U.S. patent application number 10/455701 was filed with the patent office on 2003-10-23 for automatic stock trading system.
Invention is credited to Freeny, Charles C. JR..
Application Number | 20030200169 10/455701 |
Document ID | / |
Family ID | 23793081 |
Filed Date | 2003-10-23 |
United States Patent
Application |
20030200169 |
Kind Code |
A1 |
Freeny, Charles C. JR. |
October 23, 2003 |
Automatic stock trading system
Abstract
The present invention relates to a system for automatically
trading real investment items desirably on at least one trading
exchange based on predetermined conditions. The present invention
includes a data interface for receiving investment data identifying
at least one item capable of being traded and containing
information uniquely associated with the item. An individual
trading computer receives predetermined trading criteria for making
a trade. The individual trading computer receives the investment
data and the predetermined trading criteria. The individual trading
computer then analyzes the investment data with the trading
criteria and outputs a trade request signal desirably with no
manual intervention in response to the analysis determining that
the item should be traded. The trade request signal identifies at
least one trade of the item to be made by a trader and authorizes
the trader to make the trade identified in the trade request so
that at least a portion of the trade identified in the trade
request signal can be consummated.
Inventors: |
Freeny, Charles C. JR.;
(Grand Prairie, TX) |
Correspondence
Address: |
DUNLAP, CODDING & ROGERS P.C.
PO BOX 16370
OKLAHOMA CITY
OK
73114
US
|
Family ID: |
23793081 |
Appl. No.: |
10/455701 |
Filed: |
June 5, 2003 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
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10455701 |
Jun 5, 2003 |
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09451643 |
Nov 30, 1999 |
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6594643 |
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09451643 |
Nov 30, 1999 |
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08970769 |
Nov 14, 1997 |
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Current U.S.
Class: |
705/37 |
Current CPC
Class: |
G06Q 40/06 20130101;
G06Q 40/04 20130101 |
Class at
Publication: |
705/37 |
International
Class: |
G06F 017/60 |
Claims
What is claimed is:
1. An individual trading computer for automatically trading
investment items, the individual trading computer comprising: an
input unit receiving predetermined trading criteria from an
individual for making a trade; a data interface receiving
investment data from a data source selected by the individual, the
investment data identifying at least one item capable of being
traded and containing information uniquely associated with the item
for making a trade; a computer in communication with the data
interface and the input unit, the computer receiving information
selecting a market trader, and automatically analyzing the
investment data with the predetermined trading criteria and
automatically outputting a trade request signal to the market
trader in response to the analysis determining that the item should
be traded, the trade request signal identifying at least one trade
of the item to be made by the market trader and authorizing the
market trader to make the trade identified in the trade request
signal whereby at least a portion of the trade identified in the
trade request signal is capable of being consummated.
2. The individual trading computer of claim 1, wherein the
predetermined trading criteria are stored in the computer, the
predetermined trading criteria including multiple instructions to
form a trading sequence relating to the same investment item.
3. The individual trading computer of claim 1, wherein the input
unit, data interface and computer are all provided as components on
a single physical computer.
4. The individual trading computer of claim 1, wherein the computer
outputs trade request signals to more than one individual selected
market trader, and an investment item portfolio is stored on the
computer, the investment item portfolio including a first
investment item maintained in an account by one individual selected
market trader, and a second investment item maintained in an
account by another individual selected market trader.
5. The individual trading computer of claim 4, wherein the
investment item portfolio stored on the computer is maintained
confidentially.
6. A method for automatically trading investment items based on
predetermined conditions, comprising: receiving an individual's
selection of at least one individual selected data source;
receiving investment data identifying at least one item capable of
being traded and containing information uniquely associated with
the item from the individual selected data source; receiving
predetermined trading criteria for making a trade; receiving the
individual's selection of an individual selected market trader;
analyzing the investment data with the predetermined trading
criteria; outputting, automatically, a trade request signal to the
individual selected market trader in response to the analysis
determining that the item should be traded, the trade request
signal identifying at least one trade of the item to be made by the
individual selected market trader and authorizing the trader to
make the trade identified in the trade request signal whereby at
least a portion of the trade identified in the trade request signal
is capable of being consummated.
Description
CROSS REFERENCE TO RELATED APPLICATIONS
[0001] This patent application is a continuation of U.S. Ser. No.
09/451,643, filed on Nov. 30, 1999, which is a continuation-in-part
of U.S. Ser. No. 08/970,769, now abandoned. The entire disclosures
of U.S. Ser. Nos. 09/451,643 and 08/970,769 are hereby incorporated
herein by reference.
