Synchrony is the key insight in HerdForce. It is a big deal.
Ever been to a sporting stadium and seen the crowd suddenly wave their arms at the same time? Or, applause in an auditorium where the claps go from randomness to everyone clapping at the same time? That is synchronicity in human behavior which is easy to identify with our visual and auditory senses. This type of synchrony is also occurring in the financial markets - which has never before been possible to detect since we never had data for social trading behavior. However, with the markets now being open to an unprecedented number of individuals who are freely discussing their trades on social platforms, HerdForce can detect the synchrony in financial markets by analyzing this social activity.
There is a simple analogy to understand the implications of synchronicity in the financial markets. Imagine a group of people trying to bring down a brick wall. If every individual in the group punched the wall one after another, it would make very little difference. But, if everyone in the group punched the wall at the same time - synchronously - we increase the probability of the wall coming down. Similarly, in the financial markets, when a large group of random people synchronize, they increase the probability of moving the price. GameStop, Tesla, AMC and many other momentum stocks, which are popularized by mainstream media, are examples of stocks with large price movements caused by synchronicity.
The best traders in the world have incredible pattern recognition skills. But, filtering the noise to generate trade ideas day after day is exhausting and causes mental fatigue even for elite traders. The HerdForce™ platform addresses this problem and aspires to create harmony between man and machine by using machine intelligence to enhance human decision making.
The intelligent algorithms in the HerdForce platform are inspired by the science of synchrony [1][2], which in its essence is the study of how order emerges from disorder. In the context of the financial markets, this translates to the study of how random individuals transition to behaving like synchronized herds - a phenomenon recently popularized by Gamestop and becoming increasingly important with the rise of the retail trader.
The HerdForce intelligent system was born out of our ongoing research on this phenomenon of social herding. We have developed the technology to precisely measure herding by discovering unique signatures of synchrony and then detecting these signatures in the stream of social activity across all publicly listed US stocks and ETFs. When a group of people are talking about a stock, it does not imply that they are all in alignment. The group's ability to impact price depends on their degree of alignment. By modeling synchrony in behavior, we differentiate between alignment and random chatter, and thereby drastically improve the signal to noise ratio for trade discovery.