Personal Composite Instrument for Multi-Market Trading Analysis
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Solution Overview
Problem
Traders face limitations in tracking and analyzing complex market trends and relationships between multiple assets, as existing systems lack customizable and flexible tools for creating composite financial instruments that can reveal hidden interrelations and facilitate personalized trading strategies.
Innovation Solution
A method and system for creating a personal composite instrument (PCI) by combining two portfolios of assets, allowing users to select and weight individual assets, calculate and visualize their values, and perform trading operations, enabling the creation of unique financial entities with their own price history and analytical capabilities.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Adaptability or versatility
If traders use existing market indices to track market trends, then they can monitor overall market movement, but they cannot track or trade on multiple markets or exchanges simultaneously or analyze trends on multiple markets, sectors or exchanges
Solution Approach 1:
The patent combines multiple assets from different markets, sectors, or exchanges into a single composite portfolio instrument. This allows traders to track and analyze multiple markets simultaneously through one unified instrument, resolving the contradiction by merging the functionality of tracking multiple markets while maintaining a single manageable tool.
Solution Approach 2:
The composite portfolio instrument serves multiple functions: it can track trends across different markets, sectors, and exchanges simultaneously; it can be used for both analysis and trading; and it can be customized to reflect various investment strategies. This multi-functionality resolves the contradiction by providing a single instrument that adapts to multiple tracking needs without requiring separate systems for each market.
2Adaptability or versatility
If traders design custom market indicators to analyze specific trends, then they can track more than one market or exchange, but existing systems do not provide customizable independent financial instruments that could be interpreted as a composite dynamic relation of two sets of assets
Solution Approach 1:
The system performs preliminary actions by automatically calculating and maintaining the composite portfolio value based on the selected assets and their weights. This preliminary computation of the composite instrument's value and performance metrics reduces the complexity for traders, as the system handles the complex calculations in advance, making the custom indicator ready for immediate use without requiring traders to manually compute complex relations.
Solution Approach 2:
The composite portfolio instrument acts as an intermediary between individual assets and the trader's analysis needs. It mediates the complex relationships between multiple assets by synthesizing them into a single instrument with a defined price and performance history, making the complex interrelations accessible and analyzable without requiring traders to directly manage the complexity of individual asset relationships.
3Adaptability or versatility
If the system allows unlimited combinations of assets in composite portfolios, then users can create unique personal composite instruments, but the number of possible combinations is theoretically unlimited requiring extensive computational resources
Solution Approach 1:
The system performs preliminary actions by pre-calculating and storing the performance history and price data of composite instruments as they are created. This allows the system to handle unlimited combinations efficiently, as the computationally intensive calculations are performed once when the instrument is created, and the results are then readily available for analysis and trading without requiring repeated complex computations.
Data Source
AI summary
A trader is enabled to create, to visualize, to study historical performance, to track, to perform analysis on, to share, to edit and to trade a personal composite instrument (PCI) that includes a first portfolio with a first set or group of assets and their respective quantities, and a second portfolio with a second set of assets and their respective quantities, the first portfolio “traded against” the second portfolio, leading to the creation of a new independent financial entity. Being a flexible and universal tool for traders in financial markets, the PCI provides an opportunity to invent unique financial entities which can open hidden ground for performing an in-depth analysis of assets or even markets and can enhance the trader's ability to set entry and exit points for separate assets or whole portfolios as technical analysis tools and composite price history become available.