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Algo-Trading for the Individual
Investor
Algo-Trading’s place in a Sound
Investment Strategy
Algo Trading for the Individual
Investor
• Raw Speculation has always been anyone’s game
• Traditional tools and fundamental analysis is not a great answer to
compete with firms that use High Frequency Trading (HFT)
• Most traditional wisdom and tools are hard to use for a singular market
like a stock
Humans just can’t beat
High Frequency Trading
without an aid of their own
on a day to day basis!
Quantitative Trading
• The lesser known method of utilizing algorithm’s for trading
– The popular version is HFT, which dominated markets but is
marred in controversy and growing less effective
• Huge technological costs
• Curbed usage by law in E.U and Canada
• Quantitative trading uses its own set of mathematical
computer algorithms that:
– Analyze the structure of the market
• Identifies Trends
• Establishes Patterns
Quantitative Trading
Artificial Intelligence
Machine
Learning
Neural
Networks
Genetic
Algorithm
www.iknowfirst.com
Machine Learning
• Machine Learning is a subunit of computer
science that focuses on Pattern Recognition
– Specific for forecasts!
• The hallmark is that it is Self Learning
– The Algorithm adds code that are consistent with
patterns found
– The Algorithm dumps the codes that are
unsuccessful www.iknowfirst.com
Neural Networks
1. Neural Networks
are inspired by a living
brain!
2. Each connection is
assigned a weight that
works with the input
to arrive at an output.
The Output is a
function of the inputs
and connections.
3. As a member of the artificial intelligence
community, Neural Networks update their
connections (the assigned weights within)
according to what works and what doesn’t work.
Historical Data
4. Sounds a lot like Optimization! The algorithm, after all, is one giant function.
Genetic Algorithms
• The glue that holds the theory behind the
algorithm together
– A search function which eliminates bad solutions
and pieces together new ones out of the ashes
Genetic Operators
Crossover Mutation
• Gives the algorithm the ability
to alter the data being crossed
over. It has to be controlled,
because it includes an element
of randomness.
• Combines the parent data
together and builds it into
a recognizably similar
solution
www.iknowfirst.com
Artificial Intelligence
• You can rely on good artificial intelligence
– Hospitals, Air control centers, Toy Companies, and of
course Investment firms do all the time
• Artificial Intelligence, almost by definition, is on
the up-and-up in the global market
• The Stock Market it the best place to apply
artificial intelligence because it receives
feedback a million times a day!
• I Know First’s algorithm is operational since
and already has of learning under
its belt! www.iknowfirst.com
Quantitative Trading
• Quantitative Trading gives off the best of both
worlds:
– Could be made fully automatic
– Could be a forecast with suggested put and call
orders
• Traders watch the market and place trades manually
• The Investors decide what to do with the
forecast!
www.iknowfirst.com
Quantitative Trading
• Every good portfolio stacks investments up with
counter-investments with curb losses (and gains)
Trade in USD Also trade in GBP
Hold interest bearing assets Hold assets with “static” value
Invest in Bank Stocks Invest in stocks in a different industry
Look for assets that would perform well in
a sudden downturn
Look for assets that would do well in a
sudden expansion
Hold stocks on the TSX Hold stocks in different global markets
Pick stocks based on emotion and gut-
feelings
Pick socks free of emotion and gut-
feelings- Algo-Trading!
www.iknowfirst.com
Algo-Trading Protection
Algo-Trading
Human
Factors
Psychological
Pressures
Noise
(news) Miscalculations
Objective
Valuation of
a Stock
Quantitative
forecasting the
future stock trend
www.iknowfirst.com
Algo-Trading Protection
• Our global world: Markets become more and more
integrated with each passing technological
advancement
• Stock Markets have always been interconnected
– Movements in one market affect all markets somehow
• Political events in Iran and Russia affect oil prices and
the E.U, which have a profound effect on the Canadian
economy which will harm the U.S economy…
• Algorithms quantify these effects and build them into
predictions, much more extensively than a human can
Algo-Trading with I Know First
• The
benefit of algo-
trading with
I Know First is
that our
algorithm is a
proven success
The overall I Know First return
in the one year period from
July 1st, 2014 to June 30th,
2015 yielded and overall
return of 83% while the
S&P500 rose by 5.2% during
the same period.
