MakerMovers

StockTwits and Trade Ideas do Lunch

Thu, 09 Feb 2012 19:31 GMT

Unstructured data is becoming a moreimportant part of the trade decision process. As the most innovative andpowerful real-time stock scanner and event-driven backtesting tool out there, TradeIdeas is committed to bring our users the newest technology. Our friends atStockTwits are the leaders in bringing real-time, actionable social media datato traders, so it’s only natural for Trade Ideas and StockTwits to worktogether.

We’ve been working closely with StockTwits for several yearsnow to provide a perfect combination of applied quantitative analysis andsocial data. Many of you familiar with Stocktwits know they provide a servicefor traders and investors to share market insight, ideas, charts, and news inreal-time in a format similar to Twitter. And the StockTwits A.I. filters outmuch of the unwanted data from the stream.

Lunch with StockTwits

Last week, we sat down to lunch in Del Mar with members ofthe Stocktwits management and development teams to talk about several of ournew features and future projects. The new social features include the ability to instantly share Trade Ideas strategies and alerts throughsocial networks including StockTwits, Twitter, Facebook, and Linkedin. Thisis now available in the newest release of Trade Ideas Pro (download here).

Looking forward with StockTwits, we discussed interesting waysin which our data mining can be used with Social data from StockTwits. Includedin the discussion were building alerts based on how much a stock is beingmentioned on StockTwits, using ourtechnology to keep a baseline and when unusual amount of mentions occur the usersare notified, and tagging StockTwits posts as buys or sells in the future tocreate a value for every post that can be tracked and counted. This would allow us to give StockTwitsviewers a real tangible feel for buy or sell pressure on any given name.

The bottom line is combining Trade Ideas quantitative datamining and streaming technology with social data from StockTwits is a win-winfor both companies and most importantly the end user.

Here is a stream that takes advantage of this data.

Traders Talkabout Social Media

During a recent round of Focus Group surveys, we learned moreabout how traders are using StockTwits and social media. We interviewed three separategroups of traders during the last week of January and found most of them usesocial media to augment their trading strategies.

Some takeaways from the Focus Groups include traders who use“StockTwits to identify reversal opportunities to support/resistance levels,”and the use of “StockTwits streams as a shortcut [by using] edited, filteredstock ideas from respected traders.” Other traders make a list of stocks theyknow and watch Twitter and StockTwits for unusual activity.

Trade Ideas users can already choose to create a strategythat watches the most talked about stocks this hour on StockTwits or the mosttalked about today on StockTwits.

Social Media Tackles Investor Relations

In addition to traders sharing ideas with other traders, large companies are now issuing their public communicationsdirectly and firstly through social media channels.

An excellent case example of Investor Relations via social networks is DELL’s release of their Q4 2011 financial results (http://irwebreport.com/20110216/dell-inc-breaks-new-ground-for-social-media-in-investor-relations/).DELL’s Investor Relations team broke new ground by reporting their earnings onStockTwits before dissemination anywhere else. This was a game changer inseveral ways because prior to DELL reporting earnings on StockTwits the onlyway to get real-time earnings information was to have access to traditionalchannels like analyst reports and other services which can be very costly.

Implementing social media into our software is just one ofthe many reasons Trade-Ideas a front runner in the trading industry. We arevery fired up about our new endeavors with Stocktwits and we are certain thatthis will only lead to other exciting technological advancements. For moreinformation on Stocktwits, please visit their website. http://stocktwits.com/

If you haven’t already tried Trade Ideas Pro, it’s free todownload and demo. http://www.trade-ideas.com/Application/Help.html

Join Trade-Ideas in Supporting Jeans 4 Justice

Mon, 23 Jan 2012 18:16 GMT

Asmany of you are aware, Trade-Ideas is a longtime supporter of the Jeans 4Justice charity organization. Jeans 4 Justice is a unique non-profitorganization dedicated to ending sexual violence through the use of creativeawareness campaigns and innovative education programs.

Werecently sat down to lunch with the executive director of the organization,Jessica Johnson, and she filled us in on the progress of their most recentinitiative, LEAD IT, which is a part of the J4J Campus program. LEAD IT focuseson working with college communities to engage, educate, and encourage studentsto take charge and stand up against sexual violence.

J4J Campus provides students with workshops that help improve self-awareness,confidence, communication, and how to effectively work with others while alsohelping them to develop a deepened understanding of their own values andbeliefs. These workshops encourage students to expand their knowledge andprovide resources for the prevention of sexual assault. Through workingwith students, Jessica hopes to help cultivate young minds and provide a safehaven for individuals who have personal experiences with sexual abuse.

