Does an MFE prepare you to make money on your own?

[Parallel_Computing]

MFE programs generally prepare students to do things that would turn out to be useful to employers. But does the typical MFE program provide information that is directly useful to opening up your own trading account and to start making money with quant finance tools?

I would like to know if studying courses such as Statistical Arbitrage, Derivatives Securities, etc. can actually be used at home, as opposed to being useful at an institutional level only.

 

[MRoss]

Each class is preceded by a "don't try this at home..." lol!

But yes of course, technically this is all based on math which is fact. Assuming you are doing things correctly...

 

[Yike Lu]

If it's been published in a paper, it's either
1) Already arbitraged out
2) Not quite what it seems

MFE can provide you the tools to identify alpha when you see it, but the search will be your own.

 

[Andy Nguyen]

MFE programs generally prepare students to do things that would turn out to be useful to employers. But does the typical MFE program provide information that is directly useful to opening up your own trading account and to start making money with quant finance tools?

I would like to know if studying courses such as Statistical Arbitrage, Derivatives Securities, etc. can actually be used at home, as opposed to being useful at an institutional level only.

MFE graduates don't get a "Making money guide" upon graduation.
MFE programs mainly help entry-level people break into the industry. There are a smaller group who study in these programs part-time to improve their personal trading. Being able to learn advanced technique and get access to practitioners in these programs are very useful. Since trading is predominated by huge financial institutions, I'm not sure how much retail traders will benefit but everyone can use some better understanding in risk, options theory, greeks, etc.
GusTsahas is a member here that comes to mind immediately. He joined MFE program to improve his own trading and judging from the results, he benefited a great deal.

 

[amanda.jayne]

But yes of course, technically this is all based on math which is fact. Assuming you are doing things correctly...

Markets can stay irrational longer than you can stay solvent.

The average performance of quantitative funds (or lack thereof) should tell you something about the applicability of using mathematics as a strategy.

One could argue that every strategy works... Until it doesn't.

 

[Lyosha]

If you honestly think reading a book (any book...) or taking a class will make you a good trader, you should reconsider your career goals.

You likely already know if you can or cannot make money in markets. An MFE can provide you with some useful tools to broaden your investment options and increase your returns via proper management of risk, etc. But that is (roughly speaking) the limit of its scope. As a matter of fact there is no college on earth that will prepare you for a career in trading.

 

[MRoss]

Markets can stay irrational longer than you can stay solvent.

The average performance of quantitative funds (or lack thereof) should tell you something about the applicability of using mathematics as a strategy.

One could argue that every strategy works... Until it doesn't.

Obviously people have to be conscious of the fact that while math is 100% models are based on probabilities and assumptions. This does leave an area for error.

For example: If one follows a limiting-profit/limiting-risk strategy (e.g. Bear Spread), there is no way that that person can lose (or gain) more money then the speculated gains/loses. This is pure math. If someone is reckless or wishes to engage the risk factor in order to optimize gains, you cannot blame that on mathematics.

 

[amanda.jayne]

Obviously people have to be conscious of the fact that while math is 100% models are based on probabilities and assumptions. This does leave an area for error.

There is a big difference between value and price.

It is also possible to earn a positive return and still destroy value.

 

[Andy Nguyen]

There is a big difference between value and price.

Sylvain Raynes?