What is quantitative finance?

In quantitative finance, math and large data sets are used to understand financial markets and securities. This can involve finding the value of financial instruments like options, and managing risk in investment portfolios. People who work in this area are known as "Quants."

Quantitative finance vs financial engineering

Quantitative finance is concerned with the mathematics behind pricing securities and assessing risk, while financial engineering takes this a step further by developing practical tools and techniques based on these mathematical models.

Financial engineering involves using computational simulations to make investment decisions such as pricing, trading, and hedging. It combines the principles of quantitative finance with practical implementation.

Quantitative Analysts

Quantitative analysts use mathematical models to analyze financial markets and support the trading and risk management functions of banks and financial institutions.

This career typically requires a strong background in math and advanced degrees such as a Master's or Ph.D.

Quantitative finance analysts are less common than traditional financial analysts who work in the finance industry. In order to be successful in this role, it is important for these analysts to have a thorough understanding of:

• Algorithms
• C++
• Differential equations
• Linear algebra
• Multi-variable calculus
• Probability theories
• Statistical analysis

Quantitative finance analysts are commonly found in the operations or IT departments of large banks and financial institutions, providing numerous career opportunities.

These positions are less common at smaller boutique firms, so those interested in this career path may want to focus their job search on large banks and institutions.