STATEMENT REGARDING FEDERALLY SPONSORED RESEARCH OR DEVELOPMENT
[0002] Not Applicable.
BACKGROUND OF THE INVENTION
[0003] The trading of investment items, such as stocks and bonds is
well known in the art. To aid investors, there are a number of data
sources available for providing investment data to the investor.
Also, there are a number of on-line investment trading systems
today in which a trade request can be sent via a computer to a
trader, and a traded product confirmation can be transmitted back
from the trader to the computer. For example, one such system is
offered by the Charles Schwab Company. Further, there are many
commercially available investment item analysis programs or
algorithms which analyze investment items including stocks,
options, metals, and commodities.
[0004] However, to Applicant's knowledge, a system for
automatically executing a trade by receiving investment data and
analyzing such investment data with predetermined trading criteria
and then sending a trade request to a trader and/or an exchange is
not currently available. It is to such a system for automatically
executing trades that the present invention is directed.
SUMMARY OF THE INVENTION
[0005] The present invention relates to a system for automatically
trading investment items based on predetermined conditions. The
investment items could be stocks, options, contracts, metals,
and/or a number of other investment items, for example.
[0006] The system includes a data interface for receiving
investment data identifying at least one item capable of being
traded and containing information uniquely associated with the
item. An individual trading computer receives predetermined trading
criteria for making a trade, and the investment data. The
individual trading computer then analyzes the investment data with
the predetermined trading criteria and automatically outputs a
trade request signal in response to the analysis determining that
the item should be traded. The trade request signal identifies at
least one trade of an item to be made by a trader and authorizes
the trader to make the trade identified in the trade request so
that at least a portion of the trade identified in the trade
request signal is capable of being consummated. Thus, the present
invention provides a fully automated investment trading system in
which an entity such as a person or computer can input investment
data and predetermined trading criteria into the system and then
leave the system unattended to trade real investment items for
extended periods of time such as hours, days or weeks.
[0007] The present invention solves at least three problems of
manual trading. The first problem relates to discipline. That is,
for psychological reasons the requirement for matching the exact
criteria for a trade is overwhelming difficult when trading
manually. Automatic trading eliminates this difficulty. The second
problem is human error. That is, it is preferable that a close
watch of market data for a number of indications be exactly
maintained. However, factors such as boredom, interruptions,
misreadings, etc. lead to poor or losing trade executions. The
third problem relates to the fact that market conditions gradually
change and require criteria or algorithm methodology alterations.
This difficulty is virtually impossible to detect when trading
manually. The present invention permits the individual trading
computer to maintain a close watch on market data by the data
interface periodically receiving investment data. The individual
trading computer can analyze the investment data with the
predetermined trade criteria and then send a trade request signal
to a trader in response to the analysis determining that one or
more items should be traded to overcome the before mentioned
problems of manual trading.
[0008] Thus, it is believed that the present invention represents
an advance in the state of the art relating to investment systems.
Other objects, features and advantages of the present invention
will become apparent to those of ordinary skill in the art upon a
reading of specification in conjunction with the attached drawings
and appended claims.
BRIEF DESCRIPTION OF THE SEVERAL VIEWS OF THE DRAWINGS
[0009] FIG. 1 is a schematic, diagrammatic view of a system for
automatically trading investment items operating in accordance with
the present invention.
[0010] FIG. 2 is a schematic, diagrammatic view of a data interface
adapted to operate in accordance with the system depicted in FIG.
1.
[0011] FIG. 3 is a schematic, diagrammatic view of an automatic
individual trading computer adapted to function in the system
depicted in FIG. 1.
[0012] FIG. 4 is a schematic, diagrammatic view of a trading
interface adapted to operate in the system depicted in FIG. 1.
[0013] FIG. 5 is a price/share chart of a stock for XYZ company to
illustrate the individual trading computer being programmed with a
moving stop loss in accordance with the present invention.
DETAILED DESCRIPTION OF THE INVENTION
[0014] Referring now to the drawings, and more particularly to FIG.
1, shown therein and designated by the general reference numeral 10
is an automated investment trading system constructed in accordance
with the present invention. The automated investment trading system
10 basically comprises a data interface 12, an input unit 14, an
individual trading computer 16, and a trading interface 18.
[0015] The individual trading computer 16 is an open architecture
system which is designed to be publicly available and utilized by
individual investors to automatically manage the individual's
portfolio (e.g. place buy and sell orders of real investment items
such as stocks or bonds) based on predetermined criterion entered
into the individual trading computer 16 by an individual via the
input unit 14.
