Edo the Reliable ("Amin")

Web 2.0 Trading/Investment Community

In $1M ideas on March 4, 2009 at 11:29 pm

Web sites that offer financial/investment info (e.g. Marketwatch, Investopedia etc.) sometimes have competitions. You get a virtual account and execute actions. If your bottom line by the end date of he competition is the highest, you win.

The rules of such games are:

  • You start with a fixed budget
  • You give orders as in real life

Let’s look at what “real life” means. Real life for the individual investor is lousy and limited. Market, Limit, Stop, Stop Limit are the only buy/sell actions allowed.

PC Trading applications are way more sophisticated. They are “real life” for traders, unavailable for the private investor. They do signaling, back testing, real-time trading,  etc. The makers of such programs make them as fast as possible to run on a PC on real-time data — and sell them to (day-)traders at $x,000/license.

In contrast, our application is sophisticated in its algorithmic options rather than in its real time operation — “buy when (a whole universe of  variables here, perhaps optimized daily by back-testing)”. Real time is overrated. V 1.0 works only on yesterday’s (and yesteryear’s) data.

Now, this isn’t a PC application. This is a web application with multiple user accounts.

We create a new competition: Don’t give orders for next hour, day or month; rather, program a virtual machine to give orders in situations.

Now just to get the idea across: The competition that covers the period of year 2007 has started 1/1/2007, and will never need to end. We basically always will welcome new views and more back-testing on 2007. You will always be able to compete for the best algorithmic for 2007, even in 2900 (Ok, so maybe we should create an arbitrary deadline. We deal with kids after all.)

Community is the missing element that has not yet been integrated into investing. Implemented for investing, I still want to see social software that is more than a guy cursing his bad luck in a forum. My vision-of-the-week: put those human neurons to work.

The business model? You end up owning the algorithm.

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