This book suffers from bad writing, tons of typos, and very poor layout. Despite these flaws I still managed to learn some new things about finance.
This book is a MUST READ for anyone looking to intern or start a career in financial markets; it should be in the same category as Liar's Poker, Barbarians at the Gates, and the Fabozzi series.
For the Intern: this book will give you a leg up heading into your summer. With familiarity of each role and some trading floor jargon, things will make sense much quicker and will allow you to take on larger and more complicated projects to impress your managers.
For the Financial Professional: this book will definitely teach you something about a role on the trading floor you did not know much about. The anecdotes are interesting and relatable (giving you a laugh as you connect them with your own experiences).
For those who don't have a clue: this book will open the door into an industry that has received so much press in the past few years it is impossible to ignore. The author's writing is not technical, but rather inviting to an audience that doesn't know anything about financial markets.
I will certainly be recommending this book to many of my peers.
Boy, I could have used this book fifteen years ago when I found myself, quite unexpectedly, sitting in the middle of one as a Research Analyst. This was a somewhat unexpected career development, and it was fun while it lasted. But I have to say that half the time early on I was bluffing when someone would say Yadda yadda yadda blab la bla, and I would just nod knowingly. This book would have changed that. I made it through, and know lots of stuff now that I didn't know then. But Duhon's book would have made the whole process easier and more intelligible. In fact, since I still hang out on a trading floor much of the time, I can bring a bit of swagger to the process now, since I can actually claim to sort of know what's going on now--I read this book.
There have been lots of books on the financial crisis the past several years, and several have been very good indeed--Barry Ritholtz's Bailout Nation, Yves Smith's Econned, Joseph Stiglitz's Freefall, and James Kwaak and Simon Johnson's 13 Bankers come to mind here. But these are all fairly generalist books, although some (Smith in particular) go into a fair amount of granulation. Duhon's book, which is actually a primer of what indeed does go on on the trading floor, and why, fills a long-needed gap. Duhon isn't out to explain the crisis. But what she does explain, and very well indeed, is the mechanics of how banks do what they do in what is now, for many banks, their largest profit center--what is the logic for particular trades? What do they accomplish? Who does them? How does it actually happen? What's the result? It's a multi-faceted dynamic, actually something of a mosaic, and the fact that the parts all tend to interact successfully nearly all the time is something of an institutional marvel.
Duhon lays out all the players--not just traders, but the corollary participants in the whole range of trading and dealing--and discusses their roles. She uses three particular trades throughout the book--a treasury bond trade, a structured transaction, and an equity trade. All have their distinct requirements--different customers, different desks entirely, different implications for the market and for the banks involved--but there are clear similarities as well in how the process gets initiated, reviewed by affected parties, and finally executed. None of this takes place in a vacuum--there is usually a good reason behind a particular trade, whether it's just to make a profit for the trader, or to position the trading desk (and the bank) a certain way.
All of this makes for a satisfactory instruction manual. We see how traders impact other parts of the banks they work for. We also see the importance of what they do--providing liquidity being their major role. And we come to understand why in many markets that was difficult to do in 2008 and 2009. Not that this is Duhon's point. But it's such a refreshingly useful book that we come out of it a lot smarter not only about how traders do what they do, but how what they do impacts everything else. As John Muir said in another context, "When we try to pick out anything by itself, we find it hitched to everything else in the Universe." This is as true of banking as anything else--in fact, as Duhon shows, it's especially true of banking. And the book is chock full of examples and actually useful (for a change) exercises for the reader.
Two very minor quibbles. First, while Duhon does a nice job of discussing the difference between Research Analysts and Desk Analysts, she doesn't spend much time discussing the sorts of problems that can arise when the two disagree. Having been involved in some of these, I have witnessed how intense some of these disagreements can be. As Duhon correctly notes, this is an intense environment, and people are protective of their turf. And this is one area where many banks have not managed the turf battles very effectively.
Second, more a technical quibble--Duhon could have spent a little more time discussing the problems that arise when pricing isn't always clear. In most markets this isn't an issue. But in some markets, the corporate bond and CDS markets in particular, price is often difficult to determine, from a variety of factors--lack of liquidity, small issue size, and limited number of banks actually trading the instrument being the principal reasons. This actually makes the picture a bit more complicated at times than Duhon's examples would suggest.