[0016] The data interface 12 is capable of interfacing either
simultaneously or not simultaneously with a plurality of individual
selected data sources 20, only one of which is shown in FIG. 1 for
purposes of clarity. The data interface 12 receives investment data
identifying at least one real item capable of being traded and
containing information uniquely associated with such item from the
individual selected data source(s) 20 via a communication link 22.
The investment data can be recent or historical stock or investment
item price data, company financial data, commodity price data,
interest rate data, consumer price index data, or any other data
relevant to the evaluation of investing in the item. The item can
be stocks, bonds, contracts, options, metals, real estate, or any
other type of tangible or intangible property which can be bought
or sold and/or otherwise invested in by an entity, such as an
individual. The individual selected data source(s) 20 is selected
by the individual manipulating the individual trading computer 16
from a plurality of data sources, such as Charles Schwab, Data
Broadcast Company, an investment item exchange, a data base, or any
other suitable source of investment data. The communication link 22
can be cable communications, air way communications or any other
suitable transmission link.
[0017] The investment data is transmitted from the data interface
12 to the individual trading computer 16 via a communication link
24. The individual trading computer 16 receives the investment data
transmitted by the data interface 12. The individual trading
computer 16 also receives predetermined trading criteria for making
a trade from the input unit 14 via a communication link 26.
[0018] The predetermined trading criteria includes instructions,
such as buy and sell orders, or algorithms capable of being used to
analyze investment data to generate a trade request to buy and/or
sell one or multiples of an investment item or products. For
example, the predetermined trading criteria can be an instruction
to buy and/or sell a stock at a predetermined price. In addition,
multiple instructions (predetermined trading criterion) can be
entered into the individual trading computer 16 to form a trading
sequence relating to the same or different investment items. For
example, a predetermined trading criteria to buy 100 shares of a
stock at $50.00 and another predetermined trading criteria to
subsequently sell the 100 shares of the same stock at $55.00 can be
entered into the individual trading computer 16 before the
predetermined trading criteria to buy the 100 shares of stock at
$50.00 has been executed. The predetermined trading criterion can
then be sequentially executed if the stock's market price drops to
$50.00 and then rises from $50.00 to $55.00. The algorithm can be
any algorithm and/or program capable of analyzing investment data
to produce the trade request, such as a commercially available
investment algorithm.
[0019] The input unit 14 can be a keyboard, a modem, a disk drive,
or any other device capable of supplying predetermined trading
criteria to the individual trading computer 16. The input unit 14
can be located in close proximity to the individual trading
computer 16.
[0020] After the individual trading computer 16 receives the
investment data, and the predetermined trading criteria or
criterion, the individual trading computer 16 automatically
analyzes the investment data with at least one of the predetermined
trading criteria. In response thereto, the individual trading
computer 16 generates the trade request and automatically outputs a
trade request signal to an individual selected market trader 28
with no manual intervention in response to the analysis determining
that the item should be traded. The trade request signal identifies
at least one trade of an item to be made by the individual selected
market trader 28 and authorizes the individual selected market
trader 28 to make the trade identified in the trade request signal
via a communication link 30. The trade request typically identifies
at least one investment item and includes a product quantity and a
predetermined trade price or market order conditioned to
specifically identify all predetermined parameters or conditions
necessary (such as long or short positions) to authorize the
individual selected market trader 28 to make the trade identified
in the trade request signal.
[0021] The trading interface 18 receives the trade request signal
output by the individual trading computer 16. In response thereto,
the trading interface 18 formats the trade request signal to a
format understandable by the individual selected market trader 28
and then outputs the formatted trade request signal to the
individual selected market trader 28 via a communication link 32.
The communication link 32 can be a cable and/or air wave
communications and/or any other suitable transmission link.
[0022] The individual selected market trader 28 receives the
formatted trade request signal and in response thereto, the
individual selected market trader 28 executes at least a portion of
the trade. The individual selected market trader 28 is separate and
apart from the individual trading computer 16. The individual
selected market trader 28 can be anyone or anything that causes at
least a portion of the trade to be consummated desirably on at
least one trade exchange. The individual selected market trader 28
is selected by the individual from a plurality of potential
traders, which may be Internet traders such as E-trade,
Ameri-trade, Instinet, or Charles Schwab. The individual selected
market trader 28 can be a company, an individual and/or a
securities market, such as the New York Stock Exchange, the Pacific
Stock Exchange, the Midwest Stock Exchange, the NASDAQ Stock
Exchange, the over the counter market, the futures market, and/or
the commodities market, for example.
