Risk Management in Trading: Techniques to Drive Profitability of Hedge Funds and Trading Desks

Trading and Risk Management In easy to understand language, Wall Street veteran Davis W. Edwards provides a definitive guide to the relationship between trading and risk management. Risk Management in Trading describes how successful traders use quantitative analysis to make trading decisions and control risk. By framing risk management analytics as part of a decision making process rather than a stand–alone effort, the author illustrates how modern risk management techniques can help drive profitability. Edwards also demonstrates how misuse of these techniques can lead to outcomes worse than the ones traders try to prevent. This book is an excellent resource for MBA students, as well as candidates for the Financial Risk Manager (FRM) or Certified Financial Analyst (CFA) exams. With self–study quizzes that reinforce the main concepts, it is easy for readers to test their learning. Risk Management in Trading is also a great reference for risk management professionals, executives, and anyone who wants to understand how financial disasters happen – and how to make sure they dont .

Preface Chapter 1: Trading and Hedge Funds Chapter 2: Financial Markets Chapter 3: Financial Mathematics Chapter 4: Backtesting and Trade Forensics Chapter 5: Mark to Market Chapter 6: Value–at–Risk Chapter 7: Hedging Chapter 8: Options, Greeks, and Non–Linear Risks Chapter 9: Credit Value Adjustments (CVA) Afterword Answer Key About the Author Index

DAVIS W. EDWARDS, FRM, ERP, is a senior manager in Deloittes Energy Derivatives Pricing Center and a specialist on the topics of risk management, statistical analysis, and valuation of financial derivatives. Prior to joining Deloitte, he worked as a director of credit risk at Macquarie Bank and senior managing director on the proprietary trading desk at Bear Stearns. Davis was an early pioneer in the development of artificial intelligence execution and order–matching systems that revolutionized the NYSE and NASDAQ. Davis is a Certified Energy Risk Professional (ERP) and Financial Risk Manager (FRM) with the Global Association of Risk Professionals and directs the organizations professional chapter in Houston, Texas.