The best college degree for stock trading and investing depends on the specific career desired. It also involves choosing between a financial education that is more comprehensive or more specialized.
If you’re in the process of choosing a college degree, this answer likely doesn’t provide the specific information you need to narrow down your options. So, that’s what I’ll go over in this post. Specifically, I’m going to discuss what you need to learn to begin or advance a career in stock trading or investing, the top undergraduate degree options that teach this information, and other ways to gain knowledge and experience that support a career in stock trading or investing.
Let’s start with what a stock trader or investor needs to know. Various positions fall under the umbrella of stock trading and investing. Though the specifics of these positions will vary, anyone working in these professions will need a few key skills.
Some of these skills are soft skills learned over time, such as focus and control. Other skills require more formal education, including a deep understanding of economics, financial markets, technical analysis, and research. The problem is that plenty of degrees cover some or all these fields. For example, almost any college degree will include a research component, but that doesn’t mean any college degree will teach the type of research skills necessary to succeed in a career in stock trading or investing.
To help clarify how specific degrees prepare students for stock trading or investing careers, let’s take a more detailed look at the roles and responsibilities of jobs in stock trading and investing.
The ultimate responsibility of a stock trader is to buy and sell stocks. Though the movies may lead us to believe that stock traders spend their days yelling out orders on the bustling floor of a stock exchange, this is no longer the case. Though a few traders still trade using this auction-style method, most traders spend their days in front of a computer, buying and selling stocks electronically.
What goes into the process of buying and selling stocks?
Stock traders must continuously conduct research and analysis to determine the potential price patterns of stocks. This involves keeping a close eye on the day-to-day movements of financial markets, as well as taking into consideration broader economic trends. Traders then use this information to inform their buy and sell decisions, often ending up at proprietary trading firms.
Investing and stock trading goes hand in hand, but investing is a far broader term. We can divide investing careers into two main categories – asset management (the “buy-side”) and investment banking (the “sell-side”). Investment banking positions are often heavily quantitative, while asset management usually involves building relationships and helping clients achieve goals.
Investing positions in asset management include research analyst, portfolio manager, and financial advisor. Investment banking careers with an investing component include trading, but also include corporate finance, derivatives, equity and fixed income research, emerging markets, brokerage, and research analyst (yes, analyst positions exist in both asset management and investment banking).
As you can see, investing positions include a wide range of options. What all these positions have in common is a heavy focus on numbers, research, and analysis. On a day-to-day basis, most investing careers look similar to trading positions in that much time is spent sitting in front of a computer working with numbers, often ending up at hedge funds.
Now that we have a better idea of the day-to-day responsibilities, we’ll walk through a few of the best college degrees for stock trading and investing. The six degrees we’ll look at are:
- Business Administration
- Computer Science
- Applied Mathematics, Engineering, and Physics
Each of these degrees covers different subjects and therefore helps prepare for slightly different careers, but the right degree is also about more than the information it includes. It also depends on the long-term goals of the student. Some degrees offer a broader experience that students could apply to almost any finance career. These degrees are ideal for students who prefer a more holistic approach and more flexibility. On the other hand, more specialized degrees may help graduates stand out when applying for more competitive positions.
Easily the most applicable degree for any career in finance is, not surprisingly, a degree in finance. But what exactly does a bachelor’s degree in finance cover?
While the exact details of a program depend on the school, the main goal of any finance program is to teach students about investing. This includes stock trading, portfolio management, and capital budgets. Specific courses may consist of those addressing topics such as corporate finance, investing, accounting, fixed income securities, and financial reporting.
Though it depends on the program, many schools provide students with the opportunity to take part in real-life portfolio management, which can help graduates stand out when applying for jobs. One of the other reasons those with a degree in finance may stand out is that finance program admission standards are often relatively high. The coursework covered in a finance degree can help prepare students for a career in trading or investing, but it can also apply to other jobs in finance, such as accounting.
