Foundations

Markets, trading floors, time value, macro, central banks and regulation.

1. F1The map of marketsSay what kind of risk a trade carries, who is on each side, where it trades, and how borrowed money magnifies losses.7 min
2. F2Inside a trading floorKnow who does what on a trading floor and work out what a dealer earns from the gap between its buying and selling prices.7 min
3. F3Market making, inventory and the balance sheetAdjust a price to sell off unwanted stock, split a dealer’s profit into its two parts, and work out the capital a position uses.8 min
4. F4Time value of money and day countsWork out what future money is worth today, judge an investment by its NPV and IRR, and count interest days correctly.9 min
5. F5Returns, risk and portfoliosTurn daily swings into yearly risk, estimate a bad day’s loss, and compare funds by their return for each unit of risk.9 min
6. F6Growth and the business cycleRead GDP and business surveys, convert between US and UK growth figures, and measure how surprising a release was.8 min
7. F7Inflation and real ratesWork out inflation from a price index, spot a base effect coming, and read the inflation rate priced into bonds.9 min
8. F8Central banks and the policy rateExplain how a central bank sets interest rates, read the market’s odds of a move, and match each of its tools to a problem.10 min
9. F9Fiscal policy, debt and bond supplyExplain deficits and debt, project debt against GDP, and say why heavy government borrowing pushes up long-term interest rates.9 min
10. F10How data moves marketsMeasure a data surprise, size the market move it should cause, and say which way interest rates, currencies and shares go.8 min
11. F11Corporate finance for tradersWork out a company’s enterprise value, free cash flow and cost of capital, and say what a debt-funded buyback does to its bonds.9 min
12. F12Regulation and market plumbingWork out a toy bank’s capital and liquidity ratios, and know the benchmark and settlement changes that shape trading.10 min