DimeChimp can be used in a variety of ways to find a multitude of trades. There's no silver bullet or magical formula. Instead, DC is a consolidation of data, analyses and visual representations. We hope that our community can find great ways to use these tools to find profitable trades. That said, it can all be a bit overwhelming, so here's a primer:
Narrow Your Universe
Choose which asset classes or industry sectors you want to focus on, as well as timeframes and trading intervals. This is dictated by your trading style, how actively you want to manage trades and your trading windows. Narrow your universe down further by choosing which quant filters you want...whether you're looking for strictly stationary assets (low pValues), mean reverting/trending assets (hurst closer to 0 or 1) or anomalies in the market (zScores show how far away an asset is currently from its historical mean).
Plant The Seed
Select symbols you want to investigate. You can choose from the filtered symbols or from the entire universe. Choose symbols which you think are related in some fundamental way. As you select symbols, new suggestions will pop up based on those selections.
Check The Possibilities
We'll calculate the quant values for all the possible combinations derived from your selected symbols. We limit these to, at most, 3 symbol combinations. We've found that trading 4+ symbols together is a bit much to manage on the retail side, not to mention transaction costs really start to play a role.
Verify Your Findings
We'll graph the synthetic symbol based on a combination of the stocks you've chosen. The proportions of each stock in the combination are found in the upper left. We do preliminary backtesting based upon the most common indicators used in the industry and return analyses using multiple metrics. Of course, your strategy may be different or may combine multiple indicators, or none at all. This is a quick glance at the trade's viability.
Formulate Your Trade
If you're trading the symbols against each other, you're set. If you're using options to implement your trade, you can view the current option series and their prices. We've created a vol curve based on the implied vols to give you an idea of which options are cheap/expensive relative to the others. If you don't like how the vol curve fits, you can change it manually by shifting the curve or changing the skew (moving the wings opposite to each other) or kurtosis (moving the wings up or down together).
Track Your Ideas
Found a great idea you want to test? Enter some fake trades and track how it's doing over time.
That's a basic rundown of how to use DimeChimp. Of course, there are lots of ways to interpret the data, slice up the results, or create trades from the ideas generated. We're excited to have our community show us what they've come up with. Good luck!!!
