A Modular Approach to Trader Development
All successful traders understand their relative strengths and weaknesses as risk-takers, are aware of how different entities interact to form a market, and how the needs of each type of participant drive their commercial activities. All successful traders employ a robust methodology for acquiring information, distilling it into an actionable perspective on the future of price, auditioning candidate implementation strategies, and developing and executing a trading plan for accumulating and managing an exposure.
Instradev, LLC's comprehensive curriculum is composed of fifteen modules, each of which can be delivered in a single two-hour session. The client can choose from topical groupings or select from an a la carte menu of modules relevant to their particular development needs. From that starting point Instradev, LLC will customize the depth, content, and market and product-specific examples to ensure that the training program is targeting all of the client’s requirements.
The modules on Understanding Markets, Developing a View of the Market, and Choosing an Implementation Strategy have consistently been the most requested, highest value-added training across all types of academic and industry groups. Additional suggestions for Analysts, Junior Traders, New Hires, Non-Trading Finance Firms, Risk Managers and Students are listed below.
Training Modules:
Module 1 - Understanding Trading
What does it mean to be a professional trader? What sorts of character traits are markers for success, and what behaviors inevitably lead to ruin? Not all traders do the same thing, and there are a variety of different decision-making styles and approaches to the market that can be productively deployed.
Recommended for: New Hires, Students.
Module 2 - Understanding Markets
How to identify and categorize the various types of firms present in a market, understand their motivations and the types of business activities they undertake. Describes the transactional ecology, where some entities are seeking to acquire risk for a profit while others seek to shed risk for a fee.
Strongly Recommended for: Analysts, New Hires, Students.
Module 3 - Fundamental analysis
Explores how analysts collect data, process it, and turn it into actionable information. How traders work with subject matter experts to develop a consensus of market opinion which, when contrasted with internal projections, leads to a perception that prices are relatively too high or too low.
Module 4 - Technical Analysis
Technical analysis is the study of charts of price fluctuations as a window into market sentiment and a means of understanding the probability and magnitude of potential price responses to market events and new information. Explains basic principles by relating them to actions of market participants.
Module 5 - Understanding Volatility
Volatility is more than just a statistical measurement. Traders must learn to observe and categorize the real-time fluctuations in prices and develop an understanding of how the characteristics affect liquidity and participation by different types of entities present in the market.
Module 6 - Understanding Risk
Traders must learn how the market volatility combines with the firm’s positions to translate into risk. Traders must understand how to measure risk both mathematically and experientially to accurately assess the potential P&L impacts of both normal and extreme market fluctuations.
Recommended for: Risk Managers
Module 7 - Developing a view of the Market
How to combine fundamental information, a technical analysis, an assessment of market volatility, and risk implications into a view of the market. Developing a view of the market is the primary task of any trader. Subsequent modules will cover implementing the view and managing the resulting position.
Strongly Recommended for: Junior Traders, Analysts, New Hires, Risk Managers, Students, Non-Trading Finance Firms.
Module 8 - Directional Trading
Directional trading strategies are the simplest, most immediate means of gaining exposure to the market, but require the greater degree of engagement and immersion to successfully manage. This module explores how to evaluate a pure long/short directional implementation of the trader’s view.
Module 9 - Spread Trading
Spread trading strategies involve offsetting long and short positions that are designed to profit from the convergence or divergence of the initial price relationship. This module covers how to evaluate various types of spread position implementations of the trader's view of the market.
Module 10 - Option Trading
Option trading strategies involve using instruments with complex, non-linear risk characteristics that can be used to take leveraged directional views, create structures that profit under specific, predetermined conditions, or take positions that profit from changes in market volatility.
Module 11 - Quantitative Trading
In some data-intensive markets it is possible⎯or necessary⎯to utilize a quantitative, machine-based approach to understanding the market and implementing trading strategies. How to evaluate different types of machine-based trading strategies as potential means of implementing the market view.
Module 12 - Choosing an Implementation strategy
How to take the candidate directional, spread, option, and quantitative trading strategies and evaluate the best means of implementing the trader’s market view of the market. Once the trader has decided on their preferred strategy, they will create a trading plan that describes its implementation.
Strongly Recommended for: Junior Traders, Analysts, New Hires, Risk Managers, Non-Trading Finance Firms.
Module 13 - Trading Technique
After arriving at the optimal strategy for the current conditions and drafting a trading plan, the trader must accumulate the desired position. To efficiently operate in the market the trader must develop and maintain solid trading mechanics.
Module 14 - Managing positions
Securing an exposure is not the end. A trader must continue to monitor the market and re-assess the viability of their view on the future of prices in light of a continue stream of new information, standing ready to take action to optimize the profitability of the position or portfolio.
Recommended for: Analysts, Risk Managers, Non-Trading Finance Firms.
Module 15 - Pricing & HEdging Strucutred Transactions
Traders exposed to customer deal flow will frequently have to price and hedge complex structured transactions. The trader’s involvement can range from performing routine price discovery to risk decomposition, extracting value from embedded optionality, and warehousing non-standard products.
Source Material
Instradev, LLC's training modules are based on material from the 2016 finance textbook Trader Construction Kit, published by Joel Rubano. All content from Trader Construction Kit Copyright 2016 Joel Rubano and is used with permission of the author. A sampling of recent Amazon reviews for Trader Construction Kit includes:
“TCK should be required reading for anyone who works on, or wants to work on, a trade floor.”
“It approaches the complicated and highly technical field of markets and trading with the perspective of someone who has lived and breathed the subject for many years, and distills the key points in a very clear and approachable style.”
“TCK is an outstanding text for aspiring traders as well as seasoned practitioners looking for additional training. In particular, I would recommend this text for students or recent graduates who would like to establish themselves on a trading floor. If you want to trade, this is the book you need to read.”
“Great mix of theory, practice, and anecdote. A vital, articulate resource to learn not only how to trade, but what it's like on the front lines.