Virtual-reality interfaces and 3-D software are changing the way financial traders perceive the market
David Baum
It's just another sunny day at the beach: sea gulls, sunbathers, a surfer or two. But wait--who's that guy with the virtual-reality goggles talking to the sky?
That's Mas Dinero, lead securities analyst at Market InSight, keeping an eye on utility-stock fluctuations during lunchtime. And that's not the sky he's talking to, it's a microphone concealed in his goggles. He just sold a million shares of Con Ed.
Farfetched? Not according to Peter Rothman, managing partner at Dive Laboratories, a virtual-reality company. Dive has produced a financial-trading application called vrTrader, which lets PC users chart market movements by interacting with audio and visual cues in an animated 3
-D scene. Market data on stocks, indexes, futures, and options is displayed as 3-D objects, real-time graphs, and text. Users are immersed in a world of color, motion, and sound; it's like walking around in a life-size bar chart. Individual investments, up to 100 at a time, are the bars, or rather poles, that can spin around, change color, flash, or give off sounds in response to changes in the market (
see the screen
).
Market information travels to vrTrader via a live data feed from Data Broadcasting, a financial news service in San Mateo, California, that transmits real-time stock-market data by cable TV, FM radio, or satellite. A decoder box, which is leased from Data Broadcasting, captures the data and feeds it to the PC in binary format through a serial port. The vrTrader software processes the data in real time, mapping current values for particular stocks and stock groups to their 3-D representations on the screen (see the figure
"Live 3-D Data"
).
"S
o long as you have the FM radio data feed," Rothman says, "you could run vrTrader on a laptop computer at the beach."
You can experience vrTrader's 3-D world on a well-equipped Windows PC, preferably a Pentium, with 16 MB of RAM and a 256-color display. Optional LCD-based shutter glasses (
see the photo
) add binocular depth to the 3-D scene, or, for total immersion, vrTrader Pro supports a complete virtual-reality headmount with voice recognition and spatial sound capability.
Each 3-D icon can display a dozen pieces of information simultaneously. If you want to sell your stock when it hits $30 per share, you could enter an alert related to the price, such as a red flash. When the price goes above $30, the visual alert (plus whatever sound you associate with it) will trigger. Other visual cues can represent how an entire industry group is trading as a whole.
"Once you are used to the visual metaphors, it is very easy to apprehend a lot of information at once," says
Maurice Doucet, who is a vice president at Dive. Currently, vrTrader can read only live data, Doucet adds, but an upcoming version will show historical data from a relational database as well.
Donning headgear to watch stock ticks might seem a bit, well, extreme. But just look at it from Mas Dinero's perspective. If a picture is worth a thousand words, a 3-D picture must be worth a million, right? The better you can perceive the market's subtle gyrations, the better you can reap its rewards. And the bigger the rewards, the more time you can spend soaking up sun on pearl-white beaches.
Through the Looking Glass
Several technologies have converged to bring 3-D visualization and virtual-reality interfaces into mainstream commercial use: faster PCs, improved digital-compression techniques, better video-capture boards, high-resolution bit-mapped displays, and live data feeds of financial information, to name a few. There are even software development tools for building virtua
l-reality applications, such as WorldToolKit from Sense8, the development environment from which vrTrader was built.
"Virtual reality is the next logical step," says Tom Coull, who is the president of Sense8. "Multimedia typically implies prerecorded sound and images; the scene is not computed frame by frame on the fly. Virtual reality, on the other hand, means real-time graphics. It's interactive. You can do anything you want to the objects, and they will respond."
But where virtual-reality applications once required specialized platforms and programming skills, WorldToolKit now brings the technology to Windows PCs and other platforms. It's a C toolkit of about 650 functions that developers can use to control real-time simulations, mapping data onto a 3-D display using an object-oriented paradigm.
Most of the development work involves the graphical description of the 3-D world--the database, in virtual-reality parlance--and writing the behavior for the objects. The former involves manipu
lating prebuilt objects from libraries of common visual displays--buildings, fish, birds, airplanes, cars, what have you--or adding your own graphical items from CD clips or a graphical modeling tool. The latter means hand-coding in C or C++.
WorldToolKit uses the OpenGL API and graphics language, developed by Silicon Graphics but which is fast becoming a de facto standard on many platforms, including Windows. Developers use the API to give the virtual objects tasks to perform, such as dynamically resizing screen icons to reflect changes in a stock's value.
"The metaphor that you use to represent your data is part of the art of building these applications," Coull says. "That's where the developer's own experience and creativity come into play."
