HN Explorer

Ask HN: Best ways/resources to learn finance (self-study)

15 points by abhimskywalker ↗ HN
Currently have a plan to start with "Principles of Corporate Finance" (by Richard Brealey and Stewart Myers), followed by "Options, Futures, and Other Derivatives" (by Hull). Then perhaps "Security Analysis" (by Benjamin Graham and David Dodd). These seem to be of quite seminal nature in finance literature according to most sources.

Not very sure what to do after that. Would really appreciate any guidance in this direction, or if there is a better/efficient way to go about gathering solid applicable knowledge in this area. Want to acquire solid finance foundations, so as to be able to implement the complex financial processes & systems (like marketplaces, securities & OTC instrument contracts, trading bots, etc.) on my own.

Additional background info if it helps: Current skill sets I have: Economics & Stats (MS level knowledge) | R, SAS, Stata, MATLAB, etc. (2 years as data science guy) | Python (2 years as full stack dev); basic Java (coding challenges level only) | Also good college level calculus, linear algebra, basic optimization techniques etc. so won't shy away from complex Maths.

10 comments

[ 3.1 ms ] story [ 33.1 ms ] thread
brotchie
Brealey+Myers, Hull, and Graham+Dodd are good starters. Trading and Exchanges by Harris is great for understanding the actual mechanisms of markets. Try and find "Max Dama on Automated Trading" (it's a pdf that's floating around) for some pretty decent advice on building trading systems.
abhimskywalker
Thanks! The "Max Dama on Automated Trading" looks awesome!

"Trading and Exchanges" by Harris also looks very helpful towards actual implementations. Will order it right away. Thanks a lot!

zhte415
If possible, get an internship, or placement, or something. You seem to be quantitative, so send a million emails / LinkedIn requests to people in charge of quantitative things and be fast to follow-up. Practice and theory are aligned, but getting to the nuts-and-bolts of a few practical, current problems can be a great education. Even something seemingly simple, like constructing a proxy for an index, is practical and skills learnt applicable.

Focus on getting the foot in the door, as long as you ace the above, that's enough academically. Your academic drive (having mastered the above) should be enough to problem-solve and push forward.

abhimskywalker
I am just coming out of previous full-stack dev role. Wanted to spend some time dabbling in a few ideas right now in this space of finance/fintech. So I wanted to develop solid understanding of this field right now first (which has also been a latent personal desire/goal now for a quite some time) as well as experiment with a few ideas by myself first for some time...
akg_67
The three books you mentioned focus on three different areas of finance with very little overlap. And all three books are not considered basic text and are much more theoretical. Are you trying to learn basics of different segment of Finance? Then these books are more advanced.

What is your goal? What do you expect to achieve after finishing these books? Why do you want to learn three very different segments of Finance: Corporate Finance, Options, and Fundamental Security Analysis? Do you want to work in Corporate Finance or Options Trading or Security Analysis? You can't be all three at the same time.

abhimskywalker
My goal was to cover some of the main fundamentals of finance to get a good all-round understanding along with eventually specializing towards practical application based finance... mostly stuff like designing & implementing algorithmic trading strategies, building securities exchanges/marketplaces on my own (maybe in python for now), maybe even design and implement more complex financial instruments & related contracts...

Was looking to get to learn both the theory and real-life implementations of this financial systems & processes. Hence wanted to start with Corporate Finance as it looked the most generic and seemed more like broad revision of stuff i already learned in a lot of econ classes and some management electives I took in college, with some additional knowledge to build good skeletal/context structure of the field and various agents involved, which I can later fill in with and place new concepts i would learn in the two other books. Then next logical step seemed like getting to know ins and out of the financial instruments of more complex nature hence Hull seemed good to start with. (Also the fact that I read first few chapters in college and quite liked them then...) And then Security Analysis seemed like a good way to look at all of the above learnt info in more analytical way specifically from POV of an investor.

Also as suggested in the other comment "Trading and Exchanges" by Harris is definitely going on this list of books to finish for me to get better practical implementation understanding.

As of now quant side of finance seems most interesting, but again haven't explored all other roles/areas fully so can't say for sure as yet where would I like to work. A finance nOOB question... is there something like a full-stack finance engineer? Closest seems to be a quant guy...

akg_67
If your objective is to be quant, I will suggest removing Corporate Finance and Security Analysis books from your reading list. "Trading and Exchanges" is a good addition.

A learning strategy that has served me well is to look at syllabus and recommended texts for an academic program closely aligned to my interest. Going through recommended texts in these programs on my own has helped me gain more structured knowledge on the topic of interest. Each successive module builds on previous modules.

In your case, you want to check out academic programs related to financial engineering and computational finance such as at Baruch, Carnegie-Mellon, UW etc. Here is a link to UW Computational Finance and Risk Management curriculum: http://depts.washington.edu/compfin/content/ms-degree/curric.... The link to course description shows the recommended textbooks. Going through these books will prepare your well to be a Quant.

In case you want to see recommended readings from other programs, check out list of financial engineering program at https://www.quantnet.com/mfe-programs-rankings/. I am sure some of them have detailed syllabus and recommended readings available on Interest.

A few other resources for recommended readings:

Quant net Forum Book section https://www.quantnet.com/forum/books.37/

Quant net Master Reading List https://www.quantnet.com/threads/master-reading-list-for-qua...

abhimskywalker
Thanks for the references! The idea to follow the texts and readings from one of these courses seem to be a good idea. Will read up on that.
twisterf5
I am an ex-commodities trader. My advice is to get some used CFA lvl 1 materials or you can download the pdfs online through torrent. they arent up to date but they should be cheap. the corp fin, accounting, and portfolio sections are great. derivatives, fixed income and equities are ok; also to learn about the market and how it works better to read materials from the exchanges and articles then textbooks. ALSO cant stress enough that to know finance you need to learn accounting and how to read company's annual reports and financials.
abhimskywalker
Thanks! Will look into the CFA level 1 material as well. I have some basic hold on accounting concepts, have prepared financial projections for large projects in the past and also can read and understand most parts of company annual reports and financials. Also could you please extrapolate a little on "materials from the exchanges and articles", does it mean routine publications/periodicals and white-papers sort of material? It would be really great if you could just point me to any one of the example source of these.