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Market_Correlation

Creating Trading App - Need Input from You Guys

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Hi Everyone,

 

I'm working for a startup that is focused on making trading apps, as we beleive there are'nt enough good ones (I've been trading forex for 4 yrs or so).

 

We're making a web and mobile app that will calculate and scan Market Correlations. We're looking for early adopters, anyone we give us feedback will get free access to our web app in 2-3 weeks when we launch.

 

Help us out, we make a better app for traders, you get it free. Everyone wins!

 

Sign up as an early adopter at http://www.marketcorrelation.com

 

Thanks to all our early supporters. Here is a sneak peak:

5aa710ec911f4_ScreenShot2012-04-17at12_44_20AM.png.3eb3e30199f3f096b500f3eb8e5d91ea.png

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Thanks for the input! We are creating more of a stand-alone app for researching the role of correlations across various assets. It will be a neat little tool to see what's most correlated with X, what X&Y's correlation and a few more tools.

 

 

Just looking for some feedback and some early adopters.

 

Cheers

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You need out of the box original thinkers with correlation experience. Without ot your teams combined years trading experience is a leading [offset infinite] negative one correlation to everthing in the array.

 

If you truly get that .. goog should reward you well for your year of hard work.

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Hello,

 

The following is totally my subjective opinion, and might be complete nonsense:

 

Serious traders are not going to mess about with an app on their mobile. Trying to perform any kind of analysis or professional execution from a two inch screen would be unthinkable. Take a look at a photo of any trading floor - each trader will have three, six, maybe more full size monitors running. That's a pretty significant clue, I think.

 

So a successful app would need to appeal to 'amateur' traders. People for whom trading is nothing more than a mildly cerebral form of gambling. Such people aren't really going to be interested in any wealth of technical analysis or measures of intermarket correlation. They want something that is FUN and offers some kind of instant gratification. If you could provide something that achieved this, then I think you would have a massive market at your disposal (far larger than the 'serious trader' market).

 

In the UK we have financial spreadbetting companies. Last year I got reasonably far down the line with one of these companies for an agreement to white label their product and promote it in a fun, pure-gambling format in pubs. So I do believe what I am saying above!

 

I hope that's some help to you, and best of look with your company and product.

 

Bluehorseshoe

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Look inside yourself, if you don't have something unique to what your focus is then reconsider focusing on something else. Trading experience will enable you to write trading apps but it will always be a business you own rather than what you have the potential to create if you can find something that compels you to do it night and day.

 

BTW, this is not intended to be taken as saying your hearts not in what you're doing or that you won't write great apps. My intent is only to help you market your apps successfully and find the startup company that every programmer dreams of creating.

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Thanks for your insights guys.

 

I do agree that we need to make the app fun, we are working on incorporating some social elements. We are also going to offer a web version of the app, so it won't just be on a mobile. I am hoping that investors who use online brokerages would be interested to see how correlated one investment is to another.

 

But do you think that there is a market for "Correlation education"? Basically a site where you can learn about correlations and have a tool that will help you research and understand them?

 

The term "Correlation" is often bandied about, yet few people have the tools they need to measure or understand the significance of this.. We hope to provide these tools/education.

 

On a side note, what do you guys think is a sorely needed "fun" or "serious" app for traders/investors?

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Back in 2006 it was fun to watch the DOW and trade GBPJPY, but those days are long gone.

 

Sure correlations still exist, the correlation coefficient is realtime, frankly I am surprise no one has created a derviative of the coefficient to trade....sure there are some out there that use that stuff...

 

buy eurusd/sell usdchf??? what about eurchf...pretty steady now, if SNB intervenes well there goes that steady coefficient.

 

Correlations are only interesting when they disrupt...market makers use fractional disparity to sweep stops but using the crosses pairs. Bonds and Indices selling off, Japanese Yen depreciates, 2-3 days later Bond and YEn retrace but not Indices? weird..shifting dynamics...money moves in mysterious ways.

 

but sure the Social Appy stary and your gizmo thing is al-a-mode, so make an app, def. Don't blame me if everybody wakes up one day and decides that real sex is better.

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But do you think that there is a market for "Correlation education"? Basically a site where you can learn about correlations and have a tool that will help you research and understand them?

 

The term "Correlation" is often bandied about, yet few people have the tools they need to measure or understand the significance of this.. We hope to provide these tools/education.

 

 

My short answer would be 'yes'. In fact, I know very little about correlation, either as a statistical process or as a trading tool.

 

I am aware that powerful quantitiative strategies can be built around it, but have never stumbled across obvious opportunities to do so. It has been commonly held, for instance, that bonds and indices are either negatively or positively correlated. A glance at an indicator shows that one or the other is typically the case at any given time, but that the correlation constantly switches from positive to negative.

 

The dollar index and most commodities, meanwhile, tend to show a very strong negative correlation (and one for which the fundamental driver makes perfect sense). And yet neither really seems to lead the other - they move almost perfectly in tandem, at the hands of lightspeed arbitrageurs, no doubt.

 

Finally, I don't think that I'm aware of any methods to take advantage of strong intermarket correlations besides spreading.

 

So I for one would be interested in learning about how correlation analysis can be profitably employed.

 

BlueHorseshoe

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frankly I am surprise no one has created a derviative of the coefficient to trade....

 

 

Actually, that's a great idea - I wonder if the exchanges have explored it? I guess coefficiency is a bit less glamourous than volatility, say, but the main participants would be institutions, and they don't chase glamourous markets in the way that retail traders do.

 

I don't think launching a new derivative contract is too difficult, assuming one moves in the right circles. Certainly toward the middle of last century the exchanges were desperately casting around for ideas for new contracts (anyone remember Egg futures?).