Jeans4Justice.org

Much like Trade-Ideas, Jeans for Justice relies heavily on word of mouth to spreadtheir message. We’re big fans of the Jeans 4 Justice organization, theiraccomplishments, and their message.

Signup for their mailing list and let them know if you are available to volunteer,donate, attend an event, or share your story. For more information on the Jeans4 Justice organization, upcoming J4J events, and their new J4J Campus programplease visit the website: http://jeans4justice.org/

The Moneyball of Trading is Here

Wed, 11 Jan 2012 17:58 GMT

Use number crunching to put the "Win" in Swing Trading.

The market moves faster than and beyond your eyes. Patterns that appeal to you on a chart visually are more often than not misleading.

Set-ups seen at trade shows or on websites are sales tricks. There is no simple and easy.

Most traders have neither the tools or the time to take an identified pattern, test it against the market multiple times, and determine any sort of consistent record of performance when the aforementioned scenario takes place.

If traders could do so, they would see most patterns and the way to trade them perform like a coin flip. Sometimes it works and sometimes it does not.

Obviously a coin flip is not a good trading strategy.

I argue that a successful trader from now on must clean house and throw out tools and approaches that offer only diminishing returns:

Visual, from-the-gut trading of 1 stock's chart pattern
The race for lowest latency and scalping for profits
Client based technology and limited database capacity

Trading demands better number crunching against the avalanche of data generated by the markets.

Call it the Moneyball of Trading. And enter The OddsMaker.

The OddsMaker by Trade Ideas slices through the enormous data generated by the market every day. After more than 4 years of analysis and continual improvement, here's one fact results prove over and over: market windows of opportunity open and close. If someone is telling you they have a system that has been working for 10 years . . . run.

A trader who lets go of the '1 Holy Grail' approach to unlocking the markets' "secrets" comes better prepared to hunt for opportunities.

Below is a system we designed performing well over the last 30 days. Imagine crunching the market data for every stock generated over this period. From that pile we identify a pattern and a set of trading rules that performed with a high success rate. Call it the “strategy of the week.” It looks for stocks oversold: making a 30 day low, are down 4 days in a row, and are trading on unusually high volume today.

Oversold 30 Day Low, Down 4 Days

The trading instructions are set to go long when the alert takes place and to hold the trade for 5 days exiting at the open on the 5th day.

Fig. 1: OddsMaker settings

The results:

Fig. 2: OddsMaker results

What do these results tell us?

What looks like a break in support is actually a buying opportunity.

The trading rules above stipulated that the minimum dollar amount to be defined as a winning trade was 20 cents. This requirement and the underlying strategy generated a 60% success rate, a 2 to 1 ratio of winner size to loser size, and over 90 points extracted out of the market in the last 30 days - a good starting point.

These are tools and approaches that stand a chance against the kind of market many trading veterans describe as the most frustrating ever. Time to put on the field technology that can crunch Big Data and time the market's windows of opportunity.

If you have any questions about the strategy, please email us or post a comment. If you're not yet a subscriber and would like to try out a demo of Trade-Ideas Pro, please sign up for a free trial.

Trade-Ideas Fundamentals

Tue, 03 Jan 2012 19:39 GMT

We know trading ishard. By choosing Trade-Ideas, you have picked a powerful tool to helpyou find opportunities in the market. We want to make sure you are getting themost out of our technology. Many of our customers are so enthusiasticthey want to get started right away, without reading the help materials orasking questions. It's okay if you don't want to read everything, buthere are some fundamentals you don't want to miss.

Volatility

Most of our tradersknow volatility is important. But do you know how to use it to your advantage? If you like looking at charts, you are picking up on volatility whetheryou know it or not. A typical market view window will hide the volatilityfrom you. Several of our filters are available with or withoutvolatility. Look for the filter icons that look like stock charts. The filters based on stock chart patterns take volatility into account.

Negative numbers

We have a lot ofvideos and articles on this subject. People still ask us, "I onlysee 'Gap up.' How do I find a stock which is gapping down?" Thesimplest answer is to start with the positive case of the filter, and then usethe flip button to get the reverse. If you're still confused by our useof negative numbers, use this page to verify that you are setting up the filtercorrectly.

Baselines

Our focus is never onindividual numbers, like the today’s volume or today's opening price. Takenout of context, these mean nothing. We like to talk about a stock’s normalbehavior, and find it doing something interesting right now that is differentfrom its normal behavior.

