An adage goes as: `a picture is worth thousand words’. I am slowly finding out that this can apply very well to the world of retail trading applications. In fact, visualization can become a new way of trading in the future. In some areas, such as technical analysis, a methodology for forecasting the direction of prices through the study of past market data, evolved quickly after the OHLC(Open, High, Low, Close) data of a security was plotted in the form of line and candle stick charts. However, even though the capital markets industry is constantly evolving with innovations and methods of trading, visualizations remain understated.
Uses of Visualization
Visualization can be very useful in analyzing market data, company results, fundamental information and also news. However, the type of visualization should be carefully selected for each trading app widget, i.e. Watchlist, Option Chain, Order book etc., in such a way that the data represented remains meaningful and tradable.
I have always been a fan of www.finviz.com as the visualizations provided by them are very relevant and tradable. However, some of the new features like 3-D heat map are undoubtedly visually appealing, but their relevance and tradability remains questionable. Hence, it is crucial to find the right balance between the visualization type per widget and the data to be visualized.
Visualizations developed for a retail trader should be focused to simplify the process, instead of having to skim through tons of data, analyzing them, trading them and finally tracking them effortlessly. In other words, all widgets be it the simple widget like a Watchlist or a complex widget like an Option Strategizer; visualizations should be customizable as per the needs of the trader.
Recently, we at Tavant, were working on a project for one of India’s leading bank’s retail trading web application, and the results were studied through web analytics. The response visualizations received from the traders was fascinating! Some of the visualizations like the bubble chart that were provided to analyze market scenarios, and news analytics received significantly more views than the traditional market statistic data like top OI gainer, volume gainers, etc. We also found significant tractions for other visualizations like Fin Map, an interesting, but complex variation of a heat map that could help a trader to analyze a company’s results at a glance. To summarize, there were more views for every visualization implemented on a single trading day. Meanwhile the team at Tavant Technologies, Bangalore, is trying to blend heat maps with technical charts to obtain calendar charts to offer technical analysis to even novice traders.
Portfolio Heat Maps
In concurrence with the above-defined principles, visualization of a portfolio in the form of a heat map was constructed. Heat map that is one of the many ways of visualizing portfolio was attempted.
Heat maps are an easier method to track and analyze a portfolio with colors (red, green or gray) and the area of the rectangle used in the heat map summarizes the portfolio performance at a glance. Traders, on right click, were provided with the option to trade.
For advanced traders or portfolio managers, heat maps are constructed with an option of tracking the performance by Invested amount, market value or profit & loss. Drilldowns in the heat map can be used to analyze the portfolio based on asset allocation, sector allocation, and capital allocation.
Thus, visualizations are a whole new possibility for retail trading applications where the trader can get rid of numbers, percentages and averages, and trade purely based on colors, shapes, and sizes.
