Brain%20Teasers

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Brain Teasers

• You have 8 red and 16 blue socks. Theres no
  light in your room, so you have to choose your
  socks in the dark. Whats the minimum of socks
  you need to choose to ensure you have at least a
  matching pair.

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Answer

• Three
• Two socks can be different, but a third must
  match one of the first two

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Announcements

• Upcoming Presentations
• Economist Stephen Roach on Thu 1230
• Derivatives
• Upgrade Capital Trading Competition
• www.upgradecapital.com/signup/

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Market Update The Macro View
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Quantitative Finance Society

• Anatomy of a Trade

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Anatomy of a Trade

• Trade Thesis
• Trade Execution
• Managing Risks
• Exiting a Trade

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Trade Thesis

• Bottom-Up vs. Top-Down
• News
• Catalyst
• Time Horizon

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Trade Execution

• Pick the right instrument or asset class to
  express your view
• Isolate your trade thesis
• Long
• Relative Value
• Hedging

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Trade Execution

• Picking an optimal entry time
• Technical analysis
• Understanding price and volume
• Momentum vs. mean reversion
• Understanding your catalyst
• Upcoming news
• Efficient markets

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Managing Risks

• Trade Order Types
• Market Order, Limit Order, Stop Order
• Stop-Loss Order
• Risks Affecting your Trade Thesis
• Market Risk, Interest Rate Risk, Credit Risk
• Political Risk, Currency Risk
• Idiosyncratic Risk

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Exiting a Trade

• Watch your thesis and catalyst
• Capture profits
• Technical analysis
• Discipline stick to your thesis

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Questions?