A bachelor’s degree in economics is also applicable to most fields in finance but is a bit more focused than a finance degree.
Earning a degree in economics includes studying business cycles, economic indicators, interest rates, currencies, and monetary and fiscal policies. Much of this information is taught through reviewing historic trends, the economic impact of previous policy decisions, and past economic shocks and crashes. By providing students with historical data, an economics degree gives students more context with which to view current events and policy decisions.
An economics degree prepares students for many of the same trading and investing careers as a degree in finance. Therefore, students may base the choice between a degree in finance and economics largely on personal preference, with finance being the better alternative for individual stock analysis and economics being more beneficial for [global macro investing/blog/global-macro).
Much like a degree in finance, a bachelor’s degree in business administration provides a foundation applicable to most positions in finance. Arguably, business administration offers even more career flexibility than a degree in finance. That’s because, beyond trading and investing, a business administration degree can prepare students for a career in accounting, auditing, budget analysis, or even financial advising. In fact, a degree in business administration is so broad that most programs have students choose a specific concentration.
The most common concentrations for business administration degrees include accounting, management, business communication, and marketing. Those looking to pursue a career in trading or investing should choose a concentration in line with their goals, such as accounting. Regardless of the concentration selected, the coursework of most business administration degrees includes business statistics, business law, and business communication.
What sets a business administration degree apart is that while the degree focuses heavily on critical financial concepts, it focuses more on communication and critical thinking skills than most other finance-based degrees. The comprehensive nature of this degree makes it ideal for those looking for either a broader educational experience or more flexibility in their career choice.
Computer science may not be the first degree that comes to mind when pursuing a career in trading or investing. Still, as previously mentioned, these careers now occur predominantly on computers. As trading continues to become more computerized, a better understanding of computers will become an increasingly valuable skill. A computer science degree may also help graduates stand out among peers with more broad degrees, such as finance or business administration.
The coursework required for a computer science degree will vary considerably from the coursework required for other degrees on this list. Though the specific classes required depends on the school and the program, most programs will cover algorithms, artificial intelligence, data logic, data management, operating systems, programming languages, and statistics.
While any trader could benefit from a background in computer science, companies often seek employees with computer science experience for a few key areas. One of these areas is the risk management team, where computer scientists are essential. Companies also need computer scientists to assist in algorithmic trading. While trading algorithms have become more prevalent throughout trading, companies use them, especially in high-frequency trading, market making, and statistical arbitrage.
A statistics program teaches students how to collect, organize, and analyze data and then interpret the information to help make decisions. Statistics programs also tend to overlap with some of the information and coursework taught in economics, accounting, and finance.
Though the coursework involved in computer science and statistics is often quite different, the trading and investing careers they prepare students for tend to be quite similar. As previously mentioned, those with degrees in computer science often work as part of the risk management team or on the creation of complicated trading algorithms. This also tends to be where those with statistics degrees work, though a statistics degree arguably offers a bit more flexibility.
Statistics is, therefore, a good degree option for those more interested in specializing in the quantitative side of finance, such as [algorithmic trading/blog/algorithmic-trading-is-it-worth-it), but who also want a degree that has applicability throughout finance (and even other industries).
We’ll lump these three together because though they’re all quite different, their implications for investing and trading careers are surprisingly similar.
The difference between these degrees and others on this list is that the number of positions for which the coursework is directly applicable is often far lower than in some of the broader degree options. You can choose to view this as a good thing (more specialization and more competitive) or a negative (fewer choices and less flexibility). That is not to say that a background in any of these fields would disqualify you from a more general career in trading or investing. Some companies looking to have a more diversified team may find a background in any of these fields ideal for a trading position. That being said, these degrees are generally better for students looking to pursue the more technical side of trading and investing.
The derivatives market is an area where those with a background in applied mathematics, engineering, and physics are often most highly sought. The key to excelling in these careers is not only understanding these highly quantitative concepts but having the ability to apply them in new and novel ways creatively.
