Systems and methods for providing investment opportunities

• US 20070043650A1
• Filed: 08/03/2006
• Published: 02/22/2007
• Est. Priority Date: 08/16/2005
• Status: Active Grant

• Current Assignee: Bridgetech Capital Incorporated
• Original Assignee: Bridgetech Capital Incorporated
• Inventors: Rivard, Doug, Hughes, John
• Granted Patent: US 7,865,423 B2
• Time in Patent Office: Days
• US Class Current: 705/37
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

The invention relates to methods and systems for providing investment competitions. In one aspect, trading algorithms that automatically generate trading instructions in response to market data are developed by and received from a distributed plurality of independent trading algorithm developers. The algorithms are periodically executed against market data and generate trading instructions, which, based on an association of investment accounts with the trading algorithms, initiate correlative trades in the investments accounts.

Claims

1. A method for initiating trades in an investment account, the method comprising:

holding one or more trading qualification events among a plurality of traders;

selecting a subset of the plurality of traders participating in the qualification event as portfolio managers;

allocating to each of the portfolio managers an amount of money to be invested;

distributing information regarding the portfolio managers and their respective investment strategies to a distributed community of investors;

facilitating a selection by one of the investors of one or more of the portfolio managers;

receiving a trade instruction from one of the portfolio managers selected by one of the investors; and

initiating in response to the received trade instruction a correlative trade in an investment account associated with the one of the investors.

2. The method of claim 1 wherein the qualification event is a virtual investment competition.

3. The method of claim 1 wherein the allocation of money to each of the portfolio managers is based on an investment strategy adopted by each respective portfolio manager.

4. The method of claim 1 wherein the allocation of money to each of the portfolio managers is based on historical performance data of each respective portfolio manager.

5. The method of claim 1 wherein an investor selects multiple portfolio managers.

6. The method of claim 1 wherein multiple investors select one portfolio manager.

7. The method of claim 1 wherein multiple investors select multiple portfolio managers.

8. The method of claim 1 wherein a trade detail of the correlative trade is adjusted prior to execution in the investment account associated with the one of the individual investors.

9. The method of claim 8 wherein the trade detail is the number of shares.

10. The method of claim 8 wherein the adjustment is a proportional adjustment.

11. The method of claim 10 wherein the proportional adjustment is based on a relationship between an existing portfolio allocation of the investment account associated with the one of the individual investors and a resulting portfolio allocation of the investment account associated with the one of the individual investors if the correlative trade were to be executed.

12. The method of claim 10 wherein the proportional adjustment is based on a relationship between a total portfolio value attributed to the portfolio and a total portfolio value attributed to the individual investor.

13. The method of claim 12 wherein the total portfolio value for the individual investor comprises account totals from multiple investment accounts.

14. The method of claim 8 wherein the adjustment is an absolute adjustment.

15. The method of claim 14 wherein the absolute adjustment results in the correlative trade not being executed.

16. The method of claim 8 wherein the adjustment is made in response to one or more trading rules previously supplied by the individual investor.

17. The method of claim 1 wherein the correlative trade is initiated in multiple investment accounts associated with one of the individual investors.

18. The method of claim 1 wherein the investors are individual investors.

19. The method of claim 1 further comprising executing the correlative trade.

20. A system for initiating trades in an investment account, the method comprising:

a communications server for communicating investment information to a plurality of investors;

a qualification server for facilitating qualification events among the plurality of traders to identify exemplary traders;

a performance module for calculating performance data associated with each of the traders;

an allocation module for facilitating selection of traders by individual investors and allocating individual investors accounts among traders selected by the individual investors; and

a trading module for receiving a trade instruction from one of the traders and initiating in response to the received trade instruction a correlative trade in investment accounts associated with investors.

21. The system of claim 20 further comprising a performance display module for displaying the performance data associated with each of the traders.

22. The system of claim 20 further comprising a database module for storing one or more of historical market performance data and historical trader performance data.

23. A method for providing an investment competition, the method comprising:

providing an algorithm development application to a plurality of traders, the algorithm development application comprising a language for implementing algorithms for initiating trading instructions in response to market data;

providing access to a database of historical market performance data, thereby facilitating the testing of the algorithms;

receiving one or more of the algorithms from at least one of the plurality of traders;

determining a performance metric for each of the received algorithms;

selecting one of the algorithms as a winning algorithm based at least in part on the performance metric.

24. The method of claim 23 further comprising attributing a rating to the algorithm based at least in part on the performance metric.

25. The method of claim 23 further comprising attributing a rating to each trader having submitted an algorithm based at least in part on the performance metric for each trader'"'"'s respective algorithm.

26. The method of claim 25 wherein the rating attributed to each trader is further based on a previous rating attributed to each respective trader.

27. The method of claim 25 further comprising selecting at least one trader to invest a pool of assets on behalf of investors based at least in part on the trader'"'"'s rating.

28. The method of claim 24 further comprising selecting an algorithm to programmatically determine trading instructions for a pool of assets on behalf of investors based at least in part on the algorithm'"'"'s rating.

29. The method of claim 23 further comprising compensating the trader that submitted the winning algorithm.

30. The method of claim 23 wherein the performance metric is determined over a predetermined time period.

31. The method of claim 30 wherein the predetermined time period is selected from a period of an hour, a day, a week, two weeks, a month, two months, a quarter, six months, and a year.

32. The method of claim 23 further comprising facilitating the allocation of one or more algorithms to investors accounts based on allocation instructions received from individual investors.

