Practical analysis for investment professionals

Trading


Book Review: Trading and Electronic Markets

Going beyond the traditional fundamentals of trading that are covered in academia, Larry Harris, CFA, explores the motivations and goals of the wide spectrum of traders, including profit-motivated traders, utilitarian traders, and the newest breed of traders — those resulting from the growth of electronic markets. Understanding other market participants’ motives allows traders to determine the most opportune time to trade.

Book Review: Speculation, Trading, and Bubbles

Adapted from a lecture by the author and a follow-up discussion with eminent economists, this book includes an analysis of the South Sea Bubble and the application of the author’s new economic model to that and similar episodes. Open-minded investors would benefit from the book’s insights on speculative trading bubbles.

What Makes a Great Trader? An Interview with Jack Schwager

Jack Schwager discusses some of the traders featured in his book, The Little Book of Market Wizards.

Understanding the LIBOR Scandal: Recommended Reading

The scandal surrounding Libor, the London Interbank Offered Rate, continues to sweep through global finance like wildfire — so much information, so little time for investment professionals to assess the facts. These seven recommended reads will help you home in on the essentials of this still-unfolding imbroglio concerning the global benchmark.

Avinash Persaud: Investors Should Brace for a Return of Currency Volatility

The chairman of Intelligence Capital laid out "seven rules of foreign exchange" that can help market practitioners manage their exchange rate exposures and clarify the future direction of currency markets.

Book Review: Managed Futures for Institutional Investors

Investment professionals thinking of offering managed futures should read this primer on the nuts and bolts of managed futures and conventional “how-to” guide to making money. It provides both the solid theoretical underpinnings of the asset class and the practical aspects of incorporating managed futures into a client’s portfolio.

Volatility Harvesting: From Theory to Practice

We’ve all heard the old adage that diversification is the only free lunch in investing, but Paul Bouchey, CFA, debunked that notion at the CFA Institute Wealth Management 2012 conference in Miami. To be clear, Bouchey did not challenge the notion that we can reduce risk without sacrificing return through diversification. He did, however, call out another free lunch — volatility harvesting.

Book Review: No-Hype Options Trading

The trading of options is quite mysterious to many investors. Some view the use of options as nothing more than gambling. One may place small bets with the potential for very large gains. Unfortunately, just like bets at a casino, the options trader who bets on a large move in the price of an asset is rarely the winner because most such bets expire worthless. As Kerry W. Given (a.k.a. Dr. Duke), founder of Parkwood Capital, points out in No-Hype Options Trading: Myths, Realities, and Strategies That Really Work, “The casino establishes a game where the casino holds a statistical edge. . . . Your model for trading options should be the casino owner, not the player at the tables.” His goal is to teach investors how to profit from the use of options while intelligently managing the risks involved.



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