Simulations
Watching the model at work
The spin model simulation: on the left the investors (blue = selling, white = buying), on the right the resulting price.
"Metastable phase transition in a Financial ISING Spin Model" · opens on YouTube
Heritage · 2014
For years we built trading systems commissioned by third-party clients, based on the Ising spin model — the model physicists use to describe magnets. It is no longer our business: here we tell what they were and what they taught us.
The model
An Ising model describes the behaviour of magnets. The feature we used to describe financial markets is imitative behaviour among agents: when trading financial assets, people are influenced by their "nearest neighbours".
To make the analogy visible we built a simulation: on one side the spin lattice, where every pixel is an investor — blue when selling, white when buying; on the other the simulated price, simply the difference between units bought and sold.
Local imitative behaviour leads, globally, to a "phase transition": a sudden price jump in which most investors polarise. The system was built to recognise that condition and take advantage of it.
The history
The system — BeatIT™ — operated on EURUSD from 2014 with a two-tier architecture, fully unattended: it recognised and corrected dozens of market, broker and platform anomalies on its own. For its time, an autonomous system of that robustness was a small manifesto of method.
The framework remained valid as long as its founding hypothesis — imitative behaviour among traders — persisted, which is why we kept verifying it on data. Over time we chose to focus Redexe on analysis services for institutions: trading systems are no longer an active business.
What remains is the method: the attention to collective behaviour, tails and sudden transitions entered our risk measure and everything we have done since. In a sense, RedES™ is a child of that season.
Roles and responsibilities
One point must be stated explicitly: the trading systems were software commissioned by third-party clients. It was the clients who held the responsibility for running them, monitoring them and fulfilling all related obligations. Redexe, in that phase, was a software house only.
Simulations
The spin model simulation: on the left the investors (blue = selling, white = buying), on the right the resulting price.
"Metastable phase transition in a Financial ISING Spin Model" · opens on YouTube
"A couple of BeatIT™ trades": catching the butterfly before it becomes a monsoon · opens on YouTube
FAQ
No: trading systems are no longer an active Redexe business. This page remains as historical documentation of a real activity, started in 2014.
The third-party clients who had commissioned them: they held the responsibility for running them, monitoring them and fulfilling all related obligations. Redexe was the software house only.
Because it is a verifiable part of the method's history: the focus on imitative behaviour and sudden transitions, born here, lives today in the RedES™ risk measure and in the analysis services.
The trading system based on the Ising model, developed by Redexe as a software house: live on EURUSD from 2014, unattended, able to autonomously recognise and correct operational anomalies.
Contact
If our way of looking at markets interests you — applied today to analysis services — message Riccardo Donati on LinkedIn.
Nothing on this website is a solicitation to invest. Redexe works strictly B2B.