New and old firms alike are creating new investment vehicles and new strategies that are radically changing the nature of the industry. To compete, mutual funds, hedge fund industries, banks and proprietary trading firms are being forced to quicklyy research, test and implement trade selection and execution systems. And, just as in the early stages of factory automation, quality suffers and leads to defects. Many financial firms fall short of quality, lacking processes and methodologies for proper development and evaluation of trading and investment systems.
Authors Kumiega and Van Vliet present a new step-by-step methodology for such development. Their methodology (called K|V) has been presented in numerous journal articles and at academic and industry conferences and is rapidly being accepted as the preferred business process for the institutional trading and hedge fund industries for development, presentation, and evaluation of trading and investment systems. The K|V model for trading system development combines new product development, project management and software development methodologies into one robust system. After four stages, the methodology requires repeating the entire waterfall for continuous improvement.
The discussion quality and its applications to the front office is presented using lessons learned by the authors after using the methodology in the real world. As a result, it is flexible and modifiable to fit various projects in finance in different types of firms. Their methodology works equally well for short-term trading systems, longer-term portfolio management or mutual fund style investment strategies as well as more sophisticated ones employing derivative instruments in hedge funds.
Additionally, readers will be able to quickly modify the standard K|V methodology to meet their unique needs and to quickly build other quantitatively drive applications for finance. At the beginning and the end of the book the authors pose a key question: Are you willing to change and embrace quality for the 21st century or are willing to accept extinction?
The real gem in this book is that the concepts give the reader a road map to avoid extinction.
* Presents a robust process engineering framework for developing and evaluating trading and investment systems
* Best practices along the step-by-step process will mitigate project risk, model risk, and ensure data quality.
* Includes a quality model for backtesting and managing market risk of working systems.
Price: $67.16
User Reviews about Quality Money Management: Process Engineering and Best Practices for Systematic Trading and Investment (Financial Market Technology)
Quality Money Management (QMM) is an excellent book, providing a framework for business systems processes in asset management firms.
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QMM offers method and structure aiming for "best practices" for investment management firms. This is a excellent work for those rolling out a new strategy, fund offering, or business line.
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The focus is on systematic trading, but many of these processes are adaptable for custody chain or decision making for more discretionary investment methods, however the emphasis is on complex market microstructure and the developing, testing and managing portfolios of a new trading system.
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Emphasis is additionally on financial software and human interface with software, so this is an excellent resource for those who support or develop application for traders.
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The cycle of "continuous improvement" is as old as Edward W. Deming's pioneering work in the 1950s, however it is refreshing to see it applied to making systematic trading smooth.
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This is an excellent book for improving a framework in place, or for starting from scratch. -- Excellent framework for systematic trading process.
Quality Money Management is a very timely book meant to bring quality control processes to the trading process. It provides a detailed look at using well-known product development processes in the finance community. Variation is a big weakness of any system that could undercut a great trading strategy. After all, one cannot foresee all possibilities. The use of a systematic approach that addresses development phases requiring management involvement and extensive testing prior to deploying a new trading system is a unique aspect of this book.
As a former six sigma black belt at a Fortune 500 company overseeing product development and quality control who utilized similar processes, it never ceases to amaze me how much money is lost in the transactional processes that govern financial institutions. One would do well to apply these principles in an adapted form at their financial institution for trading systems, risk management systems, and model development...a paradigm shift indeed. I would recommend this book to anyone who wants to improve their margins with a very cost effective solution. -- Concepts Extend Beyond Trading
This book really flows and makes sense. I was afraid the concepts might be too technical but I was pleasantly surprised at how the authors connected the dots. The concepts and methodology detailed in this book are certainly a significant step forward in trading system design. -- Hitting the mark
Quality Money Management is an impressive reference book, very well laid out and pleasing to read. The book presents an innovative methodology that combines quality best practices with Investment Management. The chapter describing the components of the methodology alone is worth having the book on my desk. The book has an innovation technique of using a 'Money Document' deliverable to formalize a business case for presenting to seed capital investors to fund a new investment strategy. The stages and the numerous techniques in the Quality Money Management Methodology provides a clear systematic roadmap for a complex initiative of developing, testing and managing the portfolio of a new trading system. This book is a key tool in my knowledge base that takes my deliverables to a new level of quality and fluidity. -- An Essential Reference Book Blending Quality, Best Practices & Process Engineering
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