Financial Trading and Investing

Financial Trading and Investing, Second Edition, delivers the most current information on trading and market microstructure for undergraduate and master’s students. Without demanding a background in econometrics, it explores alternative markets and highlights recent regulatory developments, implementations, institutions and debates. New explanations of controversial trading tactics (and blunders), such as high-frequency trading, dark liquidity pools, fat fingers, insider trading, and flash orders emphasize links between the history of financial regulation and events in financial markets. New sections on valuation and hedging techniques, particularly with respect to fixed income and derivatives markets, accompany updated regulatory information.

In addition, new case studies and additional exercises are included on a website that has been revised, expanded and updated. Combining theory and application, the book provides the only up-to-date, practical beginner's introduction to today's investment tools and markets.

Concentrates on trading, trading institutions, markets and the institutions that facilitate and regulate trading activitiesIntroduces foundational topics relating to trading and securities markets, including auctions, market microstructure, the roles of information and inventories, behavioral finance, market efficiency, risk, arbitrage, trading technology, trading regulation and ECNsCovers market and technology advances and innovations, such as execution algo trading, Designated Market Makers (DMMs), Supplemental Liquidity Providers (SLPs), and the Super Display Book system (SDBK)

1. Introduction to Securities Trading and Markets
2. Financial Markets, Trading Processes, and Instruments
3. Institutional Trading
4. Regulation of Trading and Securities Markets
5. Adverse Selection, Trading, and Spreads
6. Random Walks, Risk and Arbitrage
7. Arbitrage and Hedging with Fixed Income Instruments and Currencies
8. Arbitrage and Hedging with Options
9. Evaluating Trading Strategies and Performance
10. The Mind of the Investor
11. Market Efficiency
12. Trading Gone Awry
Mathematics Appendix
Glossary
End-of-Chapter Exercise Solutions