Actually, considering that on average, the stack market has grown over the years, this seems like a good strategy. It's why mutual funds and the like exist: individual enterprises come and go, but the economy is constantly growing. If you you invest widely across the economy, you should see fairly consistent growth (with a few spikes and dips which cancel each other out.)
Right, but the default stock order only lasts 20 days. Surely the small delta up trend of the market doesn't affect a 20 day order in any significant way?
Whatsay over a given year the entire stock market grew 10%. Then the average rate of growth for every stock is 10% per year and so for any given stock for any given period over a period of 20 days the average growth would be 10%/18.25, or .0054. So, if you consistently buy, you will on average, profit about that much per trade.
Yep, that's what a lot of people are seeing. Just execute a bunch of buys, and watch your account grow! I'm going to add an APY feature, so whoever has the highest percentage gain per time in the market will be the leader. This will take away the "I bought 500 stocks and now I'm in the lead" account. (And the trade length is in trading days, 20 roughly = 1 month)
I just launched on Saturday and have already had more than 10,000 trades "executed". Your comments are much appreciated. (Note: if you think reading stock charts is a bunch of crackpot hooey, feel free to flame.)
I'm no expert, but it seems to me that reading stock charts is just a particularly unsophisticated form of statistical arbitrage, and that it _might_ work provided that nobody else in the world is doing it.
Real statistical arbitrage firms, as I understand it, work by looking at the historical variation in thousands of asset prices at once, putting them into an enormous covariance matrix, and using dozens of very smart mathematicians and millions of CPU hours to figure out which assets are likely to be currently underpriced.
That's how folks like Renaissance Technologies got rich. Unfortunately, as soon as the secret got out, other folks started doing it as well, and pretty soon the mispricing of assets got smaller and smaller, so they're in an arms race to find more and more sophisticated algorithms.
So I guess the point is that if mispriced assets are that hard to find when you have a hundred PhDs and a supercomputer, you're not likely to do very well just by looking at whether a squiggly line is currently above or below its recent average. All the easy money has already been vacuumed up.
I do think that reading stock charts is a bunch of hooey, but I will withhold from flaming. If you could expand this site to allow people an easy web 2.0 method of back-testing alternative trading strategies (or even just portfolios), it would make me happy.
Stock charts, by itself without a history of what is being traded, is a bunch of hooey. Data without context is worthless.
Even though 2 different charts look the same, the reasons may be different. One could be because a company is doing so well that they are constantly running out of stock (Nintendo) versus another company who's just had their 4th lead paint recall (Toy's R Us).
Very cool. It's sort of Hot or Not for stocks. I would suggest showing just a small summary and graph of previous trade below the current total so you can get rid of the New Trade button and have the Buy/Skip/Sell buttons and chart for the next stock imediately available on the result page. That way users can just click Buy/Sell/Skip to move from page to page.
The main problem right now is that since the market is long-biased and there's no concept of time in the rankings, it's easy to get to the top by always clicking "Buy". It would be cool if you could make the rankings actually reflect a confidence score of how well a user is beating the market.
I'm not very strong on the statistics, but here's a possibility: for each trade, calculate the user's excess return against the market, represented by an index fund: (user's return % - market return %), and multiply that by the number of days. Then assign a confidence score using a t-test, maybe: t = (excess return * days) / (sample variance / sqrt(number of days)), and look up the confidence level based on the t-value. Finally, rank users according to their confidence level.
Something else--since this is technical analysis, it would be cool if you could include some other indicators on the chart, e.g. RSI, more than one moving average, bollinger bands, etc. That could give you some cool metrics--you could track how well each combination of indicators improves picks, by user and in aggregate.
That'd be right clicking to snatch the chart URL, which contains the stock symbol and date parameters. Peeking into the future would certainly help one's rate of return a bit :)
Yes, I thought of this but didn't think someone would go to the trouble to look at the stock and date, then look up the price N-days after that, then go back and trade it. Apparently I was wrong! I could solve this by dynamically creating an image w/ PHP and trimming the stock & date, but my poor shared CPU wouldn't like that...
Then you don't have to use image processing (including actually reading the image), and they'd have to become right-click-and-copy-paste-image-src-check-in-new-tab-cheater! :-)
The concept is interesting. I, however, am not a fan of technical analysis. It's been drilled into my head that technical analysis is a self-fulfilling prophecy.
If everyone looking at a chart determines that the exit price should be $20 (let's assume the stock has shown a resistance level at that price) many people would try to exit around $20. The assumption would then be that if everyone does indeed believe that $20 is a ceiling, then everyone would sell at $20 thus creating the ceiling.
I believe sound fundamental analysis is the optimal method of analysis, but even that method has been called into question over the course of the last eight months as many investors are learning that much of what is on the books is either someone's best guess or flat out fraudulent at best.
The page doesn't factor in Splits.
Entry Price: 52.00 (Mar. 8, 2000), Exit Price: 48.88 (Apr. 5, 2000)
Comes out to a 6% loss, but there was a SPLIT on the 21st! I should be up nearly 100%.
I like the concept. While short term stock exchange is usually a risky waste of money, this does help illustrate certain principles.
The number of people suggesting that 'always buy' works shows us something: that the economy on average has grown over the past century. Reason being of course that, when one person succeeds, he provides means for another person to succeed. Thus growth begets growth, especially capital growth. Investing broadly in the stock market is almost always sure to bring modest gains over the long term.
Question, are the charts simply random charts from random companies recently trading?
Where are they coming from? I see AOL is providing them, but how are they selected for use in the site? This might explain the amount of users who seem to be succeeding by clicking only the "buy" button.
Is there an algorithm that makes sure the gains and losses are evenly distributed in the charts (less realistic), or are the charts completely random (mimicking the experience a real stock trader would be presented with the charts)?
My only criticism is that its hard to tell where the stock was after the time-window is grown after I click buy/sell. If i click back, then I can see, but otherwise its kinda hard. If you could put a little vertical red line over the image where I bought/sold the stock, it'd help figure out what happened. I know you're just pulling a picture from yahoo finance, but since the time-window change is always the same, the red line should always be over the same spot.
Hmm. Are you storing our passwords as plain-text? It's always disappointing to see my password emailed to me after I've registered on a site. I picked it out, I know what it is, but now I have to wonder how it lives in your database since you don't seem to care about security at all.
I found another way to "cheat." Change the length of time to 40 days, and then click the buy button five or six times before the buy/sell/skip buttons change to the "new trade" button.
Anyway, create an API and a bot competition! Don't give the link, and use a timer and required open source to discourage cheating (still can't eliminate it, ah well.)
EDIT: Oh man! your score isn't saved if you make an account. I would be in second place.
This confirms my opinion that chart reading is nonsense.