For example, a lot ofusers will say, "I only want to see stocks that have traded at least1,000,000 shares today." What does that mean? You won't tradeTNA until 15 minutes after the market opens, but you'll start trading BAC onlya minute or two after the market opens? You don't start trading GOLDuntil lunch time? That's probably not what you meant, but it’s a commonmistake. We'll let you do that if you really want, but please consideraverage daily volume or current volume instead. Here is a link to a helpful video about volume.

Alerts vs. Filters/ Top List vs. Alert Window

An alert is an event. You are notified when the event described for the strategy occurs. It is like telling the software, “When XYZ happens,tell me.” You will see fewer alerts when nothing is going on in themarket. Compared to alerts, filters last for some period of time. These are useful when you want to periodically check on stocks that youlike.

A top list window islike the evening news; the news lasts for the same amount of time every dayregardless of what happened today. The alert window is like a hurricane warning;the TV starts beeping at you and displaying time-critical information. Click to view a helpful video about alerts.

You don't have to use everything

Think of our softwarelike Baskin Robbins. Don't be offended or confused when you see diet ice-creamor some strange thing from Italy. Tell the clerk that you want strawberrywith chocolate sprinkles on top. A lot of our most successful tradersonly use 2 or 3 of our alerts and fewer than 10 filters. We offer so manychoices because different traders like different things.

When you start your complementary one-on-one training, tell the trainer the sorts of things youlike to see. He will point you to a good starting place and help you toconfigure a relevant strategy. You can explore more at your own pace. Go here to schedule a one-on-one training session.

These are some of themost important and the most underused tools that we offer. If you onlyhave a little time for education, start here.

Introducing Trade-Ideas Pro 3.1

Fri, 16 Dec 2011 18:42 GMT

Trade-Ideas is on the leading edge of stock scanning and eventbacktesting technology. Maintaining the roleof market leader requires a mantra of “constant and never-ending improvement” regardingour technology, partnerships, and personnel. I’m happy announce that I’vejoined the Trade-Ideas team during an exciting growth period for the company.

Allow me to briefly introduce myself before introducing thenewest version of the Trade-Ideas Pro stock scanning and backtesting software. Myname is Scott Olson and I’m honored to join Dan, Phil, Brad, David, Jamie, andthe rest of the TI team as their new Director of Marketing. I had the privilegeof working with some of the crew back in the early 2000s in a software startup.So, I’m excited to come onboard to work on marketing strategies for Trade-Ideas.2012 is going to be an exciting year for our company and our customers.

The Trade-Ideas Pro 3.1 rollout

I happened to join the TI team during the beta testing ofthe replacement for Trade-Ideas 2.3. A newbie couldn’t pick a better time tolearn about the software and the improvements that Trade-Ideas Pro 3.1 bringsto the table.

Trade-Ideas Pro 3.1 is available for download here.

There are a lot of exciting new features. So, what’s new?

The TI Pro 3.1 Options menu has additional connectivityoptions and we are now translated into Dutch, French, Portuguese, Chinese, andRussian.

New ways to view the market depths

TI Pro 3.1 adds two new types of windows to compliment theAlert window. We now offer Top List and Multi-Strategy windows. Use the TopList windows to view the biggest gainers, losers, volume movers, gapers, andmore. The lists are filterable, sortable, and configurable, helping you spotinteresting stocks.

Top List Windows

The Multi-Strategy window is a powerful tool to findinteresting events happening now. You can configure as many strategies as youwant in a Multi-Strategy window and easily toggle the strategies on andoff. This video highlights the newfeatures in the Multi-Strategy window.

Odds even more in your favor

Our Oddsmaker backtesting module is the only event based stockbacktesting tool on the market. It’s one of our most popular and praisedfeatures. We’ve made improvements to the Oddsmaker that will provide you withmore ammo for the hunt.

When you select to use Oddsmaker from an alert window, theOddsmaker window for that alert is opened.

Oddsmaker Window

The Oddsmaker results are now displayed more clearly and youhave several options to export the results. If you select “Copy Data toClipboard”, you can easily paste the results as you see them into another programlike Email, Notepad, or Word.

Oddsmaker Results

Selecting “Save Detailed Results” allows you to save thedetailed data for each and every trade as a CSV or Excel file. Traderswho want to drill-down into the details of how their setups preform canleverage this information to finely tune successful strategies.

Oddmaker Detail Export

Take your scans on the road – QR codes

Another area Trade-Ideas continues to innovate is making itquick and easy for traders to share their strategies across email, instantmessage, and social networking apps like Twitter and Facebook. Our Collaboratefeature is built into all our windows (Alert, top List, Multi-Strategy). And we’vemade it even easier to get the collaboration links in and out of the window.

Now there are buttons to help you copy/paste the Collaboratelink for sharing. However, the biggest change is the addition of a QR code tothe window.

