Traders Design

There will be a number of inputs that will be provided to design a trading agent strategy. The following definitions describe the information that will be required by the participants of STG to design trading agent.

Fund:

  Fund is the amount of capital available to the trader. There will be a specific amount that will be provided at the start of the game.

Tips: the funds can be split evenly between the trading strategies so that there is a limit to invest in the markets. E.g. Allocate 50% fund to Stock A and 50% fund to Stock B so that the risk of losing your investment due to bad performance of one is reduced.

Inventory:

 It is the quantity of various assets (stocks) that a certain trader holds at a specific time in the game.

Profit/Loss:

 Value representing the amount a trader gained as compared to the initial capital held by that trader. In case of a loss it would be the difference of Capital minus the current fund, resulting in a negative value.

Profit/loss = Capital – Current funds available

High Price:

 The highest price that a stock reached in a certain day.

Low Price:

 The lowest price a stock reached in a certain day.

Price:

 A certain value generated in-between the Market High Price and the Market Low Price of the stock.

Closing Price:

 The price of a stock at the end of the day.

Transaction Cost:

 Cost incurred by the trader during the completion of a certain transaction. This is the amount every market will charge to complete a transaction.

Quantity:

 Number of stocks to be bought or sold by a trader during a certain transaction.

Note: Quantity will not be provided as an input it has be part of the decision of investment for the trading agent.

Shout Price:

 Price that a trader will quote for a specific ask/Bid in the market.
Trader Design

This Process diagram demonstrates how the inputs will be provided to the trader and then using an appropriate strategy the trader will produce an output which will be sent to the market visa the server.

Trading Strategies

To design our strategy we have decided to divide it into two parts, so that the first one is more of the analysis section called market indicator. Market indicator will help find the market trend and help make a decision. Second part of the strategy is where the decision of investment will be made based on the analysis performed earlier, so that is how much to invest and at what price. In-case trading agent owns the stocks then he can decide to sell these stocks to the respective market.

Market Indicator:

 This section of the strategy can help the trader decide the trend of the market. i.e. Bearish, Bullish or Neutral. There are various types of indicators available to help the trading agent make investment decision.

Trading Actions:

 The ability of the trader to invest in a certain stock will be given in this section. Once the trading agent identifies a specific trend in the market it’s time to decide if trading agent is going to buy or sell the stock or decide on the quantity to and how much of his fund he wants to invest.