Getting your arms around these new technologies is like chasing a white rabbit, so Coull uses another WorldToolKit application as an example. Quantal International, a start-up firm, developed a visual portfolio management tool. Quantal uses a "flyi
ng" metaphor for its virtual universe. Portfolio managers use two mouse buttons to move in three dimensions through a cityscape that represents selected stocks and securities.
Quantal's software is designed to simplify international portfolio management. It can analyze changes in up to 10,000 stocks in different currencies, with an eye toward recommending investment strategies whenever investment managers wish to evaluate and update their holdings, typically once a month.
"There is no good way to represent this with a standard 2-D spreadsheet interface," says Terry Marsh, a professor of finance at the University of California at Berkeley and one of Quantal's three founders. "So we use virtual reality to present an ever-changing surface that you can fly above and walk around on."
Down the Rabbit Hole
Diving from the aerial view of the cityscape into the streets and back alleys of Quantal's virtual world is how users home in on a particular industry or group of secu
rities (
see the screens
). For example, a group of utility stocks might appear from a distance as a skyscraper. Once you fly closer, the building comes into focus as a group of individual data elements, representing the data objects themselves. Alighting on that building allows you to drill down to reveal its contents.
Users can analyze investment options by selecting specific countries, industries, and stocks of interest. For example, they might look at financial securities in Singapore or the auto industry in France. The portfolio management software performs off-line computations and modeling to recommend specific holdings in those areas.
The portfolio management software doesn't perform real-time data visualization from a stock feed, although it could potentially, Marsh says. Rather, it draws from a Microsoft SQL Server relational database of information loaded daily from Reuters.
"For the most part, real-time data feeds that are applied to real-time graphics are d
isappointing," Coull believes. "The information doesn't change that quickly, and thus it doesn't affect the virtual environment very dramatically." Obviously, this depends on the application.
The Quantal portfolio manager runs in Windows NT (on 90-MHz Pentiums and up) and interacts with SQL Server through any ODBC-compliant (Open Database Connectivity) query-and-analysis tool. Programmers, led by Indro Fedrigo, a founding member of Olivetti-Sixcom, devised risk-analysis programs in Visual C++ and used WorldToolKit to present the data in three dimensions with a virtual-reality interface.
"Computing the optimal holdings for 10,000 securities is no easy feat," says Marsh. "Our competitive edge is a new way of doing that, and a new way to visualize the results. With our portfolio manager, computations of this scope can be performed in a minute or two on a standard 90-MHz Intel Pentium. The biggest limitation is the speed of the video card. As those get faster, the graphics get more impressive."
However, users must be careful not to fly too high, lest their wings get burned. There is an important distinction to be made between visualizing data and giving financial advice.
"We can help you interact with the financial data or envision the value of a certain composite of securities," Marsh says. "But we don't tell you when to buy or sell. What you do with that information is up to you."
Analyzing the Data
The Quantal and Dive applications are examples of the potential of data visualization and virtual reality. WorldToolKit helped automate their unique visual worlds, but programmers had to drop into C to create business logic and perform data-analysis functions.
A step up in complexity leads to VDA (visual data analysis) software. VDA technologies include the high-speed 3-D graphics that visualization and virtual-reality tools provide and a host of analytical capabilities as well. Some of these are mathematics and statistics, signal processing, data sortin
g and subsetting, plotting, color-table manipulation, animation, data-point differentiation, and interpolation routines. There are also tools for building menuing systems, GUIs, and hooks to other programs. This gives business developers an enormous bag of tricks for building complex trading applications.
To cope with this huge volume of data, firms such as Barclays Bank (see the sidebar "Financial Engineering") are using a VDA package called PV-Wave from Visual Numerics. Most trading houses already have applications in place that monitor data feeds and report ticks to hundreds of thousands of securities, rates, and currencies. From these existing applications, data structures that monitor market data can be created and loaded into the VDA package, where they can be treated as variables.
Once the variables have been defined, it's a simple matter to apply the data-analysis functions (e.g., correlation and regression analysis) and use built-in plotting and animation functions to visualize the resu
lts. Plotting the data points from a large array labeled Z, for example, is accomplished with the simple command:
PLOT, Z
where Z is a variable that represents the entire data set. Such high-level operators make the application code much more compact and efficient than FORTRAN and other low-level languages.
Within PV-Wave applications, traders can click on a button or pull down a menu to select calculation and analysis functions. They can then visualize the results.