While gut reactions and emotions play into finance (often more than many traders like to admit), most trades made by firms are based on mathematical equations of one sort or another. As the role of computers and other technology continues to increase in trading and investing, it’s likely the value of mathematical expertise will grow with it.
Internships have become common in many industries, and finance is no exception. Most employers and graduate programs relating to finance expect college graduates to have had a finance internship by the time they’ve graduated from college. This has transformed internships into a part of the college experience for many students.
An internship can help you put into practice the material you’re learning in your classes, and it can make your resume far more appealing after graduation. Beyond these benefits, though, an internship can also help enhance your professional skills, network with others in the industry, and decide if your chosen profession is a good fit.
One question that often comes up for those pursuing a career in finance is whether it matters which university they attend. The most high-powered trading and investing careers are often linked with Ivy League universities. While many assumptions relating to finance prove inaccurate, this one does not. The best investment banks, consulting firms, and law firms all tend to hire graduates of Ivy League universities. This is good to know if you’re interested in working on Wall Street.
If you’re interested in a trading or investing career anywhere outside of Wall Street, though, where you go matters less. The same concept applies to those pursuing graduate degrees at the most elite universities.
If you’re applying to a graduate program at an Ivy League university, an undergraduate degree from the same or another Ivy League university can provide a competitive advantage. For anyone applying to any other graduate program, the university where you earn your undergraduate is less critical.
A discussion of the best degrees for those pursuing a career in trading or investing is not complete without also considering master’s degrees. That’s because even though a bachelor’s degree will suffice for most entry-level positions, as you move up the corporate ladder, you may find that many higher-level positions require a master’s degree.
Many employers may also put more weight into the field of the graduate degree than the undergraduate degree. This is good news for those who may have already obtained an undergraduate degree in an area that doesn’t relate to finance or chose to earn a broader degree such as English, Business, or Communications.
For those interested in more specialized careers, master’s programs provide an opportunity for more concentration than most undergraduate programs. For example, if you’re interested in algorithmic trading, you may choose to get an undergraduate degree in computer science, statistics, or even applied mathematics. Then, at the master’s level, you could pursue a degree in computational finance.
In general, the best graduate degrees and the positions they prepare students for are the same as undergraduate degrees. A master’s degree in statistics, for example, offers more depth and complexity than an undergraduate statistics degree, but the core principles taught remain similar. Hence, the areas it prepares students for also remain similar.
Nonetheless, there are a few master’s programs that are so prolific throughout finance that they’re worth a quick discussion.
In almost all areas of finance, the most desired master’s degree is a Master of Business Administration (MBA). One of the reasons for earning an MBA is so encouraged is that it includes a varied curriculum of finance, accounting, management, financial markets, communication, economics, and entrepreneurship. This makes an MBA ideal for students looking for a more all-encompassing degree option who may prefer management roles.
A master’s in finance or economics is the more focused alternative to an MBA. These programs look similar to an MBA in many respects but include a bit more specialization. A master’s in finance or economics will touch on topics such as corporate finance, forecasting, risk management, economics, and monetary policy.
Once again, we come upon the issue of whether to pursue a more specialized degree or a more comprehensive degree. The answer for a master’s degree remains the same as it was for an undergraduate degree – it depends on the goal career, how much flexibility is desired, and the interests of the student.
Our discussion of graduate degrees, thus far, has looked exclusively at master’s programs, but what about Ph.D. programs?
While I’m always in favor of furthering education, a Ph.D. is unlikely to advance your career in most fields. Plenty of Ph.D. programs exist that relate to stock trading and investing, but these programs are often targeted more at those who wish to pursue a career in academics than those who want to advance their careers. One notable exception is computational finance. Companies looking to hire individuals for computational finance roles will often expect a Ph.D. in the quantitative research department.
Even if a Ph.D. isn’t necessary for your field, that doesn’t mean you can’t further your education. Those who’ve already earned a master’s may choose to advance their knowledge, experience, and job prospects by earning specific certifications.