Collaborate QR Code

Use the Collaborate QR code to get your alerts and listsonto your mobile devices like smartphones and tablets! You can even share thelink from your phone by simply texting or emailing that link to a friend or colleague. This video demonstrates how easy it is to get your lists and alerts to your phone!

TI Pro 3.1 is easier to configure

The new Configuration window streamlines selecting the rightalerts and filters to get your strategies and lists just right to find the bestopportunities. Selecting and searching for alerts and filters is now mucheasier. This video demonstrates how these changes benefit the user.

Configuration Window

Get Trade-Ideas Pro 3.1

The newest version of the best stock screening andbacktesting software is available for download here. If you aren’t yet aTrade-Ideas subscriber, you can try TI Pro3.1 for free (download and login as “DEMO”).

To sign up for a Trade-Ideas account or to receive updates,sign up here.

I’m looking forward to big things in 2012. Follow me onTwitter for updates (@TradeIdeas_Scot) so you don’t miss any news or updates.

Cheers!

Holiday Reflection

Sun, 27 Nov 2011 09:56 GMT

As we celebrate Thanksgiving the team at Trade Ideas is reflecting on the many thing for which we are thankful.The first group that we have to thank is of course our loyal customer base. Over 50K in over 75 countries around the world. Wow.You have been with us since 2002. In what seems like a blink of an eye nine years has come and gone. I recall our first Trader's Expo in Las Vegas wherewe stayed at the Hotel Boardwalk and Casino for $45.00 dollars a night! That year Vegas was freezing in November. As we walked around the convention hall, my team and I hoped that innovation that was forged out of 10 years of bloody noses in the bowls of the SOES, SNET, and SuperDot direct access market and a 50 million dollar education courtesy of Menlo Ventures and the dot.com bubble would give us the kind of product that could change how people sought to capture alpha. We knew what was needed. Could we bring it to market? We knew what traders and investors needed to see because we ourselves were also our intended audience. When we designed and built our first version of the software we were always building a product that we ourselves would use as customers. This philosophy holds true to this day. Once we were out in the market our customers gave us valuable feedback that we incorporated to improve the Trade Ideas product. Our customers are our lifeblood and we thank you for all of your support!The world is littered with good ideas but many of them never see the light of day. In order to bring a good idea to market you have to have a greatcombination of different talents. In our case you have to have nothing short of incredible software development. Initially there was just one. The man himself,Philip Smolen. We don't joke around when we say we have the "Good Will Hunting" of code writing. Simply put this man is a Juggernaut. In the aftermath of the dot.com bubble days much like today people still think that the best software developers live in India, Russia, China, or somewhere other than the US.The ability to write the kind of code that scales to enterprise on a budget of zero is a gift much like the way Tiger Woods swings his clubs. You can't juststudy this in college you have to feel the zeros and ones. Think Neo ;-). Philip not only built the foundation of the software but built a team around him that allows us to beat any and all competitors that pop up in our space. So many props go out to our code writers who make the magic happen.Everyone who actually has done a business deal can tell you that the art of the deal is an art. To an extent you have to be born with it. Enter my good friend David Aferiat. Here is a man who took a leap of faith at the perfect time. Learned all there was to know about the trading business and put his talent of relationship building and deal closing to work! David's ability to communicate the value proposition of our technology at both the executive and management level of business was instrumental in us forging long lasting mutually beneficial enterprise licenses. Cheers!The next bit of thanks goes to our COO Mr. Brad Williams. It takes a very unique individual with the skill set that allows him to speak business development, sales, and be able to distill requirements into a language that software development can take and make into a product. There is a notion that the the customer is always right, but as we all know too well from business, that you can't take anything literally. There is an art to speaking to the customer and understanding what is the need. Through Brad's ability to be the MC of all of that we continue to forge ahead in the right direction.Every customer that needs support comes in contact with different members of the team. Marissa Hill is our point for internal and external communication. Relaying all the appropriate information to the appropriate team members. For your educational needs Jamie Hodge is our resident expert on getting started with the software and building your alpha hunting strategy. You can have the most amazing software but unless there is support to help you get started it can be like that piece of gym equipment that serves as a coat rack in your garage :-)Thanks to our amazing support team that helps customers get the kind of user experience that makes them see why Trade Ideas is the leader in the field.So there you have it. Thanks to all of you, customers, team members new and old.

