Trading?

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Re: Ask HN: Good resources for learning+getting into Finance / Trading?

#31

Post by tmsh »

If you know programming, the thing probably is to get intrigued about the various different areas.

  The Predictors (Thomas Bass)
  Market Wizards (there's a series)
  When Genius Failed
  Pit Bull (Marty Schwartz)
  Rigged (Mezrich)
  Liar's Poker
  Reminiscences of a Stock Operator
These are all basically novels. All basically dated, misguided and incorrect. But then slowly you might learn to ask the questions that will interest you.

In terms of learning finance or trading, you have to learn that thing in a spiral (like with programming). Unless you're superhuman. In which case, by all means, pick up: Fabozzi for bonds, Ross for equities (Corporate Finance is the name of his book, but he's known for inventing APT, a key model in equity portfolios -- so unlike a lot of people, he does have a pretty clear sense of authority) and Hull for options/derivatives, etc.

But remember -- that one thing that is very much alive in the markets is the invisible hand and specialization. There are even fewer generalists than there are among professional programmers, etc. Most highly successful people can summarize their trade by highlighting 1/2 of a sentence in some textbook. (If they have experience, they might also be able to tell you how 40% in that textbook relates to or is in some ways similar to that 1/2 of a sentence.)

So it's kinda like that, imho. Good luck. And as I think you mention in one of your recent posts about being a millionaire, leverage your strengths, etc. If it becomes a very large interest, probably the most efficient thing is to go to a prop shop or a large firm and learn from the source.

Re: Ask HN: Good resources for learning+getting into Finance / Trading?

#32

Post by HSO »

If you were allowed only the proverbial one book on the island, I'd recommend Kuznetsov's "The Complete Guide to Capital Markets for Quantitative Professionals".

It is one of the rare books where the marketing blurb is actually a valid description: "...a comprehensive resource for readers with a background in science and technology who want to transfer their skills to the financial industry."

Instead of further praising it myself, I'll copy a reader review from amazon that describes how I feel about it: "Rarely a book with a title as ambitious as "Complete Guide" fulfills its promise. This book does. Big time. It is written for quantitative professionals (current and prospective) and gives a bird-view account of all types of activities available to them in a typical Wall Street firm. The author cleverly avoids pitfalls of the books of this genre. The book is general enough to cover various settings, but not too general to become useless. It is detailed enough to provide relevant information, but not too detailed to become a software manual or a textbook. The text educates without being annoying and entertains without being lightweight. Hopefully, readers will appreciate consistency and appropriateness of the book's style. The author avoids over-fragmentation and "bulletization": the book consists of 20 chapters without any further subdivisions. It makes for much smoother reading undistracted by unnecessary subheadings. After finishing the book one can only marvel at the author's efficiency, wondering how he could cram so much useful and interesting information in just 600 pages. "

Kuznetsov also includes a great commented bibliography for further reading. I know many of the books therein, as well as their competitors, and I can say his are good recommendations (at least, I would have picked the same in most cases and found a lot of good reads there too).

Re: Ask HN: Good resources for learning+getting into Finance / Trading?

#34

Post by davidw »

For some reason, this stuff seems to interest a lot of people here. Me too, I'll admit. But when I think about it, I come away with a deep suspicion that "the only way to win is not to play the game". How are you, as an individual, supposed to come out ahead playing in the same field as people with more knowledge and skills than you? The only way I can see is to have a 'sure thing' of some kind. Some sort of knowledge that is not widespread, perhaps to the point of insider knowledge, which is actually illegal. Perhaps you can gain that knowledge through lots of research, but even there... how much time is that going to take and how can you be sure you'll get there faster than bigger, well connected people and companies? For instance, any sort of quantifiable data is going to be picked through by someone with a bigger, faster, more extensive set of algorithms than you can dream up on your own.

Edit: one more thing: with a startup, the opportunity cost is likely your biggest expense. With trading, you risk losing the money you put in, which, combined with the time, could really amount to something.

I guess the question is: where is the parallel to startups, where a small group can do well? Also: is it possible to do well without basically making a job out of it? Otherwise, perhaps it's best to avoid the whole thing: a few ETF's and forget about them, and concentrate on doing something you have an edge at.

Re: Ask HN: Good resources for learning+getting into Finance / Trading?

#35

Post by groksalot »

It seems to be implied, but I'm not taking anything for granted so my suggestion is thus: Maths. What do you know about math? Start there. You will be quickly asea if you are innumerate. Don't even think about reading any of the suggested literature (some very good suggestions, too...) without a good grounding in mathematics all the way through the Calculus. Don't make the mistake of thinking that the maths that may have helped inform any knowledge of computers and/or computation, will translate cleanly. Understand the maths first. You will then be able to understand where the authors, such as Michael Lewis and others, gloss over the mathematics to make the story more palatable to the 'average reader'. It's not that they do this deliberately, as much as their editors force them to do so. (Possibly apocryphal story: when Stephen Hawking submitted a first draft of "A Brief History of Time" it was rejected on the theory that each equation included in the manuscript would halve the sales... and he had so many equations that, it was quipped, "people would need to be paid to read it..." )

As for "what questions to ask for", start with the clear and explicit: "who's expecting to make money...? And how do they expect to make it?" This will lead you to interest rates and bond coupons, dividends, etc... But make certain you understand the math.

Re: Ask HN: Good resources for learning+getting into Finance / Trading?

#36

Post by SkyMarshal »

dustydean wrote: post #33

Simple yet effective: Turn on CNBC while you're working at your computer. Make note of any unfamiliar words or phrases and Google them throughout the day. Do this for several months and you'll be surprised at what you're learning.

Replace CNBC with Bloomberg and I'd agree. I was forced to work in a small trading floor with CNBC on all day every for almost a year, and those people are absolute morons, spin doctors, and cheerleaders.

Basically they take John Madden/Dick Vitale announcing style (but not the substance) and apply it to market news. You might learn a few terms from them, but I'm convinced CNBC exists for no other reason than to lure the next marks and suckers into the market, intentionally misinform them, hype them up, and then get kickbacks from the sharks and traders who take their money.

Bloomberg is much higher quality.

Re: Ask HN: Good resources for learning+getting into Finance / Trading?

#37

Post by SkyMarshal »

_delirium wrote: post #30
theoreticalee wrote: post #25

Earlier quoted context omitted.

Yup, all my hedge fund friends that actually make money use it :p

Isn't technical analysis basically a kind of stripped-down version of quantitative analysis focusing on relatively easy to compute and/or eyeball trend statistics?

It's more like using statistical regression methods and Microsoft Paint to find patterns in tea leaves, but as long as you use disciplined money management and avoid major losses you can still make money at it.

The only thing I know about Dan Zanger was when he was featured in one of the trading magazines many years ago, in an article discussing his feat. He accomplished it during the 90s tech boom, when you couldn't lose money even if you tried. No idea what he did after that.

Re: Ask HN: Good resources for learning+getting into Finance / Trading?

#38

Post by tmsh »

tmsh wrote: post #31

If you know programming, the thing probably is to get intrigued about the various different areas. The Predictors (Thomas Bass) Market Wizards (there's a series) When Genius Failed Pit Bull (Marty Schwartz) Rigged (Mezrich) Liar's Poker Reminiscences of a Stock Operator These are all basically novels. All basically dated, misguided and incorrect. But then slowly you might learn to ask the questions that will interest…

Also, curiously enough tonight I just learned about reddit's growing way of organizing free books online. E.g., for econ (some finance):

http://www.reddit.com/r/econbooks

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