Trade Ideas: Driving Innovation For Market Trading Decisions

Trade Ideas

Dave Mabe, CIO, Trade Ideas Dave Mabe, CIO
With the deluge of information available today, it is easy to get trapped inside the “search for the best data mania,” cycle. It is a pattern all too familiar with traders and stock enthusiasts, scouring the internet and its corners for elusive bits of insight or boutique data set that will help with their trading decisions. The phenomenon has been well documented by Susan Weinschenk, Ph.D., in her article titled ‘Dopamine Makes You Addicted to Seeking Information.’ Understandably, every person’s trading strategy leaves much to be desired if it is not calibrated constantly. The pitfalls of the last trade make way for headier research round after round until eventually; the occurrence of more losses finally restarts the process.

Rerouting around this isn’t just about garnering more ideas, but rather, fewer smart ideas that resonate with quality, which in this case is a risk-defined trading opportunity with a statistically high probability of capturing alpha. To this end, Idea Generation Technology (IGT) specialist Trade Ideas has created a cloud-based Machine Learning Artificial Intelligence market analysis platform for U.S. and Canadian equities, indices, and ETFs that delivers opportunities to capture alpha before others see them and in places fewer are even looking, all in real-time. The platform’s machine learning architecture learns over time and is easily extendable as new data sources become available. Over time, trading edges that start out razor-sharp tend to blunt and decay in terms of return. Trade Ideas’ machine learning system automatically responds to this deterioration and learns from it. This allows the trader to rely on this upward sloping baseline and focus on higher level, data-driven adjustments over time: such as exploring new data sets, incorporating market microstructures, understanding sector rotations, and applying different timeframes to continually sharpen the trading edge and widen the edge horizon.

Founded in 2003 by a team of financial technology entrepreneurs, the people behind Trade Ideas were already leaders in the Self Directed Investment movement where Investors manage more of their own money instead of fee-driven managers do it for them. Today investors face daunting obstacles to consistent success in the U.S. capital markets: dark pools of liquidity, increased volatility, and the disturbing manipulation of the meme-based stocks that exposed institutions of their wildly exaggerated short trading of stocks like GameStop and AMC Theaters. The need to level the playing field and even provide an advantage to individuals is enormous.

Built on the singular idea, of providing information to make better trading decisons, the founders of Trade Ideas named their company to reflect that initiative of helping clients find positive returns and outcomes. Every investment first starts as an idea, and a risk-defined plan that, when placed, becomes a trade. Hence, the name Trade Ideas.

A Technology Nirvana for Traders

Today, the stock market is constantly evolving as each market participant learns more and more about their particular trading edge over time. This creates an environment where the dynamics are constantly changing. This, in turn, puts a lot of pressure on the trader, who is dealing with trading edges that erode.

Users can rank market data other than chronologically with windows that utilize the company’s Patent Pending Multi-Variant, Color-Assisted Sorting. Top List windows update every 30 seconds.

The AI that Trade Ideas’ platform houses are built from the ground up to evolve with trading dynamics. Our solution invents and optimizes existing strategies on a daily basis to give traders a statistical advantage in that particular day’s type of market

Traders can also choose from a selection of preconfigured layouts organized by channel themes—including Premarket, After Hours, Social, Crypto, Volume, and more. Users can even save their own custom layouts as personal channels. Stock relevant may also be availed to view news just a click away in the Single Stock Window tab.

As Dan Mirkin, CEO and co-founder of Trade Ideas states, “The AI that Trade Ideas’ platform houses is built from the ground up to evolve with trading dynamics. Our solution invents and optimizes existing strategies daily to give traders a statistical advantage in that particular day’s type of market.” Each night Trade Ideas’ AI incorporates every market tick from the preceding day and selects from an inventory of tested, optimized algorithms that work best in the current market dynamic—whatever type of market that might be.

The AI powered robo-advisement function within Trade Ideas consists of several dozen different investment algorithms subjected to over a million trading scenarios overnight to arrive at a subset with the highest probability for alpha in the next market session.

As Dave Mabe, CIO of Trade Ideas explains, “We have a process in place to improve our models’ predictions over time. We’re always looking to make that feedback loop better and faster, so that improvement is constant. As CPU cycles continue to become cheaper we’re close to the point where broader frontiers of trading strategies can be incorporated into our machine learning system. This will allow entirely new timeframes and strategies to be included which will make our product appealing to even longer term investors.”

