/Project-3

Project 3

Project-3

Section Guide

  1. Brief Overview on Stocks
  2. Suggestions
  3. Key Features
  4. Tech Questions
  5. App Questions
  6. MVP Level 1
  7. MVP Level 2
  8. Suggestions

Before I get to answering some of the question regarding the project

  • Along with the research of creating a good game and figuring out what tech stack would work best for this type of application we really need to more clearly define what kind of features we need to have to obtain our “MVP”. I think defining that really supersedes everything. I don’t want to get bogged down in doing unnecessary research while we haven’t crystalized what we want the end product to be.

  • First off, the real stock market is enormously complex. Basically you have stocks, bonds, commodities, options and futures and each one of these categories has thousands upon thousands of investment options within them.

  • There’s more than one exchange that lists these investment products for sale to the public.

  • Let’s just look at a stocks for a second.

  • Stocks can have different share classes. Same company just 2 different share classes with 2 different prices. These shares are used to create other financial products like mutual funds and ETFs which in turn are sold on one of these exchanges. Mutual funds also have different share classes.

  • When you purchase a stock you do so using one of four order types. Some of these order types will create different purchase prices for your ONE order. Want to sell that stock, you got options there that will also give you different prices. You can even combine some of these order types in a bracket order.

  • Some stocks produce dividends based on the corporation’s performance. These dividends are given to shareholders in cash or more shares. Sometimes you don’t have enough shares to warrant a full share in the company so you can actually get a fraction of a share. Which means that you can buy/sell fractions of shares.

  • This is just some of the basics of vanilla stocks. You also have short selling, REITs, MLPs, Mortgage Back Securities (financial crisis of 2008), Corporate Bonds, Municipal Bonds, and Options. Oh the Options: Call options, Put options, Strike Price, Long Call Option, LEAPs, Spread Options, Straddles, Butterfly Option, American Option, European Option, Exotic Options. You have derivatives, currencies, margin, leverage, penny stocks, dark pools, and just on and on with stuff and things with different names, strategies, financial requirements, tax obligations and tax implications.

  • I can’t even wrap my brain around how much data we’re talking about here.

  • That’s why I think we really need to define our stock market game a little better.

My Suggestions:

  • Instead of worrying about being realistic let’s think more educational, fun, informative, and the best UI out there.

  • Let’s start by just eliminating bonds, commodities, options and futures from the game. Most people don’t start learning about the stock market there anyway. Ideally I’d start with just companies in the S&P 500 but not sure if that would be possible. If not, let’s try and just use data from the Nasdaq. If we figure that out we should be able to add in the NYSE later or vice versa but they both have around 3 thousand companies/investment options.

  • To keep it simple I’d like to just use market orders.

  • Only update the prices every 15 minutes and do that on a delay since real time data like that costs real money. Also, just on a personal note, there’s no way you’re beating the high frequency traders with your “real time” data when they have direct fiber optic lines from the exchange to their supercomputers running their finely tuned trading algorithms. So, delay data should be just fine for us.

  • Another thing that limiting our scope will do is help us explain why an individual buy or sell doesn’t have a noticeable effect on the price because most, if not all, of those companies have millions of shares.

  • We also need to see how much research we can find out there that we can get to our users because that’s one thing all these investment companies have and sometimes the reason investors will choose one firm over another. That good research isn’t free but maybe we can find something out there. If not building a web scraper to render some recent articles shouldn’t be out of our scope at this point.

  • I’d get rid of short selling and margin as well. If we some other stuff built we can circle back to adding this feature as you play longer, build experience, earn points, level up etc.

  • Users start out with X number of dollars to invest and go from there. We can talk about how to keep them engaged but one idea I had was having 2 to 3 computer users that all new users will see as friends. These friends have different trading strategies and maybe even make suggestions. They share their portfolio overview with the user so they can see what they’ve invested in and how they’re doing. If our user start’s to lose money maybe one of their friends made some money and don’t mind giving some of it away to our user if the user can help them out with something.

  • Not sure about making that all work but mainly I want to just define our MVP so we can do meaningful work on the project and start compartmentalizing this thing.

  • Don’t get overwhelmed with learning the stock market just yet. Let’s talk about what we want this thing to do when we’re done. What’s the goal? Why do people want to use it? Stuff like that. After we make some decisions there we can really dig into the research because we’ll have a much better idea of what we want.

Key Features

  • Home Page - need to figure out what links to have here and what the look and feel should be for this page.
  • SignIn/Register

Registration

  • This needs to be broken down into different pages but what information do we need from users for them to sign up? Should we ask investment questions to pre-personalize our suggestions to the user based on this? Is this something they can skip and do later? What kind of walk through should we have to explain the layout for the homepage? Can the user skip this?

On Sign In

  • Different Home Page
  • Portfolio/My Portfolio
  • Research - a place where users can look up information on potential investments. There should also be a place to store/save articles to read later.
  • Build web scrapers to scrape from financial websites using keywords or all (eg. Bloomberg, Forbes, etc)
  • Stock Ticker - a scrolling list of stocks within your portfolio or watchlist that updates with the API data and moves across the screen. Ideally it would update with red and green to signal which way the last trade went.
  • Watchlist - this is a very common feature in most stock market games but it's a place where users can add a stock just to follow
  • Awards/Achievements - what will the users want to achieve or unlock from the game. Are they able to share this with others? Where there be special icons to display next to their username?
  • Friends - I think we need to have at least computer friend to start with, ideally 3, but maybe you can add real friends here as well. Ideally these computer friends shouldn't be trading to much but they should have much larger portfolio's as far as assets go. The user should be able to go into these portfolio's and look at their strategies and see how well they're doing. If it's another user they should have to choose to share this feature.
  • Messages - Admins can send messages, user receive update messages about new challenges or awards or other friends can text them
  • Help/Tutorial - might need to be seperated out but a place where users can learn more about how to play the game, submit issues, learn how to invest and different investment strategies. I can not stress how important building a great walk through is going to be for this application. If we decide to target people that are newer to the stock market, (highly recommend) then they need a step by step guide on what to do and the best way to get started.
  • Profile - name, age, strategies
  • Sign Out

Tech Questions

What tech stack should we use and why?