But these are, as I said, minor, and do not detract from Duhon's achievement here. This book should be read by everyone starting out at an investment bank, no matter where that may be, because what happens on the trading floor really does affect everything else. That didn't used to be the case, certainly, but it is now, and will be unless some sort of Tobin tax gets implemented on a worldwide basis. But I hope it receives a broader audience as well. Having listed to some of the stultifyingly inane questions by British MPs and US Congressmen after the financial crisis (which we're still dealing with, by the way), it's clear that most of these people literally don't have a clue how a modern large bank works. This books gives a pretty good picture of what actually happens, and should be required reading among regulators and politicians as well. If they did, we'd be in considerably better shape for dealing with the next crisis when it comes along, as it undoubtedly will. Highly recommended.
Although I have been working in investment banking for 20+ years, I am always on the look out for good quality overview books. I am frequently asked for recommended readings by potential and new recruits. Before this book was published anyone interested in sales and trading would have to resort to the reams of tedious literature on day trading and technical analysis.
I am delighted to say that Ms Duhon has been able to provide a frank and detailed introduction to the world of investment banking. What I like about the book is that the author defines what is meant by terms such as trading. I suspect many readers may have an intuitive understanding about the different terms but the text actually outlines several examples. For example, much has been written recently in the press about the concept of "proprietary trading". Most definitions suggest that this is "using the banks own money to speculate". Sadly such definitions are meaningless and show a poor understanding of the subject. The author dedicates a chapter that clearly differentiates between market making and prop trading. For me, this was worth the cost of the book alone.
Anyone looking to get a better understanding of what the industry actually does should read this book. I certainly learned a number of things and I found the "war stories" informative and revealing.
The time and money invested in this book will be rewarded many times over.
This is the first financial book I have ever read that really tells it like it is.
For those who want to understand how a trading desk functions, there is no better book out there. Duhon has created a valuable resource for anyone who wants to really understand the intricacies and the unique dynamic of what it's like to work on a trading desk. There are poignant examples of each of the areas on a desk which allows the reader understand the different and dynamic roles of each person on the trading desk. Duhon also makes sense of some real world Wall Street lingo, the stuff I didn't really think I could learn from a book! Thank you! Duhon uses her extensive knowledge and experience on the subject to let readers in on "Street" secrets and life on a trading desk.
The book targets an audience who may have little experience in finance but also caters to those who may have been in the industry but not worked on a trading desk. It is also an invaluable resource for those who may be interested in pursuing a career on Wall Street but are unsure how or where they would fit in. Despite it being a financial book, the author's voice is clear throughout, making it a very enjoyable read.
I have read a lot of financial books. While my objective is to learn, these books are dry and tedious to read. These books make financial products boring. Terri has taken a different twist in How the Trading Floor Really Works by explaining financial products and markets and the role of the trading flooor in easy to understand and intuitive ways at the same time sharing her experience on the trading floor with funny stories. This allows her book to be both highly informative and engaging to read.
As highlighted in the foreward, the trading floor operates "as a community and an ecosytem... their own set of rules, traditions and languages". Terri brings this to life - she defines trading slang such as "in comp", "axe", "drinking the koolaid" to share with readers what happens on a day to day basis. She also describes the real tension that exists in banks around making money and taking risk. This is a rare balanced look into bank trading floors that looks at all the benefits (liquidity to clients and allowing buying and selling of markets) as well as the pitfalls (ripping clients off and excessive risks).
I would recommend this book to anyone who wants to know what really happens on trading floors, how interactions happen between trading and sales, what a quant does, how banks manage risk, and most importantly concepts of market risk, pricing, mark-to-market, and how prices move in markets. The examples are clear and the questions at the end of each chapter are thought provoking. I can attest that Terri has taken her knowledge of the markets and her unique story telling ability and melded it beautifully together to create a great financial handbook. Who doesn't like being entertained while they learn - I do!
Product Details :
Hardcover: 368 pages
Publisher: Bloomberg Press; 1 edition (October 22, 2012)
Language: English
ISBN-10: 1119962951
ISBN-13: 978-1119962953
Product Dimensions: 6.4 x 1 x 9.2 inches
More Details about How the Trading Floor Really Works Bloomberg Financial 1st edition
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