[0023] Once the individual selected market trader 28 has executed
the trade request signal, either partially or in whole, the
individual selected market trader 28 outputs a trade confirmation
signal to the trading interface 18 via the communication link 32.
The trading interface 18 receives the trade confirmation signal
output by the individual selected market trader 28, and in response
thereto, the trading interface 18 outputs the trade confirmation
signal to the individual trading computer 16 via a communication
link 34. The individual trading computer 16 receives the trade
confirmation signal transmitted by the trading interface 18, and in
response thereto, the individual trading computer 16 may modify the
predetermined trading criteria in a predetermined manner. For
example, if the trade confirmation only showed that 25% of the
investment items included in the trade request signal had been
traded, then the individual trading computer 16 may decrease the
number of investment items to be traded in the predetermined
criteria by a predetermined amount of about 25%.
[0024] Moreover, when more than one predetermined trading criteria
have been entered into the individual trading computer 16 for the
same investment item and the predetermined trading criterion are
indicated to be executed in a predetermined order, the trade
confirmation signal indicating that one of the predetermined
trading criteria has been executed will automatically activate the
monitoring of the other predetermined trading criterion by the
individual trading computer 16. For example, a predetermined
trading criteria to buy 100 shares of a stock at $50.00 and another
predetermined trading criteria to subsequently sell the 100 shares
of the same stock at $55.00 can be entered into the individual
trading computer 16 before the order to buy the 100 shares of stock
at $50.00 has been executed. Once the trade confirmation signal
indicates that the 100 shares of stock have been bought, the
individual trading computer 16 is activated to monitor in real time
the price of the stock so that the predetermined trading criteria
to sell the stock at $55.00 can be automatically executed if the
stock's market price rises to $55.00.
[0025] The data interface 12 is shown in more detail in FIG. 2. The
data interface 12 basically comprises an investment item data
receiver and storage unit 40 which receives signals from an
interface unit 42 via a communication link 44. The investment item
data receiver and storage unit 40 can be a model M1365117T
obtainable from Data Broadcast Corporation. The interface unit 42
can be a receiver antenna and the data source(s) 20 can be a local
radio station which receives real time investment item quotes from
a satellite station (not shown) sent from an investment item
exchange, for example. In one embodiment, the investment item data
receiver and storage unit 40 can receive real time investment item
data on all investment items listed at investment item trading
exchanges all over the world, but the investment item data receiver
and storage unit 40 only stores the data from predetermined
investment item provided to the investment item data receiver and
storage unit 40 from the individual trading computer 16. The
investment item data receiver and storage unit 40 transmit the
stored investment data identifying at least one investment item
capable of being traded and containing information uniquely
associated with such investment item to the individual trading
computer 16 via the communication link 24 when a request for a
stored data signal is sent to the investment item data receiver and
storage unit 40 from the individual trading computer 16. The
request for data signal is typically sent four to ten times a
minute from the individual trading computer 16 and the investment
item data stored in the investment item data receiver and storage
unit 40 is usually updated at a frequency of about five to twenty
times per minute from the data source(s) 20.
[0026] The individual trading computer 16 is shown in more detail
in FIG. 3. The individual trading computer 16 includes a computer
46 which receives investment data from a data broadcast interface
unit 48 via a communication link 50 and the predetermined trading
criteria from the input unit 14 via the communication link 26. The
computer 46 can be a personal computer, such as Packard Bell model
2010 or a Macintosh obtainable from Apple Computer or a personal
data assistant. The data broadcast interface unit 48 can be
software obtainable from Data Broadcast Corporation which is
running on the computer 46. The computer 46 is programmed to
analyze the investment item data with the predetermined trading
criteria to generate the trade requests, as discussed above with
reference to FIG. 1. In addition, the computer 46 is programmed to
determine the value of an investment item portfolio owned by the
individual and stored by the computer 46 of the individual trading
computer 16 in real time (every investment item data retrieval
cycle). The investment item portfolio can include information
regarding investment items which are maintained in several
different investment item accounts. For example, the individual may
have accounts with several different individual selected market
traders 28, such as E-Trade, Charles Schwab and Ameri-trade. The
individual trading computer 16 can then automatically determine the
amount of gain or loss of the investment item portfolio based on
the latest trade confirmation data received by the computer 46 over
the communication link 34.The results of these computations can be
used as part of the predetermined trading criteria supplied by the
input unit 14.