Full Trade Report
2014
Summary Report for 2014
www.iknowfirst.com
Algo-Trading with I Know First
Check out our website
IKnowFirst.com
Market Forecasts and updates Daily

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Algo-Trading for the Individual Investor

  • 1. Algo-Trading for the Individual Investor Algo-Trading’s place in a Sound Investment Strategy
  • 2. Algo Trading for the Individual Investor • Raw Speculation has always been anyone’s game • Traditional tools and fundamental analysis is not a great answer to compete with firms that use High Frequency Trading (HFT) • Most traditional wisdom and tools are hard to use for a singular market like a stock Humans just can’t beat High Frequency Trading without an aid of their own on a day to day basis!
  • 3. Quantitative Trading • The lesser known method of utilizing algorithm’s for trading – The popular version is HFT, which dominated markets but is marred in controversy and growing less effective • Huge technological costs • Curbed usage by law in E.U and Canada • Quantitative trading uses its own set of mathematical computer algorithms that: – Analyze the structure of the market • Identifies Trends • Establishes Patterns
  • 5. Machine Learning • Machine Learning is a subunit of computer science that focuses on Pattern Recognition – Specific for forecasts! • The hallmark is that it is Self Learning – The Algorithm adds code that are consistent with patterns found – The Algorithm dumps the codes that are unsuccessful www.iknowfirst.com
  • 6. Neural Networks 1. Neural Networks are inspired by a living brain! 2. Each connection is assigned a weight that works with the input to arrive at an output. The Output is a function of the inputs and connections. 3. As a member of the artificial intelligence community, Neural Networks update their connections (the assigned weights within) according to what works and what doesn’t work. Historical Data 4. Sounds a lot like Optimization! The algorithm, after all, is one giant function.
  • 7. Genetic Algorithms • The glue that holds the theory behind the algorithm together – A search function which eliminates bad solutions and pieces together new ones out of the ashes Genetic Operators Crossover Mutation • Gives the algorithm the ability to alter the data being crossed over. It has to be controlled, because it includes an element of randomness. • Combines the parent data together and builds it into a recognizably similar solution www.iknowfirst.com
  • 8. Artificial Intelligence • You can rely on good artificial intelligence – Hospitals, Air control centers, Toy Companies, and of course Investment firms do all the time • Artificial Intelligence, almost by definition, is on the up-and-up in the global market • The Stock Market it the best place to apply artificial intelligence because it receives feedback a million times a day! • I Know First’s algorithm is operational since and already has of learning under its belt! www.iknowfirst.com
  • 9. Quantitative Trading • Quantitative Trading gives off the best of both worlds: – Could be made fully automatic – Could be a forecast with suggested put and call orders • Traders watch the market and place trades manually • The Investors decide what to do with the forecast! www.iknowfirst.com
  • 10. Quantitative Trading • Every good portfolio stacks investments up with counter-investments with curb losses (and gains) Trade in USD Also trade in GBP Hold interest bearing assets Hold assets with “static” value Invest in Bank Stocks Invest in stocks in a different industry Look for assets that would perform well in a sudden downturn Look for assets that would do well in a sudden expansion Hold stocks on the TSX Hold stocks in different global markets Pick stocks based on emotion and gut- feelings Pick socks free of emotion and gut- feelings- Algo-Trading! www.iknowfirst.com
  • 12. Algo-Trading Protection • Our global world: Markets become more and more integrated with each passing technological advancement • Stock Markets have always been interconnected – Movements in one market affect all markets somehow • Political events in Iran and Russia affect oil prices and the E.U, which have a profound effect on the Canadian economy which will harm the U.S economy… • Algorithms quantify these effects and build them into predictions, much more extensively than a human can
  • 13. Algo-Trading with I Know First • The benefit of algo- trading with I Know First is that our algorithm is a proven success The overall I Know First return in the one year period from July 1st, 2014 to June 30th, 2015 yielded and overall return of 83% while the S&P500 rose by 5.2% during the same period.
  • 14. Full Trade Report 2014 Summary Report for 2014 www.iknowfirst.com
  • 15. Algo-Trading with I Know First Check out our website IKnowFirst.com Market Forecasts and updates Daily