 

BlueHorseshoe

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institutions trade correlations all the time.

Their risk models are often based on a lot of the correlations between instruments, and many portfolios are based on these risk models around the indexes (especially when talking about equities.) and various asset allocation models.

 

The easiest and simplest example is pairs trading - buy one instrument/sell another.

 

Problem is most small traders dont care too much about correlations as ....

 

1)....they are not trading a portfolio

2).....their time frames are too small unless they are trying to capture small variations (ie High Frequency trades)

3)....like everything it works until it does not and the leverage required blows you up.

4)....it still requires a fair bit of discretion

5)....simple correlations are easy to spot and track - but hard to trade profitably probably due to all of the above.

 

 

maybe it needs to be something that scans and highlights the breaks in correlations, or those correlations that are trending, and possibly looking to break.

 

I agree with BH - to make it fun is the way to interest the retail crowd, and maybe attaching to more to sports might work.

That way people can bet which football stars are sleeping with which other stars wives from the same team v other teams v cheerleaders v the groupies and if there is any correlation between being a groupie and later becoming a wife who gets cheated on.

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Thanks for your feedback everyone!

 

I often do worry that retail investors may not embrace our app fully. But our theory is that they should have a chance to access some of the tools institutional guys get. I also think (based on my research) that the market is big enough that we can attract enough self-directed investors who actually take investing seriously and would like some more info about correlations. There are also a lot of people who think they are taking it seriously, but let emotions get the best of them from time to time and ruin it all, they could also benefit from a little correlation education...

 

If you think about it, getting all the data you need for making a complex spreadsheet/database that will crunch #s for you can cost 300-1000$ a month for the exchange fees alone. Not to mention coding/excel skills most people don't have. We just want to give an affordible solution to a specific problem and see where it takes us. We do need feedback on interface and product features however.

 

We do plan to incorporate divergence/convergence elements into our site/app in the future, depending on the response we get from our initial product.

 

What elements of convergence/divergence do you guys think would be a good addition?

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anyone remember Egg futures?

 

Gann defined a method based on the square of 4 that exists in the public domain primarly as a jig saw puzzle where he applies it to trading egg futures. Four has known viable binary properties in that four feet is the recognized preferred grid and standard unit of measure in the construction industry. Squaring 4 results in the increasingly larger iterations of horizontal grid easily visible in ganns egg chart.

 

I had heard from different sources that bonds were somehow being traded using the square root of 2. So in my many explorations for repeatable models that don't require descretionary input I extrapolated the square root of 2 into a geometric shape within ganns egg chart. I scaled the first side of my smallest square to the 45 degree diagonal of ganns smallest square. Squaring this diagonally defined square generates diagonal grid which diverges and reconverges with ganns horizontal grid every 4th iteration. If you rotate this chart (not ganns egg chart, but your own work) .. to a 45 degree angle and eyeball down these diagonals you see things that are amusing and helpful to know but not necessarily viable. The darker grid aligns and repeats at places I wasn't expecting it to repeat.

 

Scale your first square to predefined grid on standard (4 is preferrable) grid graph paper and explore the math. It's extremely amusing and indicative of yet another embeded grid. A quick calculation indicates 1.681 instead of 1.618 but that higher level grid is known to require multiple iterations for it to converge. I'm certain I resolved it but debugging something like this requires energy and motivation so anyone who tries to duplicate this must accept you will have to do it entirely on your own. I'm not amused by it any more. I tossed the binders containing this study and many others in the trash along with the puzzle during a time period where I wanted to narrow the focus of my research. If this study interests you and you do it entirely on your own and present something I find outstandingly amusing then I have another study within this category I will share and it's a lot more amusing but not enough that I've ever completed iterating through the process long enough to obtain the results. And another I've almost completely forgotten I won't be able to remember unless you remind me it's toy blocks. So that's 2 other studies in total, not counting the study in this note.

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I for one would be interested in learning about how correlation analysis can be profitably employed.

 

It's not rocket science. First time I found it useful I thought of the Hokey Pokey song. That's good, not bad. Do not take it to mean anything other than it is true and it is good for me to think of it that way. IOW correlation is viable but simple works best.

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Hello,

 

The following is totally my subjective opinion, and might be complete nonsense:

 

Serious traders are not going to mess about with an app on their mobile. Trying to perform any kind of analysis or professional execution from a two inch screen would be unthinkable. Take a look at a photo of any trading floor - each trader will have three, six, maybe more full size monitors running. That's a pretty significant clue, I think.

 

So a successful app would need to appeal to 'amateur' traders. People for whom trading is nothing more than a mildly cerebral form of gambling. Such people aren't really going to be interested in any wealth of technical analysis or measures of intermarket correlation. They want something that is FUN and offers some kind of instant gratification. If you could provide something that achieved this, then I think you would have a massive market at your disposal (far larger than the 'serious trader' market).

 

In the UK we have financial spreadbetting companies. Last year I got reasonably far down the line with one of these companies for an agreement to white label their product and promote it in a fun, pure-gambling format in pubs. So I do believe what I am saying above!

 

I hope that's some help to you, and best of look with your company and product.

 

Bluehorseshoe

 

I don't agree about that, me for one would like to have a good mobile app to being able to monitor my trades and do some trading the times Im away from my computer or on vacations, some of these apps can be really advanced, I seen one with all avalible indicators, you can draw trendlines and even algoarithmic trading, technical analysis no problem, I also think they are good to have as a backup if your normal trading line would be temporary broken, then you can still go in and nurce your trades. but sure, the best thing is ofcourse a desktop platform, but I wouldn't call these mobile apps useless.

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