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Trader Construction Kit: Fundamental & Technical Analysis, Risk Management, Directional Trading, Spreads, Options, Quantitative Strategies, Execution, Position Management, Data Science & Programming
Trader Construction Kit is a comprehensive resource for undergraduate, MBA and Masters of Finance students interested in a career with a bank, hedge fund or other financial institution. Trader Construction Kit is a practical guide to developing the skills and techniques employed by professional traders, • Fundamentally and technically analyzing a market. • Assessing the volatility and risk characteristics of the market. • Developing a view, an actionable perspective on the future of price. • Evaluating directional, spread, option & quantitative trading strategies. • Weighing the inherent risk and reward in potential positions. • Efficiently executing trades and managing the resulting exposures. • Pricing and hedging structured transactions.Additional chapters describe • The evolutionary state of a market shapes the activities of its inhabitants. • The role of a trader varies at different types of financial institutions. • A trader’s personality forms an integral part of their approach to the market.• To survive and thrive on a trading floor.Trader Construction Kit contains a single, highly detailed case study that incrementally incorporates and applies the lessons learned in each chapter. A new for 2020 appendix presents an overview of the basics of data science and programming for traders.
- GenresFinance
593 pages, Paperback
Published January 22, 2020
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Displaying 1 of 1 review
April 14, 2024
Trader Construction Kit is the perfect book for a junior on a commodity trading desk. Any new hire in such a role should spend their first week reading this TCK (while getting set up with tech infra etc) – it clarifies much of the jargon you are bound to hear and gives you the basic mental models needed to be on the same page as your colleagues. Of course, part of the job is for you to develop your own mental models and processes, but this is made significantly easier by having a common language.
Rubano explains what fundamental analysis means in the context of commodities – the construction of supply and demand “balances” to identify if there is going to be a surplus or deficit. His treatment of technical analysis is excellent, explaining the theory behind the indicators while having a strong awareness of the limitations. For what it’s worth, I personally see a sort of a “bell curve meme” around TA wherein professional traders have a begrudging respect for the value of technicals. TCK also gives reasonably good introductions to spread trading, options, and risk management, though of course more depth on each of those can be found in other resources.
My favourite chapters were the ones on the craft of trading (as opposed to knowledge about finance/commodity concepts. “Developing a Cohesive Market View” explains how to synthesise fundamentals, technicals, and market flows into a tradable view; “Managing Positions & Portfolios” discusses how to think about live positions – when to add/cut risk etc; “Navigating the Corporate Culture” gives an insightful take on principal-agent problems, expectations management, and career risk.
TCK does a good job of explaining the trading process holistically, in all of its grit and contradiction. From reading a typical trading book, one gets the impression that it is purely an intellectual/quantitative poker game – making the best decisions with current information. This neglects the reality that almost everyone starting in the business does so under someone else’s roof; accordingly, there is a metagame beyond Bayesian decision-making. For example, how should one manage a joint book? How do you interact with CIOs or risk allocators? What should you tell your boss when you experience a big loss? These topics fall in the domain of the metagame rather than just the game.
My highlights here.
Rubano explains what fundamental analysis means in the context of commodities – the construction of supply and demand “balances” to identify if there is going to be a surplus or deficit. His treatment of technical analysis is excellent, explaining the theory behind the indicators while having a strong awareness of the limitations. For what it’s worth, I personally see a sort of a “bell curve meme” around TA wherein professional traders have a begrudging respect for the value of technicals. TCK also gives reasonably good introductions to spread trading, options, and risk management, though of course more depth on each of those can be found in other resources.
My favourite chapters were the ones on the craft of trading (as opposed to knowledge about finance/commodity concepts. “Developing a Cohesive Market View” explains how to synthesise fundamentals, technicals, and market flows into a tradable view; “Managing Positions & Portfolios” discusses how to think about live positions – when to add/cut risk etc; “Navigating the Corporate Culture” gives an insightful take on principal-agent problems, expectations management, and career risk.
TCK does a good job of explaining the trading process holistically, in all of its grit and contradiction. From reading a typical trading book, one gets the impression that it is purely an intellectual/quantitative poker game – making the best decisions with current information. This neglects the reality that almost everyone starting in the business does so under someone else’s roof; accordingly, there is a metagame beyond Bayesian decision-making. For example, how should one manage a joint book? How do you interact with CIOs or risk allocators? What should you tell your boss when you experience a big loss? These topics fall in the domain of the metagame rather than just the game.
My highlights here.
Displaying 1 of 1 review