Advice from a Caterpillar
Dan Clark, who is director of marketing at Visual Numerics, uses an example to explain what makes VDA software tick. To compare fluctuations in the exchange rates of the mark and the pound against the dollar, the changing values of each currency could be stored as data points within ASCII files, a database, or directly within the VDA package as they come in over the live data feed, he says.
Data for the different currencies from a specific time period
comes into the VDA software. That data is then combined to form an array, and 3-D plots are constructed to show the value of the dollar against the other two currencies.
The result is a 3-D surface, with peaks and valleys representing the highs and lows of the three currencies over the time period. Traders could use this to quickly spot trends, such as a line of peaks indicating how the value of the dollar is maximized whenever a certain combination of the pound and the mark occurs.
Traders could then represent a fourth currency, such as the yen, with color, as Barclays is doing. "The fourth variable could be draped over the 3-D surface contour of the other three," explains Clark. "This would allow analysts to easily see if there is a correlation or decorrelation between the surface plots of the first three currencies and the color intensities of the fourth. Peaks and valleys reveal the changing values of the first three variables, and `hot' and `cold' colors designate the values of the fourth.
"
The plots can be stored as images and then played back frame by frame. Thus, once the VDA software has plotted the currencies for several time intervals, it can create the illusion of animation by flipping the 3-D images by in rapid succession.
"A similar operation in FORTRAN might involve hundreds of lines of code for error analysis, boundary checking, and so forth, in addition to the algorithm itself," Clark says. "But VDA tools handle such functions as signal processing, matrix manipulation, data I/O, and animation with little or no coding."
Barclays has completed a price tracking and hedging system using PV-Wave, and it is developing a series of applications for pricing and risk management of second-generation foreign-exchange options. (These options offer features such as the ability to hedge exposure to an average rate or to create an option on an option. Tricky stuff.)
The data-visualization programs developed by Barclays Financial Engineering Group have a response time of
less than one-tenth of a second, according to Brandon Davies. Line plots can update almost instantaneously, and most 3-D plots can update multiple times per second. Intensive math processing might slow the response rate down a second or two, but developers can handle this by batching the data. Moving 250,000 floating-point data values from disk to display in under 3 seconds is typical.
Vanishing Smile
Obtaining a competitive edge as a financial trader is a lot like looking for a Cheshire cat: Just when you think you've got a clear picture, it vanishes. That's why many analysts and traders are looking to 3-D visualization technologies to help them gain a more intuitive grasp of the reams of data they must deal with every day. Market data, after all, is just numbers, an ever-changing canvas of digits and decimals piped in from worldwide data feeds.
It's easy to miss an important number as it moves across a trader's Telerate screen, but a real-time 3-D graph that changes c
olor in response to a dramatic fluctuation in a stock's price is likely to catch the eye. Looking a few years down the road, Coull envisions room-size virtual-reality chambers, with wall-mounted screens, surround sound, and motion detectors that respond to hand and body movements without imposing gloves, goggles, or even a mouse.
You think it sounds impressive? No. As Mas Dinero says, it's just another way to make a buck.
WHERE TO FIND
Dive Laboratories, Inc.
Boulder Creek, CA
(800) 434-8346
(408) 338-6460
fax: (408) 338-6462
Quantal International
Berkeley, CA
(510) 848-0470
fax: (510) 848-0473
Sense8 Corp.
Mill Valley, CA
(415) 331-6318
fax: (415) 331-9148
StereoGraphics Corp.
San Rafael, CA
(415) 459-4500
fax: (415) 459-3020
Visual Numerics
Boulder, CO
(800) 447-7147
(303) 530-9000
fax: (303) 530-9329
illustration_link (14 Kbytes)
Financial data originates with services such as Data Broadcasting. Data is transmitted via cable TV, FM radio, or satellite. When received, it's decoded with the decoder box. It enters the PC through the serial port. The vrTrader software processes the data, and 3-D images appear on-screen.
illustration_link (41 Kbytes)
Quantal's portfolio management software displays the risk exposure of a stock portfolio by market, as 3-D objects (left). Getting "closer" to the 3-D representation of the distribution of a stock portfolio in terms of country/industrial sectors (right).
photo_link (29 Kbytes)
StereoGraphics' CrystalEyes visors have LCD lens shutters that alternate views of the monitor for a 3-D stereoscopic view.
screen_link (44 Kbytes)
Dive Laboratories' vrTrader shows financial data, such as the stock prices shown here, as animated color 3-D objects.
David Baum is a freelance business and technology writer in Santa Barbara, California. You can reach him on the Internet at
[email protected]
or on BIX c/o "editors."
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