Thursday, June 14, 2007

Summer Camp Automation at Trade-Ideas Will Yield an Even Hotter Winter

Between beach trips, the San Diego Traders Expo (you're coming right?), and cookouts, development on automated algorithmic trading continues. The results (like all our tools) will bring new leveraged abilities to individual traders to level the playing field against anyone in the market.

Early "alpha" testing of automating trades begins with strategy development in Trade-Ideas, then validation and backtesting via The Odds Maker, and finally into our "Event Processing Engine" that relates position management rules into a partner's existing execution platform.

Algorithmic Trading: a la Trade-Ideas
  1. Trade-Ideas PRO: models the strategy from any number of alert and filter combinations
  2. The Odds Maker: judges the strategy's recent outcome in the current market (over the last 3 weeks) according to position management parameters chosen (e.g., holding time, trailing stops, trading hours during market, etc.)
  3. Event Processing Engine: rolls forward in real-time with the Trade-Ideas strategy and The Odds Maker rules to direct a partner's execution platform how to trade and how to stop
The review of The Odds Maker in the upcoming issue of Technical Analysis of Stocks & Commodities (July 2007 issue) quotes us summarizing our view on automated/event-driven trading,

In the future, suggest Mirkin and Aferiat, the battle in the marketplace will be less trader versus trader and more algorithm versus algorithm (or “bot” versus “bot,” as the partners put it). In this, Odds Maker seeks to be a part of that future — both in its present form as an add-on allowing traders better insight into finding and creating profitable, short-trading strategies, as well as in its future form (a form that could develop as early as this summer) as a “totally automated” trading and strategy testing platform.

Mirkin and Aferiat explain that Odds Maker turns events in the market — from the common to the complex — into technical parameters. “We are designing a system that looks at an event,” they point out. “Not a stock-specific backtesting system, but an event-specific system.” TAS&C, July 2007, David Penn

Here's some details regarding our efforts:

Integration of Trade-Ideas, The Odds Maker, and the Event Processing Engine into the Anvil platform with a launch date in late summer.

Integration with the API of a major Mid-West online options broker to produce automated trading. Live trades with the Event Processing Engine have already worked successfully.

We are not the only ones doing something about event processing and automated trading. The Aite Group held a roundtable last month on the topic with some interesting conclusions I'll discuss tomorrow.

3 comments:

Anonymous said...

this is great guys....will this this new automated system available in ScottradeElite platform?

D TradeIdeas said...

Dear Anon,

Thanks for the praise and feedback. Scottrade is still weighing the decision to add The Odds Maker against some important business considerations. Any automation will only come after implementing The Odds Maker into the arsenal of available tools.

Scottrade ELITE customers will ultimately benefit as we "get our feet wet" with our other subscribers and work to continually improve the product.

Anonymous said...

Dear TI,

Thanks for your response. This is indeed unfortunate that products like Odds Makers and your new automation tools are not be avalailable within ScottradeElite
This may have to do with revenues for you and ST, but to ST customers this is not a good deal/news.
Your products rock and I have made lots of money using it.
Hopefully this will be resolved in the near future.