Furthermore, the platform can create scans, identify trading opportunities, and build trading strategies. Traders can automate their strategies and have them execute directly through their own brokerage account like Interactive Brokers, TD Ameritrade/Schwab, and E*Trade/Morgan Stanley. Trade Ideas also comes with a simulated trading capability that works hand in hand with their platform’s AI and idea generation tools to maximize its advantage. With proper feedback from the platform, investors quickly see what actions lead to reward and where mistakes need to be corrected. The platform includes a proprietary Event-Based back testing to score how well scans, entry signals, and trading plan perform over recent history without having to know the list of stocks to test a priori. It optimizes what parameters change to further improve trading strategy results. From a graphical/interactive front, users can stream and display events as they happen in real-time based on the alerts and filters selected. Rich columns may be added to enhance the data and see multiple time frames at a glance.

The Trade Ideas platform offers full stock quote windows that let users see all the fundamental data relevant to a stock’s price, including quick visual indicators to see where the stock is in its range for the last hour, trading week, and last 52 weeks.

Scripting Exemplarily Success Stories

Over the years numerous clients benefitted greatly from Trade Ideas’ platform’s features, gathering unique case studies in the process.

In one such instance, Trade Ideas served Scottrade clients as embedded technology into their Scottrade ELITE platform for eight years leading up to their acquisition by TD Ameritrade in September 2017. Scottrade produced internal analysis comparing engagement and trading of its active customers in two groups: those using Trade Ideas and those not. The results demonstratively showed higher rates of engagement measured by frequency of platform logins and a 25 percent increase in trading activity. The company kept the brand name of Trade Ideas and used the innovative technology as a point of differentiation in its media and customer acquisition strategies. Trade Ideas served ETRADE clients also as embedded technology into their ET Pro platform for nine years leading up to their acquisition by Morgan Stanley in 2020. ETRADE chose to use the name Strategy Scanner and its own branding vs Trade Ideas. The long-standing and annual license renewal of the technology, were based on similar analysis and carried the same exceptional reliability of Trade Ideas’ data. Beyond their partnerships, Trade Ideas continues to build a strong community based on technology and trust with education resources, webinars, and summits to create information advantages for the retail trader/investor.

In addition to a clearly defined mission, understanding of their value proposition, and a culture of problemsolving, empowerment, and teamwork, there are several strategies Trade Ideas leverages to improve experiences with their technology and outlast competitors for over 18 years. One key strategy, for example, is the company’s product strategy maxim which is easy to say but difficult to execute: “Deliver the maximum value on the first impression. This strategy keeps Trade Ideas attuned to the client experience within our platform. It is not a destination strategy, but a journey that never really ends,” states David Aferiat, managing partner and co-founder of Trade Ideas.

Trade Ideas’ competitive edge entails a combination of hard and soft elements. Hard elements include the array of innovative features in the platform algorithms optimized by machine learning AI, innovative charts that graph risk management thresholds, simulated trading, Netflix style programming, called Channels, that present defined market themes and opportunities to our clients, are just a few. Softer, but no less important, elements include Trade Ideas’ culture and defined values to which the team adheres. Dave Mabe, CIO at Trade Ideas, further adds, “Culture and values are incredibly important as an organization dispersed across the U.S. and internationally. Trade Ideas evolves entirely on a remote basis, so the pandemic altered very little of the established cadence, rituals, and tools we use to collaborate, communicate, and drive innovation.”

Evolving with the Trade

Trade Ideas ensures that their product and pipeline of innovation stays relevant and engaging owing to the support from Trade Ideas’ CEO and the experienced market participants that make up their development teams. Collectively, Trade Ideas leads the evolution of trading the markets from the days of the Nasdaq Single Order Execution System (SOES) all the way to today’s volatility, SPACs, and meme-fueled trading. The company’s enterprise partners with whom they collaborate value such perspective and history because the insights provided come from tens of thousands of subscribing customers and years of execution by a team that knows what it’s like to risk capital on idea generation.

- Joe Phillip
    June 14, 2021

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