Real–Time Risk: What Investors Should Know About FinTech, High–Frequency Trading, and Flash Crashes

Avoid the New Risks and Discover Unprecedented Solutions Created by Fintech

Real–Time Risk is the groundbreaking guide to surviving intraday threats and growing wealth in today′s global, high–speed investing space. FinTech has touched every aspect of contemporary finance and investing, and this comprehensive resource presents a refreshing way to approach risk management in order to optimize returns without getting burned. Straightforward explanations make pro–level depth of coverage accessible to individual investors and shed light on topics such as market microstructure, flash crashes, aggressive high–frequency trading, and other little–understood aspects of the market. This single resource rockets you ahead of the curve with revealing insight and immediately useful tools for:

Quickly adapting dependable risk management strategies that withstand micro–second trading Protecting yourself from flash crashes with proactive methodologies that let you sleep at night Filtering and analyzing the proliferation of news and data into useful, decision enhancing information

Take the discussion beyond the page by interacting with the authors through their website and Twitter to ensure you remain up to speed on Real–Time Risk.

Preface

Chapter 1: Silicon Valley is Coming!

Everyone is into FinTech

The Millenials Are Coming

Social Media

Mobile

Cheaper and Faster Technology

Cloud Computing

Blockchain

Fast Analytics

FinTech

In the End, It s All About Real–Time Data Analytics

End of Chapter Questions

Chapter 2: This Ain t Your Grandma s Data

Data

The Risk of Data

Technology

Blockchain

What elements are common to all blockchains?

Conclusions

End of Chapter Questions

Chapter 3: Dark Pools, Exchanges and Market Structure

The New Market Hours

Where do my orders go?

Executing Large Orders

Conclusions

End of Chapter Questions

Chapter 4: Who Is Front–Running You?

Spoofing, Flaky Liquidity and HFT

Order–Based Negotiations

Conclusions

End of Chapter Questions

Chapter 5: High–Frequency Trading in Your Backyard

Implications of Aggressive HFT

Aggressive High–Frequency Trading in Equities

Aggressive HFT in U.S. Treasuries

Aggressive HFT in Commodities

Aggressive HFT in Foreign Exchange

Conclusions

End of Chapter Questions

Chapter 6: Flash Crashes

What Happens During Flash Crashes?

Detecting Flash–Crash Prone Market Conditions

Are HFTs responsible for flash crashes?

Smart Beta and Flash Crashes

Conclusions

End of Chapter Questions

Chapter 7: The Analysis of News

The Delivery of News

Pre–announcement risk

Data, Methodology and Hypotheses

Conclusions

End of Chapter Questions

Chapter 8: Social Media and the Internet of Things

Social Media and News

Timeliness of Data Analysis

What Are Other Investors Thinking? If You Knew, Would That Be A Great Benefit To You?

Internet Sentiment: How FinTech Decides How You Are Feeling with Natural–Language Processing

The Internet of Things

Tracking shipments, fleets and supplies in real time

Conclusions

End of Chapter Questions

Chapter 9: Market Volatility in the Age of Fintech

Too Much Data, Too Little Time Welcome, Predictive Analytics

Is Volatility a Trend to just Live With?

Want to Lessen Volatility of Financial Markets? Express Your Thoughts Online!

The Market Microstructure Frontier Is the New Variable in Portfolio Optimization

Yes, You Can Predict T+1 Volatility

Market Microstructure as a Factor? You Bet.

Case Study: Improving Execution in Currencies with AbleMarkets Aggressive HFT Index

For Longer–Term Investors, Following Aggressive HFT Pays

Conclusions

End of Chapter Questions

Chapter 10: Why Venture Capitalists Are Betting on FinTech to Manage Risks

Opportunities for Disruption Are Present and They May Not Be What They Seem

Data and Analytics in FinTech

FinTech as an Asset Class

FinTech Success Factors

The Investment Case for FinTech

How do FinTech Firms Make Money?

Conclusions

End–of–Chapter Questions

About the Author

Index

IRENE ALDRIDGE is managing director and quantitative portfolio manager at ABLE Alpha Trading and president of ABLE Markets. She is author of Searching for High–Frequency Trading Opportunities and High–Frequency Trading.

STEVE KRAWCIW is CEO of ABLE Markets, a leader in market microstructure analytics. His experience comes from such firms as McKinsey & Co. and Credit Suisse, and he is coauthor (with Irene Aldridge) of Quant Investor Almanac 2011.