Trading has evolved from a humble apple grower wanting a stable price for his produce come harvest time, to a complex and exciting industry comprising a significant share of the global economy.
Trading is the fundamental activity of investment banks, hedge funds, pension funds and many other financial companies. There is no better way to understand the workings of a financial entity than to follow the progress of a trade through its lifecycle and all the activities performed upon it.
This book will dissect a trade into its components, track it from conception to maturity and describe the raison d’être of the business functions of a financial entity all arising from the processing of a trade. Having seen the full path of a trade, the reader will gain a more complete view of the world of finance which will answer some fundamental questions such as why, what and how do people trade.
Derivatives are complex variations of standard trades. By contrast and comparison with the lifecycle of standard trades the reader will glean a better understanding of these often misunderstood financial instruments.
Credit derivatives are another important set of products in our post credit crunch world. How do these instruments work and where do they differ from their non credit counterparts? This book has a special section devoted to them.
Together with the trade itself, the book will explore essential activities such as booking, confirmation, settlement, risk management, legal obligations, ...