Davis Edwards on Trading



Introduction to Trading

Financial Markets

Fair Value and Hedging


Financial Risk Management

Model Risk Management




Understanding Trading



Hi, my name is Davis Edwards and this is my personal web page.

I am a professional quant – a combination of mathematician, computer programmer, and financial professional. Sometimes, people in my profession are called “data scientists”. I have written a couple of books on financial markets. I was the head trader on the proprietary trading desk for a major Wall Street firm and a risk-management director for another. Currently, I work at one of the largest consulting firms in the world, Deloitte & Touche. At Deloitte, I spend part of my time helping my clients to value financial investments. This is often referred to as “deal structuring”, “real options modeling” or “derivatives valuation”. I also spend a lot of time helping my clients write and validate financial models and similar analytics.

This web site is intended to be an insider's guide to trading and the financial markets. It starts at the fundamentals and goes further into the gory details than most professionals will dare to tread. It is the type of web page that I wished I had found when I was learning the business. Finance, like many industries, is a business full of details, jargon, and confusing double talk. This site describes how professional traders run their business. It will tell you how to structure a deal, set up a risk management team, and run a disciplined trading organization.

This web page is for educational purposes only – it does not seek to provide any financial advice or sell you any products. If you want to connect with me or if you spot any mistakes in any of these articles, please feel free to connect to me on LinkedIn (https://www.linkedin.com/in/davis-edwards-3ba963a/) or send me an email directly to davis.edwards@understandtrading.com.

New Articles:


Closed Form Option Formulas. I have written Python-based option pricing library. It contains additional documentation around closed form solutions (formulas that can be evaluated in a finite number of steps) for a variety of common financial instruments. This library includes European Options, American Options, European Options, and Spread Options as well as Implied Volatility Calculators.  The code is written as a Jupyter notebook which combines documentation with code. If you have not used Python or Jupyter – these are phenomenal tools for modeling and data science. Learning these tools would be an excellent investment of time for anyone interested in financial modeling.  You can view the library as HTML (Closed Form Option Pricing) or download a Jupyter notebook from my GitHub site (https://github.com/dedwards25/Python_Option_Pricing).

Coming Soon:

·         Model Risk Management - An Art or a Science?

·         Advance Options: Sensitivity Testing the Greeks

·         Advanced Options: Volatility Term Structure

·         Advance Options: Understanding the Volatility Smile.

Frequently Asked Questions:

·         Do you conduct training courses or speak at conferences? For non-profit organizations, like professional organizations or schools, I do not charge speaking fees. If I am nearby and I can work the event into my schedule, I will happily participate. I am currently living in Houston, TX but I often travel to the New York City area on business. If I have to fly into town, I do appreciate any help covering airfare and hotel costs. However, I will still participate whenever possible. For corporate events, there may be a cost since I work at a consulting firm and I work through them. Because Deloitte & Touche is an audit firm, if you have not done work with us previously, we have to go through a “Know Your Client” process when we have first work with a client. This can be a long and involved process.