- [Instructor] In the US financial markets,…stocks are traded through three primary exchanges:…the NYSE, or New York Stock Exchange,…the NASDAQ, and the AMEX.…There are other stock exchanges, like the BATS,…out there, but they're primarily behind the scenes,…and they mostly help with market infrastructure needs.…Bonds are also traded in the US,…but they're generally traded over the counter…rather than through the exchanges, at least at this point.…We can track their price history…through things like TRACE and MSRB,…which are databases that keep track of trades over time,…but that's really outside the scope of this course.…
For our purposes then,…we are interested in the stocks that trade…through the NYSE, the NASDAQ, and the AMEX.…In addition, though, we're also going to be interested…in derivatives.…In particular, one set of derivatives…that we're interested in are called ETFs,…or exchange-traded funds.…ETFs are a new financial innovation.…They started in the 1990s,…but they've been growing very, very rapidly ever since.…
Professor Michael McDonald provides a brief primer on securities markets. He explains how data helps investors forecast performance and automate trading. Then he moves into the practical steps: coming up with algorithmic trading rules and developing and testing an algorithm. Finally, he shows how the algorithm can be applied and eventually expanded to other securities. Anyone working in financial services, or interested in investing in the stock market, will be able to use these tutorials to understand and develop simple trading algorithms of their own.
- Define what a share of stock is.
- Classify the type of trading that attempts to capitalize on the bid-ask spread.
- Name the rule that can be used as a metric for Fed interference in the market.
- State the first step in a data analysis project.
- Identify the type of characteristic algorithmic trading relies on.
- Break down how VAR is used to manage risk.