Trading Books Trading books are essentially the portfolios of large financial institutions. They contain information about all the securities currently held by the institution, as well as the history of any and all accounting transactions involved in the buying and selling of the securities recorded in the book. This makes them a relatively simple resource that can be used to quickly track any of the investment activity made by the institution. The trading books for large financial institutions can be worth billions of dollars.
Trading books are low cost (compared to other instruction methods), and a trader could easily buy a dozen trading books for the cost of a seminar. Trading books are also somewhat flexible, in that the student can choose the books that they want to read. They are a form of individual instruction (as opposed to a large seminar), because they allow the student to learn at their own pace, and focus on the information that they believe is necessary. So far it appears as though trading books are a very efficient way of learning trading. The book drives home that fact that there are as many if not more ways to make money from trading as there are markets to trade in, and that the true secret to trading books success lies within the individual. Markets are a collection of individual action, thus, they are a representation of human psychology.
Trading books definitely have a role to play in trading instruction, but that role is as a supplementary source of information, rather than the primary source of instruction.
Trading books are essentially the portfolios of large financial institutions. They contain information about all the securities currently held by the institution, as well as the history of any and all accounting transactions involved in the buying and selling of the securities recorded in the book. This makes them a relatively simple resource that can be used to quickly track any of the investment activity made by the institution. All types of investment activity are included in the trading book. This level of detail is very helpful when considering some type of new transaction that will impact the assets of the bank or financial institution. Should the bank wish to consider establishing a bid/ask spread in conjunction with a possible purchase or sale, reviewing the transaction details recorded in the trading book may prove helpful as part of the process of evaluating the proposed action. In like manner, the information contained in the book may shed some light on the potential risk associated with a given investment scheme. One of the major functions of any bank or financial institution is to make wise investments that stand a good chance of making a return for their customers. Properly maintained and regularly consulted trading books support this function by providing concise details of past transactions. The detail in the trading book also includes up to the minute information about the assets currently held by the bank and thus helps to establish the foundation for future trading activity. It is important to note that only assets that are authorized for use in active trading and investment strategies are included in the trading book. Other assets that are not considered authorized for investment activities are accounted for in another portfolio known as a banking book. This means any securities that the bank intends to hold on to until they reach a point of maturity are not accounted for in the trading book. The progress of these long-term investments is recorded in the banking book instead. It is important to note that only assets that are authorized for use in active trading and investment strategies are included in the trading book. Other assets that are not considered authorized for investment activities are accounted for in another portfolio known as a banking book. Trading books are very good at making select statements, and substaniating those statements with specifically selected charts or statistics. Trading books are a very efficient way of learning trading. Trading books can also be used by experienced traders who want to learn about additional aspects of trading (e.g. currency traders learning about stock options), because these traders should already have enough knowledge and experience to decide whether the information they read is correct or not, and be able to fill in any missing information with their own knowledge.
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