Advanced Topics

This page is for you experts. We will cover various advanced topics. Let us know if there are any topics you would like to see included. Beginners might feel more comfortable here.  

Links

• AIMR (Association for Investiment Management and Research) -the place to go to become a CFA (Certified Financial Analyst)
• Anomalies - a great list of market anomalies collected by Investor Home. Addresses questions such as is the market truly random?  If it is then Technical Analysis can't work.  The random walk theory says that the market is very efficient and any inefficiency will get acted upon by smart money to increase returns, which will return the market to the random state. The book Random Walk Down Wall Street does its best to try to explain this concept.
• Autex - Send and receive indications of interest directly with counterparts using AutEx®. AutEx is the investment industry's preferred electronic database and online real-time network for trade order indications and executions for Listed, NASDAQ/OTC, ADR, Ordinary and Convertible securities. AutEx offers global access to liquidity to over 3,000 investment managers and broker/dealers worldwide. AutEx enables its subscribers to find the other side of the trade quickly and effortlessly. Every day, more than 400,000 messages are transmitted between buyers and sellers, making AutEx an integral part of today's volatile market place.
• Block Trades - are recorded trades which are greater than 10,000 shares. This trades are usually done by institutions
• Clearing and Settlement - this is how the stock actually changes hands when you make a trade.
• CMT - Chartered Market Technician - Get certified that you know your Technical Analysis stuff from the MTA - Market Technicians Association
• Curbs - There are various trading limits that take effect on certain price movements in the NYSE. On CNBC when you see "Curbs" it means, the Dow has been up or down 170 points from the previous colse, index-arbitrage orders on the S&P 500 are stabalized until the market moves to a level 80 points from the previos close.
• Efficient Market Hypothesis - Is the stock market just random
• Fair Value - learn the how and whys of Fair Value as an index arbitrage tool.
• Fix - an electronic messaging format that allows computerized system to automated the sending and processing of trades
• Foreign Exchange - is the trading of currencies for profit. Recently Europe has gone to the unified currency of the Euro. Find out more about the Yen, the Euro and the Pound here.
• Fixed Income - better known as bonds, contains links to sites that service the bond market
• Futures - here are some links to sites which deal with futures, commodities, currencies
• Hedge Funds - are basically very risky mutual funds which use any or all strategies to including shorting, using margin, options to maximize performance.  Don't confuse this with hedging, which could be used to reduce currency risk in a stock.
• Ibbotson Research ($) - company that authors advanced investment papers
• Indexers - they've given up on beating the market since they believe that it's random and has beaten 80% of all fund managers in the process.
• Instinet - their not just for pre-market trading they're the biggest and first ECN.
• International - we've included some sites which cater to the international investor
• Index arbitrage is defined as the purchase or sale of a basket of stocks in conjunction with the sale or purchase of a derivative product such as stock-index futures, to profit from the price difference between the basket and the derivative product.
• LiquidNet - Launched in April 2001, Liquidnet is the fastest-launching alternative trading system (ATS) for buy-side institutions in the United States. Liquidnet's unique model brings natural buyers and sellers together and enables them to anonymously negotiate trades among each other, without intermediaries or information leaks. Liquidnet's institutional Members trade large blocks of small-, mid- and large-cap stocks easily, efficiently and with little to no market impact costs.
• Market Markers - These are the bookies of the stock market.
• Market Timing - here are some sites and information to help with timing the market
• Nasdaq Level II Tutorial - Nasdaq Level II, allows you to display the bid-ask of all the market makers and ECNs, not just the inside quote
• NYSE Market Info - The New York Stock Exchange supplies some interesting information here on Research Papers, Data Library, Tick data, Program trading and bond information
• Options - here are some links to the options markets.  Options, can be used for speculation or for hedging. There is a whole separate language for options and we've tried to help you get through the maze here.
• Posit - is an intraday matching system run by ITG
• Program Trading - includes many -trading strategies which involves buying or selling a basket of at least 15 stocks with a total value of $1 million or more. Program trading is calculated as the sum of the shares bought, sold and sold short in program trades. The total of these shares is divided by total reported volume.
• Quantitative Analysis - these are the guys with the statistics and the models that are trying to beat the market
• Risk Premium - this is the perctage you pay to own stocks above hold a "safe" investment
• Statistics - there is a huge field of using statistics in trading. If you want to make a living in the market it pays to know your stuff.
• The Fed - Alan Greenspan is the quarterback. Find out what the team does.
• Tick Data - is the actual trades that take place on the exchanges.  This data consists of trades and quotes.  The quotes are the inside bid-ask and their sizes. This data can be purchased from the NYSE.
• Transaction Costs - are the measurement of trading costs, including commissions, taxes, market impact, opportunity costs
• Underwriters - These are the people who find the investors for issuance new stocks
• VWAP - Volume Weighted Average Price is the weighted average price which a stock trades at for some time period.  
• Volatility - a measure of how risky a stock is, usually quoted via Beta also known as standard deviation
  

Top Risk Sites

• Barra
• Quantal
• Risk Book: Value at Risk : A New Benchmark for Measuring Derivatives Risk
  by Philippe Jorion

Top Transaction Costs

• Plexus
• State Street
• Transaction Costs
• Able/Noser
• Elkins McSherry
• ITG
• Instinet