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, and democratic way. We believe this will be an innovative market force, combining human intelligence with the artificial intelligence of neural networks. Neural networks are computer algorithms that emulate the way a human brain learns.
In the world of developed financial markets retail investors are regarded as "dumb money," after the recent market crash and the acceleration of the historic frequency of economic bubbles, the "smart money" that is hedge funds, banks and other institutions have lost their cache. Furthermore, with the use of computer technology these top players in the liquidity pyramid have created, in their small numbers, a closed loop that, due to its reflexive nature, has short circuited the whole of the global markets. These dramatic events have underlined the need for new ways to deal with the growing complexity of modern capital. Lastly, emerging markets are often fueled by domestic retail investors who happen to be diverse and well educated. With the continuation of globalization, these reinforcements could be crucial to achieving balance and superior market efficiency for everybody. The primary tool of the small or retail investor is the Internet, this is where they perform their research, analysis, communicate with peers, get news and quotes, execute trades. This contrasts with trading institutions that use powerful dedicated computers, inside placement on the information curve, mission centered teams, and market maker status. In short, it's a David and Goliath situation. Over the years, with rapid IT advancement, these companies have come to rely on algorithm driven data crunching machines operated by scientists or "quants" to find and immediately (often times automatically) trade on perceived market opportunities. As personal computers get faster, and there's more data available throughout the Internet, it is possible to imagine that the next tool in the retail investors' arsenal will be supervised machine learning of vast market datasets, currently such a comprehensive web service does not exist.
NEUTRUE is charged with building an open web based neural network platform, promoting its merits, and supporting the product centered community. The first phase involves the construction of a working prototype that will generate trading signals for 80 or so popular ETFs. The historic data will come from either Google or Yahoo, and the back end will be run on Rapidminer or equivalent Java based machine learning program on a remote virtual server. The training will be done manually and in-house. At this stage, access to the algorithms will be restricted to the public, but the results of the experiments will be available free of charge. The site will present neural network market signals along with financial quotes and aggregated market news, the content will host advertising which will be the main source of revenue along with commissions from referrals to online broker dealers and other financial service providers. The goals of the first phase include: designing and building a nascent neural network for analyzing market quotes, creating a process flow so the program can be trained and run continuously in real time, creating product awareness, attracting an interested audience, and conducting basic market research. The second phase involves the design and implementation of the front end of the platform that will allow users to design and train their own neural networks. The platform will be solid, user-friendly, dynamic and graphic. It will incorporate things like charting, virtual portfolios, technical indicators, mouse-
click training, custom data streams, sharing, custom coding. At this point the company will also step up its marketing reach, educating about the technology as well communicating the accessibility and benefits of artificial intelligence to the layman. With the service's higher profile there will be more advertising and affiliate revenue, further monetization strategies may include charging fees for access to premium data streams (like those offered by Bloomberg or Reuters), allowing users to connect the service to on-line trading platforms, allowing users to sell signals, strategies, or algorithms that they design using the platform. The goals of the second phase are: to have a secure, bug free, easy to use, and flexible web based financial data mining platform, a large community of dedicated users, and an increased awareness of AI decision support possibilities for retail investors. The third phase is the most lucrative one and changes the fundamental nature of the company. At a certain point the users will form a critical mass and will request the functionality to trade and invest using the platform. NEUTRUE becomes a market maker and itself a liquidity provider. A good way to look at it is that individual users or groups of users with limited liquidity will form micro-hedgefunds, NEUTRUE will use its own AI tech to pool together this micro-liquidity and insure that the trading orders of its users are filled with minimal slippage and vigorish. The goals of the third phase include: having an innovative back-end AI to analyze the decisions of its users and maintain order as a market maker, allowing retail investors to invest without a minimum amount, and attracting enough small retail liquidity to become and effective counterbalance to hedgefunds. The fourth phase is the most exciting, challenging, and fantastic. As NEUTRUE becomes a global clearing house it will have universal access to world wide financial data, a powerful dedicated computer network running efficient AI algorithms, as well as a diverse army of self motivated and financed engineers and trainers. The company will have vast financial, technical, and human resources and will be perfectly positioned to solve current and potential economic problems. One example being the design and creation of a single currency unit that fairly reflects all global economic activity and is structurally immune to manipulation and speculation.
MARKET COMPETITION AND INTELLECTUAL PROPERTY
With regards to potential competitors, they fall into two categories. The first is made up of small services that offer neural network signals and newsletters or neural network based trading platforms and software. A cursory search for "neural network trading" reveals a number of companies and services that, asides from lacking in brand appeal, price their PC software at 190.00 USD and up and past 1,000.00 USD. Furthermore, these companies do not incorporate data feeds into their services. Data has to be either manually imported or licensed from other services (they start at around 99.99 USD a month). Newsletter subscriptions start at around 10.00 USD per month. The second category is made up of market makers and online brokers. The market makers have lost a lot of their reputation, and the thought of them introducing their back-office tools to their retail investors makes little sense since their business model is based on maintaining the small investor at a relative disadvantage. On the other hand there's little stopping online brokers from jumping on the neural net bandwagon and making machine learning another feature of their platforms. The only problem is that they would have to expend resources to rebrand, reprogram, and reeducate. Right now the financial establishment is weak, and we have a window where resources that otherwise would go towards building Capitalism 2.0 are spent on maintaining solvency and the status quo. IP-wise there are a lot of practical applications for neural networks in a wide array of fields. As of 2007 the Supreme Court has opened the door to contesting the "obviousness" of high-tech patents, we believe
this is a beneficial development for NEUTRUE as our strategy is not patent centric. On the other hand, during the course of Phase 2 development we will come across unique technical solutions as well as business processes and those with patent potential will become company assets.
At this stage the company is bootstrapping and is designed for capital-efficiency with a low pre-money valuation. There is a drawn up launch and monthly operating budget for Phase 1, as well as a monthly revenue milestone.
NEUTRUE is helmed by Andrei Yakovlev, a Russian born NYC based media and tech entrepreneur. Mr. Yakovlev has wide experience in fields crucial to company's success as well as access to an impressive talent pool of programming, legal, design, engineering, and business professionals and experts. NEUTRUE is currently in the "product in development" phase and can be observed at The New Capital Club website newcapitalclub.com.
Thank you for taking the time to study this brief. We look forward to working with you.
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