As a search firm that specialises in quantitative finance, our clients tend to request we introduce people with STEM education backgrounds, many of whom have never studied finance. As such, we’re regularly asked to provide recommendations on suitable literature, and have become relative experts in guiding people to the right books over the years.
In the spirit of self-promotion altruism, we thought it might be helpful to share this knowledge with our network, so here is a list of our top twelve. Please feel free to add any further recommendations in the comments section.
Options, Futures and Other Derivatives – John C. Hull: a book that finance students will read from cover-to-cover during academia; a must-read for anyone who desires a career working with derivatives. A textbook many refer to as the bible, it provides a detailed overview of derivative markets, products and pricing mechanisms.
Inside the Black Box – Rishi K. Narang: the book to read if you’re considering a career in quantitative finance. It provides an insight into how quantitative trading works, the role of a quant/quant trader, and the various ways in which quantitative trading differs from traditional discretionary trading.
Algorithmic Trading and DMA – Barry Johnson: another helpful tool if you’re considering a career in quantitative finance. There will be some overlap with Inside the Black Box, but this book is especially good at illustrating how the various market participants coexist and work together.
High-Frequency Trading – Irene Aldridge: our third book on quantitative finance, this one is focused on high-frequency trading. Again, there will be some overlap with the two books immediately above, but this is a great read if you’re considering a career in HFT.
The Intelligent Investor – Benjamin Graham: the book that inspired Warren Buffet to attend college, and ultimately moulded his career as an investor. It provides a comprehensive summary of ‘value investing’, particularly relevant to those who desire a career that involves taking longer-term positions.
Fooled by Randomness – Nassim Nicholas Taleb: this book is not just about the markets, but the subjects it touches upon are intrinsically linked. It serves to illustrate the importance of luck in everything we do, from crossing a trade to crossing a road.
How The Trading Floor Really Works – Terri Duhon: the very best guide there is if you’d like to understand the workings of an investment bank. Focused on trading, it also helps readers understand the importance of the Chinese Wall (an information barrier, separating public and private sides), and provides a detailed summary of the various functions an investment bank serves.
Risk Management and Financial Institutions – John C. Hull: another of Hull’s classics, this book details the various types of risk one ought to consider in trading (or indeed, in risk), how they are managed, why they are important, etc.
The Ascent of Money – Niall Ferguson: this one documents the evolution of banking, debt, currencies, etc. While not an essential read, they say those who cannot remember the past are condemned to repeat it, and there is no better casual-read when it comes to researching the history of finance.
Heard on the Street – Timothy Falcon Crack: crammed full of examples of interview questions, this book provides an insight into the type of conversation one can expect when interviewing for a position in quantitative finance. It contains as many questions relating to STEM as finance, but it’s definitely worth a read.
Flash Boys/The Big Short – Michael Lewis: for a more entertaining read, Lewis’ books provide a great insight into the world of finance – in terms of the culture, the characters, etc. They’re more of a poolside read than a series of textbooks, but they do offer some welcome colour and more than a touch of fun.