33. The method of claim 23 further comprising storing the selected algorithm in a library of algorithms.

34. The method of claim 33 further comprising providing access to the library of algorithms.

35. The method of claim 34 further comprising charging a fee for access to the library of algorithms.

36. The method of claim 34 wherein the access is limited to access to trading instructions generated by one or more of the algorithms in the library of algorithms in response to market data.

37. A system for providing an investment competition, the system comprising:

a web server for communicating an algorithm development application to a plurality of client machines, the client machines being operated by one or more traders and the algorithm development application comprising a language for implementing trading instructions in response to market data;

a client interface server communicating with the algorithm development application, the client interface server for receiving at least one algorithm;

a parser in communication with the web server and the client interface server for interpreting the algorithm;

and a performance module in communication with the parser for executing the algorithm, testing the algorithm, and calculating a performance metric for the algorithm.

38. The system of claim 37 further comprising a database server for providing historical market data to the performance module on which the performance metric may be based.

39. The system of claim 37 further comprising a trading module for receiving the trade instructions and initiating one or more trades in response thereto.

40. The system of claim 39 further comprising an allocation module for facilitating selection of algorithms by individual investors and allocating individual investors accounts among algorithms selected by the individual investors.

41. The system of claim 40 wherein the trading module is further configured to execute trades in the individual investor accounts based on the received trade instructions.

42. The system of claim 37 wherein the performance module further identifies one or more algorithms as winning algorithms, and further comprising a compensation module for determining compensation for traders who submitted the winning algorithms.

43. The system of claim 37 wherein the performance module further identifies one or more algorithms as winning algorithms, and further comprising an algorithm library for storing the winning algorithms.

44. The system of claim 43 further comprising an access module for enforcing access rights to the library of algorithms.

45. A method of managing a pool of investable assets, the method comprising:

providing a description of one or more of investment strategies to a distributed community of traders;

in response to the description, receiving one or more trading algorithms from the traders, the algorithms being intended to implement one or more of the strategies;

selecting a subset of the one or more of trading algorithms;

employing the subset of algorithms to initiate trading instructions for execution on the pool of investable assets.

46. The method of claim 45 further comprising:

identifying traders from which the selected algorithms were received; and

compensating the identified traders.

47. The method of claim 46 further comprising calculating a performance metric for the pool of investable assets.

48. The method of claim 47 wherein the compensation is based at least in part on the calculated performance metric.

49. The method of claim 46 wherein the compensation is a one-time award.

50. The method of claim 46 wherein the compensation is awarded on a periodic basis.

51. A system for managing a pool of investable assets, the system comprising:

a communication server for providing a description of one or more of investment-strategies to a distributed community of traders, and receiving, in response thereto, one or more trading algorithms from the traders, the algorithms being intended to implement one or more of the strategies;

a performance module for testing the received algorithms and selecting one or more of the received algorithms for use in managing a pool of investable assets; and

a trading module for initiating trading instructions for execution on the pool of investable assets based on the selected algorithms.

52. The system of claim 51 further comprising a database server for providing historical market data to the performance module.

53. The system of claim 51 further comprising a compensation module for determining compensation for traders who submitted the selected algorithms.

54. A method of programmatically generating trade instructions, the method comprising:

receiving trading algorithms from a distributed plurality of independent trading algorithm developers, the trading algorithms for automatically generating trading instructions in response to market data;

periodically executing the algorithms with substantially real-time market data, thereby generating trading instructions;

facilitating the association of investment accounts with the trading algorithms; and

initiating, in response to the generated trading instructions, correlative trades in the investments accounts associated with the trading algorithms from which the trading instructions were generated.

55. The method of claim 54 wherein the periodicity with which the algorithms are executed varies among the algorithms.

56. The method of claim 55 wherein the periodicity of an algorithm is determined by the developer from which the algorithm is received.

57. A method of programmatically generating trade instructions, the method comprising:

receiving a first trading algorithm from a first developer, the first trading program for generating trading instructions in response to market data;

receiving a second trading algorithm from a second developer, the second trading program for generating trading instructions in response to market data;

receiving a third trading algorithm, the third trading algorithm configured to generate trade instructions based on output from the first and second trading algorithms.

58. The method of claim 57 wherein the third algorithm is received from one of the first developer and the second developer.

59. The method of claim 57 wherein the third trading algorithm aggregates trading instructions from the first trading algorithm and the second trading algorithm.

60. The method of claim 57 wherein the third trading algorithm selectively generates trade instructions based on the trading instructions of the first and second algorithms.

61. The method of claim 60 wherein the selective generation is based at least in part on predetermined rules governing the execution of trade instructions from the first and second algorithms.

62. The method of claim 59 wherein the selective generation is based at least in part on market data.

63. The method of claim 59 wherein the first algorithm is configured to generate trading instructions in response to output from other trading algorithms and market data.

64. The method of claim 59 wherein the second algorithm is configured to generate trading instructions in response to output from other trading algorithms and market data.

65. The method of claim 59 further comprising the step of executing trades in response to the generated trading instructions.

66. A method for providing a trading algorithm competition, the method comprising:

facilitating development of a plurality of trading algorithms by a plurality of algorithm developers, the trading algorithms for generating trading instructions in response to market data;

running a subset of the developed algorithms for a predetermined time period using market data as input to the developed algorithms;

evaluating the performance during the time period of the subset of algorithms; and

publishing the results of the evaluation.

67. The method of claim 66 further comprising rating the algorithms based on the evaluated performance.

68. The method of claim 67 further comprising publishing the ratings of the algorithms.

69. The method of claim 66 further comprising allocating one or more of the algorithms to an investment account.

70. The method of claim 66 wherein the execution of the algorithms generate trading instructions.

71. The method of claim 70 further comprising executing trades in response to the generated trading instructions.