Trading Basics

About this course: The purpose of this course is to equip you with the knowledge required to comprehend the financial statements of a company and understand the various transactions that take place in the stock market so that you can replicate the strategies discovered by the extant academic literature. The first part of the course provides a brief introduction to financial statements and various common filings of firms. You will learn how to obtain information regarding a company's performance from them and use the information to build trading strategies. Next, you are taught basic asset pricing theories so that you will be able to calculate the expected returns of a stock or a portfolio. Finally, you will be introduced to the actual functioning of asset markets, type of players in the market, different types of orders and the efficient ways and opportune time to execute them, trading costs and ways of minimizing them, the concept of liquidity .etc. This knowledge is required to develop efficient algorithm to execute various trading strategies.

Who is this class for: This course is primarily aimed at individual investors who want to gain the skills required to develop their own trading strategies and trade using them. Although not necessary, completing the course on 'Portfolio Management' by the same professor will be of help.

Created by:  Indian School of Business

• Taught by:  Ramabhadran Thirumalai, Assistant Professor

  Indian School of Business

Basic Info Course 1 of 5 in the Trading Strategies in Emerging Markets Specialization Level Beginner Commitment The estimated workload for this course is 3 to 4 hours per week Language English How To Pass Pass all graded assignments to complete the course. User Ratings 4.2 stars Average User Rating 4.2See what learners said Coursework

Each course is like an interactive textbook, featuring pre-recorded videos, quizzes and projects.

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Indian School of Business The Indian School of Business has successfully put India on the global map of management education by nurturing young leaders with an understanding of developing economies and the society at large. Through innovations in curricula and pedagogy to reflect the shifting business landscape, the ISB is committed to providing the best venue for management education to meet the growing need to develop young leaders who can manage global challenges.

Syllabus


WEEK 1


Basics of Financial Statements



This module provides a brief introduction to financial statements and various common filings. These are the most important sources for obtaining information regarding a company's performance. Most strategies are indeed based on financial statements. After completing this module you will be able to get the important details from the balance sheets.


12 videos, 1 reading expand

1. Video: Introduction
2. Video: 1. Introduction to accounting
3. Video: 2. The balance sheet
4. Video: 3. Assets
5. Video: 4. Liabilities
6. Video: 5. Shareholders’ Equity
7. Video: 6. Income Statement
8. Video: 7. Expenses 1
9. Video: 8. Expenses 2
10. Video: 9. Statement of Cash Flows
11. Video: 10. Cash Flows from Operations
12. Video: 11. Cash Flows from Investments and Financing
13. Reading: 10 Things to Know About Every Cash Flow Statement
14. Discussion Prompt: Manchester United

Graded: Quiz 1

WEEK 2


Financial Statement Analysis
The purpose of this module is to equip you with the skills required to identify accounting information required for building trading strategies. After completing this module you will be able to calculate the key financial ratios.


5 videos, 1 reading expand

1. Video: 1. Financial Statement Analysis
2. Video: 2. Profitability ratios
3. Video: 3. Activity Ratios
4. Video: 4. Solvency and Liquidity Ratios
5. Video: 5. DuPont Identity
6. Reading: What are the limitations of ratio analysis?

Graded: Quiz 2

WEEK 3


Asset pricing theories



Before you start trading, you should first be able to calculate the expected return from a stock. The expected return comes from various asset pricing models such as Capital Asset Pricing Model (CAPM), Arbitrage Pricing Theory (APT) and Fama-French Three Factor Model. The purpose of this module is to equip you with the skills required to calculate the expected returns of a stock (or) a portfolio. After completing this module you will be able to calculate the expected returns of a stock.


9 videos, 1 reading expand

1. Video: 1. Expected returns and risk
2. Video: 2. Diversification
3. Video: 3. CAPM
4. Video: 4. CAPM Beta
5. Video: 5. Multifactor Models
6. Video: 6. APT
7. Video: 7. Arbitrage
8. Video: 8. Arbitrage-Free Price
9. Video: 9. Risk Factors
10. Reading: The 15-Stock Diversification Myth
11. Discussion Prompt: Asset pricing models

Graded: Quiz 3

WEEK 4


Basics of Market Microstructure



This module will provide a detailed introduction to the actual functioning of asset markets. The module will cover essential details such as type of players in the market, different type of orders and the efficient ways and opportune time to execute them, trading costs and ways of minimizing them, the concept of liquidity .etc. This is required to develop efficient algorithm to execute various trading strategies. After completing this module you will have a clear idea of different types of orders and which orders to use when.


11 videos, 1 reading expand

1. Video: 1. Market and Limit Orders
2. Video: 2. Limit Order Book
3. Video: 3. Limit Order Book
4. Video: 4. Limit Price Placement
5. Video: 5. Stop-Loss Orders
6. Video: 6. Short-Selling
7. Video: 7. Other Order Instructions
8. Video: 8. Liquidity
9. Video: 9. Transaction Costs
10. Video: 10. Implicit Transaction Costs
11. Video: 11. Implementation Shortfall
12. Reading: Is the market microstructure of stock markets important?
13. Discussion Prompt: Liquidity

Graded: Quiz 4