An astounding number of certifications and licenses exist within the world of finance. In this post, we’re going to focus on certifications, because licenses and certifications serve two different purposes. A license is the bare minimum a professional must earn to do business. The field of finance includes many licenses, but the most common is the Series 7, which is required in order to [buy or sell securities on behalf of others/blog/trade-stocks-for-others).
Those looking to hone their skills, learn more about their industry, or stand out in a crowded field may find earning a certification benefits their career, sometimes even more than a graduate degree.
Those working within almost any area of finance; stocks, bonds, commodities, options, etc., usually have a certification option for their specific field. Not all certifications are created equal, though, the level of effort and prestige associated with different certifications varies drastically. If you choose to work towards a specific certification, make sure to do your homework and ensure that the organization offering the certification is reputable and that the accreditation truly adds value.
For those looking for a certification applicable to trading and investing, four of the most noteworthy certifications are the CFA, CPA, CFP, and CMT.
The CFA certification is one of the hardest of all certifications to earn. The program includes content on ten investment topics from the field of investments and securities. To earn this designation, you must pass a series of three tests, two of which are offered only once a year. Even if you were to pass each test the first time you took it (which is relatively rare), it would still take over two years to earn the certification. The CFA institute recommends that participants spend about 300 hours studying for each level of the exam. With a total anticipated time commitment of just under 1,000 hours, it’s not surprising that this course is often considered equivalent to a master’s degree.
A CPA is one of the most well-known certifications in the world of finance and accounting. The CPA is most common among accountants, tax specialists, and financial analysts. Consequently, the certification is better suited for those looking to pursue careers with a focus on financial analysis. The American Institute of CPAs (AICPA) is the organization that provides the certification. The certification requires 150 hours of coursework and a difficult exam.
As the name suggests, the CFP certification focuses on financial planning. This certification, therefore, is likely not the best option for those interested in trading and is instead better suited for those looking to pursue a career in investing, with a focus on financial planning. The CFP board administers the CFP exam, which includes a series of courses as well as a seven-hour test.
The Chartered Market Technician (CMT) certification is best for those interested in careers in trading. The CMT certification focuses on technical analysis and, therefore, is targeted at those in analyst roles. Since most trading involves at least some level of technical analysis, almost all traders may find this certification beneficial. The CMT program is administered by the CMT Association and includes a series of three exams.
We’ve looked at the education and experience required for a career in stock trading or investing, but as with any career, some of the essential skills extend beyond those taught in a classroom. Even with a relevant degree, a master’s, and the right certifications, you can still fail to excel in the fast-paced and competitive world of finance without a few essential skills. This is especially true for those looking to move beyond an entry-level position, or who wish to pursue careers at more competitive firms. To close out this post, we’ll quickly touch on some of the skills needed to excel in trading and investing.
Each career has a few necessary skills that should come as no surprise. Employers expect traders to be aggressive, detail-oriented, and able to handle pressure well. Those working in the asset management category of investing must have excellent communication skills. The ability to collect, interpret, and apply data is essential for any analysis role. But beyond these expected skills, three other qualities can set you apart in any finance career.
Finance is a fast-paced environment, one where it’s beneficial always to be learning. Curiosity and a desire to continue to learn will help you stay up to date and thus remain competitive.
In trading and investing, it’s easy to become caught up in the latest craze. But long-term success requires the ability to remain skeptical and levelheaded to refrain from engaging in every short-term investing fad.
High-quality investing requires doing your homework. Becoming lazy and complacent is, therefore, an excellent way to become bad at your job.
As we’ve seen, the best college degrees for stock trading and investing are:
- Business Administration
- Computer Science
- Applied Mathematics, Engineering, and Physics
Each of these degrees has a lot to offer. Which of these degrees is best will depend on the desired level of specification and the desired career. A master’s degree, certification, and/or an internship are often required to stand out in a competitive industry. And even if you have all the right degrees and certifications, success as a trader or investor also requires excelling in a few other essential skills.