O'Reilly logo

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Real-Time Risk

Book Description

Risk management solutions for today's high-speed investing environment

Real-Time Risk is the first book to show regular, institutional, and quantitative investors how to navigate intraday threats and stay on-course. The FinTech revolution has brought massive changes to the way investing is done. Trading happens in microsecond time frames, and while risks are emerging faster and in greater volume than ever before, traditional risk management approaches are too slow to be relevant. This book describes market microstructure and modern risks, and presents a new way of thinking about risk management in today's high-speed world. Accessible, straightforward explanations shed light on little-understood topics, and expert guidance helps investors protect themselves from new threats. The discussion dissects FinTech innovation to highlight the ongoing disruption, and to establish a toolkit of approaches for analyzing flash crashes, aggressive high frequency trading, and other specific aspects of the market.

Today's investors face an environment in which computers and infrastructure merge, regulations allow dozens of exchanges to coexist, and globalized business facilitates round-the-clock deals. This book shows you how to navigate today's investing environment safely and profitably, with the latest in risk-management thinking.

  • Discover risk management that works within micro-second trading
  • Understand the nature and impact of real-time risk, and how to protect yourself
  • Learn why flash crashes happen, and how to mitigate damage in advance
  • Examine the FinTech disruption to established business models and practices

When technology collided with investing, the boom created stratospheric amounts of data that allows us to plumb untapped depths and discover solutions that were unimaginable 20 years ago. Real-Time Risk describes these solutions, and provides practical guidance for today's savvy investor.

Table of Contents

  1. Cover
  2. Title Page
  3. Copyright
  4. Dedication
  5. Acknowledgments
  6. Chapter 1: Silicon Valley Is Coming!
    1. Everyone Is into Fintech
    2. The Millennials Are Coming
    3. Social Media
    4. Mobile
    5. Cheaper and Faster Technology
    6. Cloud Computing
    7. Blockchain
    8. Fast Analytics
    9. In the End, It's All About Real‐Time Data Analytics
    10. End of Chapter Questions
  7. Chapter 2: This Ain't Your Grandma's Data
    1. Data
    2. The Risk of Data
    3. Technology
    4. Blockchain
    5. What Elements Are Common to All Blockchains?
    6. Conclusions
    7. End of Chapter Questions
  8. Chapter 3: Dark Pools, Exchanges, and Market Structure
    1. The New Market Hours
    2. Where Do My Orders Go?
    3. Executing Large Orders
    4. Transaction Costs and Transparency
    5. Conclusions
    6. End of Chapter Questions
  9. Chapter 4: Who Is Front‐Running You?
    1. Spoofing, Flaky Liquidity, and HFT
    2. Order‐Based Negotiations
    3. Conclusions
    4. End of Chapter Questions
  10. Chapter 5: High‐Frequency Trading in Your Backyard
    1. Implications of Aggressive HFT
    2. Aggressive High‐Frequency Trading in Equities
    3. Aggressive HFT in US Treasuries
    4. Aggressive HFT in Commodities
    5. Aggressive HFT in Foreign Exchange
    6. Conclusions
    7. End of Chapter Questions
  11. Chapter 6: Flash Crashes
    1. What Happens During Flash Crashes?
    2. Detecting Flash‐Crash Prone Market Conditions
    3. Are HFTs Responsible for Flash Crashes?
    4. Conclusions
    5. End of Chapter Questions
  12. Chapter 7: The Analysis of News
    1. The Delivery of News
    2. Preannouncement Risk
    3. Data, Methodology, and Hypotheses
    4. Conclusions
    5. End of Chapter Questions
  13. Chapter 8: Social Media and the Internet of Things
    1. Social Media and News
    2. The Internet of Things
    3. Conclusions
    4. End of Chapter Questions
  14. Chapter 9: Market Volatility in the Age of Fintech
    1. Too Much Data, Too Little Time—Welcome, Predictive Analytics
    2. Want to Lessen Volatility of Financial Markets? Express Your Thoughts Online!
    3. Market Microstructure Is the New Factor in Portfolio Optimization
    4. Yes, You Can Predict T + 1 Volatility
    5. Market Microstructure as a Factor? You Bet
    6. Case Study: Improving Execution in Currencies
    7. For Longer‐Term Investors, Incorporate Microstructure into the Rebalancing Decision
    8. Conclusions
    9. End of Chapter Questions
  15. Chapter 10: Why Venture Capitalists Are Betting on Fintech to Manage Risks
    1. Opportunities for Disruption Are Present, and They May Not Be What They Seem
    2. Data and Analytics in Fintech
    3. Fintech as an Asset Class
    4. Where Do You Find Fintech?
    5. Fintech Success Factors
    6. The Investment Case for Fintech
    7. How Do Fintech Firms Make Money?
    8. Fintech and Regulation
    9. Conclusions
    10. End of Chapter Questions
  16. Authors' Biographies
  17. Index
  18. End User License Agreement