Financial Stability Ch 23: The Water Balloon Theory of Global Finance
Book: Financial Stability: Fraud, Confidence and the Wealth of Nations
Authors: Frederick L. Feldkamp and R. Christopher Whalen
ISBN: 978-1-118-93579-8
Liquidity
Working Capital Management: Liquidity, Cash Cycles, and Short-Term Investing
Book: Corporate Finance: A Practical Approach (2nd ed.)
Authors: Michelle R. Clayman, Martin S. Fridson, George H. Troughton
ISBN: 978-1-118-10537-5
Asset Markets and Liquidity: Premiums, Measurement, and Market Structure
Book: Fixed Income Trading and Risk Management by Alexander Düring (ISBN 9781119756354)
Chapter 18 asks a simple question with a messy answer: how easy is it to turn this bond into cash without moving the price? Liquidity is not a constant property of an asset. It depends on the venue, the investor, the time of day, and whether someone just dropped CPI.
Trading and Exchanges Chapter 19: What Liquidity Really Means and Why It Matters
Everyone in finance talks about liquidity. Traders want it, exchanges advertise it, regulators worry when it disappears. Yet if you ask five people what liquidity actually means, you will get five different answers. Chapter 19 is where Harris finally pins it down. His definition is simple: liquidity is the ability to trade large size quickly, at low cost, when you want to trade. That is it. But the simplicity hides a lot of complexity.
Trading and Exchanges Chapter 9: What Makes a Market Actually Good
Chapter 9 is one of those chapters you might be tempted to skip because it sounds theoretical. “Good Markets.” Sounds like an econ textbook subtitle. But Harris actually makes a case here that affects literally everyone, not just traders.
Liquidity: What It Is and Why Every Trader Should Care (Chapter 19)
Everyone talks about liquidity. Traders talk about it. Regulators talk about it. Financial journalists definitely talk about it. But Harris makes a sharp observation right at the start of Chapter 19: rarely does anyone define what they actually mean. People use the same word to describe different things, and then they wonder why they cannot agree on anything.
Value Traders: Fundamental Analysis and Finding Mispriced Securities (Chapter 16)
Book: Trading and Exchanges: Market Microstructure for Practitioners Author: Larry Harris Publisher: Oxford University Press, 2003 ISBN: 0-19-514470-8
What Makes a Good Market? Liquidity, Transparency, and Fairness (Chapter 9)
What does “good” even mean when we talk about a market? This is not a philosophical question. It is a practical one that affects every regulation, every rule change, and every debate about how trading should work. Chapter 9 is Harris building a framework for answering this question, and it turns out to be one of the most important chapters in the book.
Value, Momentum, Carry, and Defensive Signals for Corporate Bonds
Book: Systematic Fixed Income: An Investor’s Guide Author: Scott A. Richardson, Ph.D. ISBN: 9781119900139 Publisher: John Wiley & Sons, 2022
Orders and Order Properties: The Building Blocks of Trading (Chapter 4)
Every trade starts with an order. And if you don’t understand orders, you’re basically showing up to a poker game without knowing the rules. Chapter 4 of Larry Harris’s “Trading and Exchanges” is all about orders, what they are, and the properties that make each type useful (or dangerous) in different situations.
What Is Market Microstructure? Chapter 1 of Trading and Exchanges
Larry Harris opens Trading and Exchanges with a simple observation: markets are fascinating. They change constantly as prices adjust to new information, as winning traders replace losing traders, and as new technologies evolve. That is a pretty understated way to describe the most complex competitive arena in the world.