On the Verge... Introducing Barreleye

Sun, 16 Oct 2011 10:23 GMT

Often times people write Blog Articles just because it is prudent to communicate with your target audience. So this is one of those Blog articles. However there is something important that we want to convey and it is in the title of this post. We are calling it out. We are on the verge of the next "BIG" motha....effen ..... breakthrough in financial market participation. Let me put it into historical context.A tale of two markets. When I was first starting my careen in trading it was 1994 and had just finished University of Texas in Austin, Etrade had not gone public yet. However at that time a small group of savvy retail investors were already taking advantage of technology in the market in a way that would make most traders today very jealous. It was the time of the SOES Bandits. Mind you they were called SOES Bandits by the market makers who did not like other people taking their easy money. SOES Bandits were the pioneers of the day trading. These small offices were set up because at that time it was the only place you could have fast internet T3 Internet and direct connections to the NASDAQ Work Stations. This set up gave SOES Bandits instant access to market liquidity and the ability to beat Market Makers at their own game. You pressed a button and instantly you had stock, it was amazing. However while this tiny sliver of traders gained access like never before the vast majority of investors still used phones. That access to information played in the favor of the few who had access. The days of the SOES Bandits are long gone. Today we find a market with virtually zero technical advantages for the individual investor. That is until now............

In the time of SOES Bandits Level 2 data gave traders the ability to see who out of the big firms was positioning themselves to buy or sell...or at least pretend. Now Trade Ideas is working to create a completely new way for individual and professional investors to see the market right before they make a trade. The window is code named "Barreleye" and if you want to understand why just google the term :) Order entry will completely be transformed!

Nasdaq Velocity and Forces is the New Level II

Sun, 18 Sep 2011 11:13 GMT

Maybe I've been in this business too long. There was a time when level II was revolutionary. Even in the early 90's only a few people had it, and they had a huge advantage over people who didn't. When I was learning to trade in 1994 we would watch level II data and try to follow GSCO and MSCO and MLCO and HRZG and JEFF. In those days Market Makers had to be good for 1000 shares on the best bid and best offer. You could see bidders coming in and offers stacking up and take advantage. In 1997 ECN's like ISLD and INET got in the game and the advantages started to fade.

Before Trade Ideas, in what we now call the $50 Million Dollar Education (Thanks Menlo Ventures) we were building a trading platform to compete with REDI Plus. I visited a lot of potential customers. By this time everyone knew what level II looked like. Two of the most popular customer questions were

1) How can I see it?
2) How can I hide my orders so they don't show up?

Please take a second to think about those two questions together. Everyone thought they were the first to use this tool, when the tool was in fact already well established. If you're new to it, and you can figure out how to fake it, then what makes you think any of it is real? Below is an from one of our market data feeds. http://www.nanex.net/aqck/1521.HTML

The chart below shows how many quotes it takes to get $10,000 worth of stock traded in the U.S. for any point in time during the trading day over the last 4 years. Higher numbers indicate a less efficient market: it takes more information to transact the same dollar volume of trading. Quote traffic, like spam, is virtually free for the sender, but not free to the recipient. The cost of storing, transmitting and analyzing data increases at a higher rate than its rate of growth: that is, a doubling of data will cost significantly more than twice as much.

This explosion of quote traffic relative to its economic value is accelerating. Data for September 13, 2011 is the thicker red line that snakes near the high. There is simply no justification for the quote traffic that underlies this growth. Only the computers generating this traffic benefit when they successfully trick other computers or humans into revealing information, or executing trades. This is not progress. Progress is almost always accompanied by an acceleration in efficiencies. This is completely backwards.

And to anyone who might say: "To my knowledge there's been no proof shown that high-frequency trading has been detrimental.", we'd like to submit this as exhibit A. We think that a 10-fold increase in cost would be considered "detrimental" by most business people.

And that's just what's on the surface. I've read multiple articles like this. There's just a tremendous amount of traffic out there with no obvious value. The number of quotes keep increasing as the value decreases.

The article suggests malice and fraud are behind the explosion in bandwidth. My experience in technology suggest something far more banal. There is a saying a fool with good intentions is more dangerous than an enemy. How many people wanted a piece of high frequency trading but didn't really know how to get there? They hire a cheap, inexperienced programmer, and they produce a lot of activity. But they aren't really doing a good job. How else do you explain all of those quotes that are pegged to exactly 50¢ from the best bid or offer? What good could really come from constantly updating those?

That's why we're investing in something new. We've always liked the last and the NBBO because they are fast and they are real. Now we also offer NASDAQ Velocity and Forces data. Like level II used to be, this is the way to see the orders before they happen. Unlike level II data these orders are real. While there is no such thing as the Holy Grail in terms of predictive value this is the best way to gauge the real market sentiment, as quickly and accurately as possible.

Please check out our new alerts and filters.