Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Finance
Reexamination Certificate
1998-10-13
2001-11-13
Millin, Vincent (Department: 2165)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Finance
C705S03600T
Reexamination Certificate
active
06317728
ABSTRACT:
The invention relates to a securities (the term “securities” is in the following to be understood to include “securities and/or commodities”) and/or commodities trading system that includes a computer arrangement communicating with a securities exchange, and has inputs for receiving buy and sell data. The computer arrangement is capable of evaluating the buy/sell data and issuing buy/sell orders in accordance with a plurality of buy/sell rules, i.e. “agents,” stored in the system. A feedback arrangement monitors the success and failure of the respective buy/sell agents and assigns rating powers, i.e. weightings, to the buy/sell agents in order to implement a learning process for gradually improving the system performance based on past and continuously accumulating experience of the agents.
BACKGROUND OF THE INVENTION
A program-trading software system is disclosed to be available to individual investors, small trading houses and investment managers. The trading system monitors a portfolio of securities in real time, executing trades automatically. The system is targeted to Intra-Day trading, a method of trading well suited to computer automation. The system performs a kind of careful, tireless monitoring, aimed to give the user a daily return on his/her investment, while minimizing risk.
The methods and formulas employed by the system were developed over a number of years of active trading, and take full advantage of 14 years of experience with pattern analysis and mathematical modeling.
The system may increase assets by leveraging daily fluctuations aiming to beat the financial market, the market-makers, institutional investors and the brokerage houses.
With the recent advent of deep discount electronic brokers, transaction fees have dropped to where active trading can be highly profitable. Large fund managers are limited by the size of the funds they manage, They cannot buy and sell large quantities of stock without impacting the price. On buying, the price goes up, and on selling it goes down.
SUMMARY OF THE INVENTION
The following is needed to practice the invention: software programs as disclosed herein; money to invest; an operating program such as Windows® 95 or NT, or the like; an internet connection; and a brokerage account.
Investing can be risky, since it is impossible to predict stock market fluctuations or company events with any accuracy. Frequently stocks plummet in overnight trading, leaving an individual investor unprotected during that time. In general, bad news is remembered longer than good news. A bad quarterly report from a company may take months to recover from, while an item of good news may be forgotten in days. Generally, stock prices fluctuate 1-3% each day, and by leveraging these fluctuations as outlined herein one may realize a return on investment. A combination of real time monitoring a portfolio of stocks and no holding positions overnight (trading flat) can shield an investor from loss while maximizing gain.
The invention embodies a process for trading securities that operates as follows: On a typical trading day a commodity or a stock may take a small dip at e.g. 9:35 am, reach its high at 11:30 am and decline until 3 pm. perhaps with a small run up at close of the day. The system buys, through a selected one of the agents, a stock or commodity at a morning dip and sells it at a mid-morning high. It then sells the stock or commodity short and buys to cover at a lower afternoon price. One makes money on the way up, and more on the way down. If possible, the system will end the day without holding any stock . . . but it if does, it will be short position. It is far more likely a stock will go down overnight than go up in value.
By monitoring one's stock holdings continuously during the day, and watching trends, the system will limit one's losses by dumping the stock should things go awry, while maximizing profits by riding out the trends. If one holds a long position overnight, one may have uncontrolled risk.
If the market is over-valued and headed for a correction, can one safely invest in this climate? The answer is yes! The system can help limit the risks.
The system provides an extract file of trades, compatible with popular tax programs, to help prepare tax returns. This reporting can save time at tax time.
Since it is difficult to watch and monitor a stock ticker during the day, a lapse in attention can be costly. Getting caught up emotionally may keep one from making good decisions. The system does not get tired, does not panic and does not get greedy, but always operates under the rules embedded in the agents.
More importantly, brokerage firms do not let one place sell and stop orders on the same shares. That is to say, one can either try to protect oneself with stop loss orders, or one can try to profit with sell orders, but one cannot do both. The system effectively lets one do both by monitoring stocks continuously.
The system enables a person to make money while on vacation. It does the drudge work of monitoring the market. It may be arranged to send alphanumeric trade reports to a user by cellular phone or pager.
Use of margin can increase one's earning power. With margin the system may deliver a return each month. But margin costs money. It is a loan against one's current stock holdings, allowing one to buy more stock. If one holds the stock for days, weeks or months, one pays margin interest even if the stock price loses ground. By actively trading, one incurs a fraction of the margin costs, and may not incur any at all, since one is borrowing and returning the same day.
The system will also let one hold stocks with pre-set buy, sell and dump prices, allowing one to automate transactions, get pager notifications and view continuously updated prices while supporting existing strategies.
In accordance with the invention there is provided a securities trading system having a data acquisition system having an input communicating with a securities exchange for receiving securities buy/sell data; a clock for generating clock times; a processing logic having inputs respectively communicating with the data acquisition system and with the clock for assigning respective clock times to said buy/sell data; a decision logic having a repository for storing a set of buy/sell rules for buying and selling securities in response to the buy and sell data aligned with the clock times; and a buy and sell execution system having an input communicating with the decision logic for executing buy and sell orders in conformance with the buy/sell rules.
In the securities trading system according to the invention, the decision logic includes at least one decision agent, the agent representing a respective buy/sell rule, wherein further the decision logic may include at least two decision agents, each decision agent representing a respective buy rule or a respective sell rule.
According to a further feature, the securities trading system provides that the sell rule is a short sell rule and the buy rule is a long buy rule, and the decision logic includes at least one agent being responsive to one of the buy/sell rules, that agent being operative for generating a buy/sell order in response to the buy/sell data conforming to the buy/sell rule.
The securities trading system according to the invention may further include a plurality of agents, each agent operating in response to a dedicated one of the buy/sell rules, and wherein each of the agents has a respective input for commonly receiving the buy/sell data.
The securities trading system may further include a feed-back connection from the current assets memory to each of the agents for conveying a cumulative number of merit points to a respective agent having issued a sell order for a successful trade.
The invention further includes a method for trading securities with a securities exchange, the method including a data acquisition system having an input communicating with at least one securities exchange for receiving buy/sell data; a clock for generating clock times; a processin
Kazimi Hani M.
Millin Vincent
Oltman Flynn & Kubler
LandOfFree
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