  • MERN

    • Database - MongoDB (Mongoose) to store User Info and portfolio data - this will be very flat and we can keep portfolio data seperate from the stock data. We don't want a predefined schema because users need to be able to add and remove (buy an sell) stocks at will.
    • We don't need to store stock price data from the API. We just need to be able to grab that price when the user makes a buy or sell tranactions and use the price for the transactions and real time portfolio calculating and charting.
    • Server side framework - Express.js
    • UI - React - Componenet driven and fast. There is going to be a lot going on if we get to MVP Level 2 and we will need some componenets to be constantly updating and trying to update the DOM each time a stock price changes will really slow down our app. Also being able to break down the application into compentents will really help split up the work to create a better team friendly environment.
    • Server - Node.js

  • It seems like a lot of financial analysis is done in python but I don't know how much actual analysis we will need to be able to do.

  • I still need to do more research but it seems like integrating GraphQL would be beneficial for our app.

  • I think Chris Demeke did some great work already related to some of the tech questions so if you haven't started on your own I would start with there:

    • Database and Model: Mongoose or Sequelize
    • I suggest Mongoose(NoSQL) - to store User info and portfolio data, this will be very flat. We can keep the portfolios seprate from the stock data.
      • I suggest Mongo for user info and portfolio becuase we do not want a predefined schema, becuase we want the user to add and remove any number of stocks at will. We don't want a rigid structure.
    • The data (stock prices etc.) being retrieved from an API may not need to be stored. We will need access realtime values for buy/selling functions. We may only need stock data in realtime transactions, portfolio value calculating, and charting.
    • JavaScript framework - React.JS
    • Will need reusable components, virtual DOM, developer tools.
      • I would like to use React becuase we will utilize a lot of forms, charts, and realtime portolio valuation functions.
    • -Express - Node - (WHY: Javascript, Javascript, Javascript!) I like Javascript.

What deployment options are there? What are the benefits of the deployment options?

  • I think we should try to do AWS. No idea if it's the best but learning to use it will be the most beneficial down the road in my opinion.

Who are the competitors? What do they do well? What problems do they have?

What APIs may benefit for a stock market game?

(neeed to research these further)

What industry related algorithms would we need to use?

Common Types of Trading Algorithms

  • Mean Reversion - What goes up must come down
  • Valuation - Bargain Shopping
  • Seasonality - Sell in May and go away
  • Sentiment - Buy the rumor, sell the news
  • Fundamental Investing
  • Technical Investing

Basics of algorithmic trading: Concepts and examples

  • Trend-following Strategies
  • Arbitrage Opportunities
  • Index Fund Rebalancing
  • Mathematical Model Based Strategies
  • Trading Range (Mean Reversion)
  • Volume Weighted Average Price (VWAP)
  • Time Weighted Average Price (TWAP)
  • Percentage of Volume (POV)
  • Implementation Shortfall

Technical Inicators

  • Simple Moving Average (SMA)
  • Moving Average Convergence/Divergence (MACD)
  • Commodity Channel Index (CCI)
  • Relative Strength Index (RSI)
  • Stochastic
  • Bollinger Bands
  • Pivot Points
  • PSAR
  • Ichimoku Kinko Hyo.

App Idea Questions

Benefits of real-world scenarios?

  • Users will learn how to actually invest and save money for retirement

What are the features of a game? How does the theme of a stock market change that?

  • Entertaining, engaging, fun, educational. Think of the stock market like gambling. It costs money to play, they're a lot of math involved, there's skill involved, there's stategy, you can lose your money pretty quick if you don't know what you're doing and you can win a lot of money by doing nothing right and just getting lucky

What legalities play into a stock market game? Into a web application?

  • Any web application that stores user data has some legalities to it. I think what kind of different legal questions we might need to ask will depend on what we want our web app to do with the data and how we monetize it.

What are the rules for various stock/currency exchanges across the world?

  • I don't think we need to worry about the world and all the different exchanges just yet. Let's decide what we want our app to do and then we can look into that.

How complicated do we want the game to be?

  • Not complicated at all. People won't stick around to play it if it's to complicated to get started.

Who is our target audience?

  • People who don't know anything about investing and want to learn the basics.

How do we hook people and then eventually make money?

  • You need to start out with enough money to make it interesting.
  • Give the user friends that we make so they can get tips and see different investment strategies.
  • If the user starts losing money maybe our friends our doing well enough to give them some charity to keep them interested.

Viability of the idea as a money making model?

  • Hinges on how addictive you can make the game.

What would our pricing/business model look like?

  • Since most games are free to play these days I don't think we can sell the game.
  • I think selling ads might be a way to make some money.

MVP Level 1 Features

  • Sign In/Regististration
  • Portfolio
  • Watchlist
  • Profile
  • Tutorial
  • Help
  • Sign Out

MVP Level 2 Features (All of MVP 1 +)

  • Stock ticker
  • Research
  • Awards/Achievements
  • Friends
  • Messages