[0027] Moreover, the individual trading computer 16 is capable of
obtaining information from more than one individual selected data
source(s) 20, and outputting trade request signals to more than one
individual selected market trader 28. The determination of which
individual selected market trader 28 the individual trading
computer 16 transmits the trade request signal to can be made by
the individual and input as part of the predetermined trading
criterion, or be automatically made by the computer 46 based on
predetermined criterion stored therein, such as the differences in
fee schedules between the individual selected market traders 28.
The individual trading computer 16 can be programmed to select the
individual selected market trader 28 so as to minimize the costs of
submitting the trade request signal (i.e. buying or selling
investment items). The individual trading computer 16 maintains all
of the information regarding the individual's investment item
portfolio, the predetermined trading criterion, the identity of the
individual selected data source(s) 20, and the identity of the
individual selected market trader(s) 28 private.
[0028] Referring now to FIG. 4, the trading interface 18 is shown
in more detail. The trading interface 18 basically includes a
computer 52 which communicates with a interface unit 54 via a
communication link 56. The computer 52 can be a Packard Bell model
2010, and the interface unit 54 can be a modem. The computer 52 can
be programmed with a trading exchange program, such as "street
smart" obtainable from the Charles Schwab Company to receive trade
requests and then output such trade requests to the individual
selected market trader 28.
[0029] The present invention also contemplates the individual
trading computer 16 monitoring the prices of each of the investment
items contained in the investment item portfolio owned by the
individual and stored by the individual trading computer 16. The
input unit 14 receives predetermined trading criteria including a
predetermined stop loss value for the item from the individual. The
predetermined stop loss value can be a predetermined amount, e.g.
$5/share, or a percentage of the value of the item.
[0030] The data interface 12 periodically receives pricing data
from the individual selected data source 20 selected by the
individual. The pricing data identifies at least one item capable
of being traded and contains a price information uniquely
associated with the item.
[0031] The computer 46, which is in communication with the data
interface 12 and the input unit 14, has a reference to the item
stored thereon. The computer 46 automatically monitors, in real
time, the price of the item via the pricing data and changes an
execution price of the moving stop loss in a first direction as the
price of the item changes in the first direction and maintains the
execution price of the moving stop loss as the price of the item
changes in a second direction opposite from the first
direction.
[0032] The computer 46 automatically outputs, in real time, a trade
request signal to the individual selected market trader 28 selected
by the individual in response to the price of the item changing in
the second direction to the execution price of the moving stop
loss. The trade request signal identifies at least one trade of the
item to be made by the individual selected market trader 28 and
authorizes the individual selected market trader 28 to make the
trade identified in the trade request signal whereby at least a
portion of the trade identified in the trade request signal is
capable of being consummated.
[0033] For example, a price/share chart of a stock for XYZ company
(hereinafter referred to as "XYZ stock") is shown in FIG. 5.
Assuming that the XYZ stock was bought at $100/share, and the
predetermined stop loss value was $5/share, the execution price of
the moving stop loss would be initially set at $95/share. If during
a first period, the price of the XYZ stock decreases to $98/share,
then the execution price of the moving stop loss is maintained, and
the moving stop loss would not be activated. If the price/share of
the XYZ stock increased from $98/share to $120/share, the execution
price of the moving stop loss would be increased in real time to
$115/share. If the price/share of the XYZ stock decreased from the
peak shown in FIG. 5 ($120/share) to $115/share, the moving stop
loss would activate the individual trading computer 16 to output a
trade request signal to sell all or a preselected part of the XYZ
stock.
[0034] It should be noted that the computer 46 of the individual
trading computer 16, and the computer 52 of the trading interface
18 can be the same physical computer. In this embodiment, programs
embodying the logic of the individual trading computer 16, and the
trading interface 18 can be programmed onto the same computer. The
trade request may then be forwarded from the individual trading
computer logic to the trading interface logic via a macro program.
The macro program may include a trade confirmation loop which waits
and captures the quantity and price of any investment item which
has been traded (the trade confirmation signal) and to forward such
trade confirmation signal to the individual trading computer logic
via the communication link 34. It should be understood by those of
ordinary skill in the art that in this embodiment, the
communication links 30 and 34 would exist as logical links between
the two computer programs.
[0035] Changes may be made in the construction and the operation of
the various components, elements and assemblies described herein
and changes may be made in the steps or the sequence of steps of
the methods described herein without departing from the spirit and
scope of the invention as defined in the following claims.
* * * * *