Shining light into darkness

Seeing Markets Better

with

Drake Howell Ltd

The Problem

Not seeing the wood for the trees is an old problem, made worse by torrents of data

Financial market traders are badly affected by the sheer quantity of data & its speed of arrival

This overwhelms human senses. A lot of time is lost to monitoring markets for chances & threats

Rushed decisions with poor outcomes are common, even among experienced market folk

Market data is multi-layered so solving this is hard. Current tools are not up to the job  

Our Solution

Make 3D displays of related ranges of instruments to show the whole market ‘at a glance'

Animate these displays to reveal patterns & ripples

Automate market monitoring to relieve stress and make space for traders to think creatively ​ 

Develop new kinds of analysis, made possible by these animated 3D displays

Provide massive competitive advantage to users

After 30 years of R&D and experiments:

This video plays for 10 seconds, repeated

Changes in the forward curve are a strong predictor of imminent price change

Shifts along the curve are clearly and easily seen as ripples and twists in the banner

This 3D cage shows 7 forward crude prices in a horizontal strip, animated in a loop

Display 1 - 3D forward markets, animated

Constant focus on this is vital, but it takes up a lot of time and is stressful for traders

New insights, plus much reduced need for monitoring confers competitive edge

Display 2 - Option implied volatility in animated 3D

Reveals the rhythms & ripples in Vol that are always present - a transformative advantage

These Vol calculations are often displayed in a horizontal surface array...  but static

This video plays for 19 seconds, repeated

Options are valued by calculating the expected future volatility ('Vol') that is implied by the current option price:

This Vol surface is animated, refreshing each period - whether weeks or micro-time

Trading options is difficult - many moving parts - arrays of options are always large

'Vol' high = expected busy. 'Vol' low = expected quiet

Option movements have not been viewable with their futures before - this is a revolutionary change

Display 3 (Advanced) - combined Options & Futures

This video plays for 17 seconds, repeated

The futures banner flows from back to front thru the shifting Vol array. All is seen at once

These rings are fixed on the x/y axes in vertical sheets. Each changes size as Vol rises & falls

CME Crude Oil options with futures

This display needed a single common axis  so the option 'Vol' array flipped through 90°

Previously thought too difficult, this is a game-changer for market-making and arbitrage

The Vol array summary 'surface' has also been swapped for rings, to show each option's Vol

Here 11 elements of the US Treasury yield curve are updating 'live' in 3D

AI, trained on this 3D data set, produces confidence bands for the likely direction of the next interval

The aim is to produce firm predictions - in the case of the 3rd run, downwards

New kinds of analysis 1 - Yield curves with AI

This video plays for 42 seconds, repeated

There is more market information in a full curve of yield maturities or forward prices than in just one value

The attributes of AI are well-suited to interpret this densely packed info

Results…

Average traders will be better and the best will be unbeatable

Data for these displays can come from any  suitable source, so users will have wide breadth

3D Animated displays transform traders' view & alleviate stress from repetitive market scrutiny

New types of 3D analysis  are already completed - we have barely scratched the surface here

With better insights and time to think, traders can choose only the decisions that should be made

And so...

This leads to a new marketplace

  • Swaps can be compared with strips; with options & swaptions; Vanilla compared with Exotic; exchange-traded with OTC
  • Showing Multiple data sources in moving 3D enables side-by-side derivatives comparison
  • Such a comparison-based market should capture a large share of derivatives trade
  • Price comparison always leads to trading, and the creation of a marketplace
  • Their merits can be quickly compared and contrasted even in dynamic markets

This is a virtual space

Where traders gather

View custom derivatives' components

Bid for & offer complex products

Which will tighten price spreads

And so increase trading volumes

This video plays for 36 seconds

- to repeat, press play button

The Mercantile Exchange meets Fortnite

4D views make Comparison into a Marketplace

In conclusion:

  • Trading is easier and better for anyone who has these tools
  • Innovative market data displays make many new things possible
  • Analysis and comparison also gets much easier, so trading between users is a logical next step
  • A full marketplace for commodity and fixed-interest derivatives is the likely end-game
  • In the interim, it will be easy to make trading possible between users of the first 3 displays

Clearer market view

By Richard Edwards

Clearer market view

  • 237