The objective of our project is to create a homegrown baseline trading infrastructure.
Background
In order to maximize individual and investor profits and use our investments to distribute and re-distribute wealth in a manner we see fit.
Methodology
Developing our own technology and systems in order to have full control and accessibility
Creating our own strategies and deploying as we see fit
Expected Results
Profits
Beating the market
Cost
Fixed Costs are low
Variable costs are range from medium to high
Dependent on technology and AWS usage
Exercise 3: Problem Formulation
What?
What is known?
Hedge funds and Mid market firms are not having as illustrious of profit margins as in the past. This poses a problem with the general strategies and convention that are used are presents an opportunity to evolve.
What is observed?
Proper, consistent profit margins from quantitative and applied math firms that treat trade signals as a mathematical input opposed to conventional trading techniques that are being outperformed.
What are the constraints?
Capital
Technology (Moore's Law, Ahmads Law, Gilders Law)
What is important?
Treating the stock market like any thermodynamic system.
Basing actions on relevant quantitative attributes and well-built strategies.
What are the goals/objectives?
To be correct, consistently
What can be expected?
A well built, effective, system.
When?
Who can provide more information?
News Outlets
Company Filings
Historical Data
Who is the customer?
Investors
Who is affected by the problem?
In the micro-level, the affected are those who entrust their money to suboptimal traders. On a macro-level, the global economy that depends on intelligent play makers.
Where?
Where is the customer located?
Anywhere with a internet connection
Why?
Why is the problem important?
Every problem in this world comes down to who can afford to solve it, mentally and financially. The stock market provides an avenue to achieve a higher financial footing and solve problems along the way.
Problem Statement: The hedge fund industry has declined in the last decade due to the clash between conventional trading techniques and quantitative methods. The later of the two has less human interaction in the sense that computer algorithms govern the majority of trading operations.
Statement Re-Statement: An opportunity exists in the market in which the resources available in terms of data and computing power.
Exercise 4: Solution Development
Steps to Solution:
Operations
Understand best method to store historical data of company data in order to be analyzed in parallel
Stock Price
Quarter Earnings
Market Sentiment
Develop trading strategies that take these as input parameters and compute investment potentials
Interface between algorithm and stock portfolio (BUY/SELL/SHORT/etc)
Investors:
Venture Capital Funding: Rounds A and B
Must prove validity of idea for Round A and proof of progress for Round B