Price charting system and technique

• US 8,195,553 B2
• Filed: 11/18/2008
• Issued: 06/05/2012
• Est. Priority Date: 03/24/2000
• Status: Active Grant

• Current Assignee: Microquant LLC
• Original Assignee: Microquant LLC
• Inventors: Helweg, Mark W.
• Primary Examiner(s): Hamilton, Lalita M
• Application Number:
  US12/272,942
• Publication Number:
  US 20090216684A1
• Time in Patent Office: 1,295 Days
• Field of Search: 705/35, 705/36.R
• US Class Current: 705/36.R
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

The invention is directed to a market price charting method for displaying both current and historical price activity in terms of valuation rather than absolute price. The invention allows users to quantify the degree in which a market is overbought or oversold. Results may be displayed electronically or on a hard copy for viewing or used in additional analysis of a market.

Claims

1. A system for facilitating the making of a trading decision by an investor, said system comprising:

a programmable computer having a central processing unit (CPU);

a communication device linked to said computer for receiving a collection of price data relating to an investment from a data source;

a software program for providing a set of instructions to said computer to receive and process said collection of price data to generate volatility-adjusted relative price data related to the investment and using the volatility-adjusted relative price data to generate an indication of a state of a market for the investment as being traded at a fair value, as overvalued or as undervalued based on the volatility-adjusted price data in relation to a function of price for the investment.

2. The system of claim 1 further comprising a display connected to said computer for showing at least one price chart comprising volatility-adjusted relative price data, the at least one price chart generated by said computer using said software program.

3. The system of claim 2 wherein said volatility-adjusted relative price data is represented on said at least one price chart relative to a floating time axis representing a financial asset price function and another axis representing a price volatility interval function.

4. The system of claim 3 wherein said volatility-adjusted relative price data is further represented on said at least one price chart as a bell curve frequency diagram showing how often an asset price determined by said financial asset price function and said price volatility interval function trades in said different volatility intervals determined by said price volatility interval function.

5. The system of claim 2 wherein said volatility-adjusted relative price data is represented on said at least one price chart as a function of a floating axis which is calculated as a function of price, relative to a calculated dynamic volatility unit, and a frequency diagram is generated from said volatility-adjusted relative price data reflecting the distribution of price data across said volatility intervals.

6. The system of claim 5 wherein said set of instructions provided in said software program includes causing said frequency diagram and said volatility-adjusted relative price data to be shown proximately to one another on said display.

7. The system of claim 5 wherein said set of instructions provided in said software program includes a command to said computer that causes said volatility-adjusted relative price data or said frequency diagram to be shown with a market status indicator, said indicator showing fair value, overbought and oversold market conditions.

8. The system of claim 1 wherein the indication is used by a mathematical trading system to enter or exit an investment on behalf of an investor according to criteria input into the mathematical trading system.

9. The system of claim 1 wherein said communication device allows said computer to access a historical price datum.

10. The system of claim 9 wherein said communication device is a storage device.

11. The system of claim 9 wherein said communication device is a media drive.

12. The system of claim 1 wherein said communication device allows said computer to access real-time price datum.

13. The system of claim 12 wherein said communication device accesses said real-time datum by a means included within a group consisting of a cable, a modem, a wire, a satellite dish, a radio antenna, and wireless communication systems.

14. The system of claim 1 wherein said set of instructions creates floating axis data and dynamic volatility unit data in order to generate said volatility-adjusted relative price data, said floating axis data and said dynamic volatility unit data being a function of historical price data.

15. The system of claim 14 wherein said floating axis data is adjusted based upon changing price data and deviations of price above or below a floating axis over time where the floating axis represents a price function.

16. A method for facilitating the making of a trading decision by an investor, said method comprising:

receiving a collection of price data relating to an investment from a data source in a processor;

processing said collection of price data to generate volatility-adjusted relative price data related to the investment and using the volatility-adjusted relative price data to generate an indication of a state of a market for the investment as being traded at a fair value, undervalued or overvalued conditions based on the volatility-adjusted relative price data in relation to a function of price for the investment.

17. The method of claim 16, wherein the generated indication of a state of a market for the investment includes determining a trading frequency for said volatility-adjusted relative price data within predetermined volatility intervals and by determining a percentage for said trading frequency within each volatility interval and generating an indication of said percentage associated with said trading frequency as a relative frequency distribution.

18. The method of claim 17, wherein a plurality of relative frequency distributions are generated from the group consisting of a plurality of different time frames, a single market, different markets or combinations thereof.

19. The method of claim 16, wherein a plurality of indications are generated for volatility-adjusted relative price data in a plurality of time frames.

20. The method of claim 16, wherein the generated indication is used by trading system to enter or exit an investment on behalf of an investor according to criteria input into the trading system.