"this is the first time the private trader is really competing
with the institutions at the same level."
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Who wants to
be a millionaire?
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Talking in Dr Dhallu's rather elegant office in Winnington
Hall (the Grade 1 listed, former ICI social clubhouse at
their Northwich, Cheshire plant) - the large computer screen
on his desk occasionally 'pings'. Then the phone begins
to ring. "It's my broker asking me about the trades," he
says sheepishly. "I've only just returned from a round the
world trip and I haven't gone back to trading yet. But you
see how busy one can be."
Nirmal Dhallu is Chief Executive Officer of decision support
systems specialist company 5D Limited. He is inventor and
entrepreneur behind FIRST, a system
for intra-day trading of futures markets. "It is clear to
me that in order to successfully do business in the 2000s,
traders are going to have to move away from the techniques
of the 1990s," he says in his promotional literature.
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Nirmal is a quiet, apparently unassuming Indian, from the Punjab,
who started out studying on the BSc (Hons) Chemical Engineering
at South Bank in 1977. Later he became Senior Process Engineer
at ICI. Now he seems to have cracked the code that can help
individual day traders make their fortunes on the futures
market.
Whilst studying for his PhD, Nirmal was asked to do some lecturing
and later joined the full-time staff at South Bank before
being headhunted to ICI Engineering in Northwich. "I moved
into a field that was directly related to my research, which
is energy integration - making the most of the energy within
the plant itself through 'Pinch Technology'. For six years,
I worked in two different jobs in ICI. I started in the Mathematical
Modelling section with responsibility for development and
application of various Chemical Engineering computer programs.
Then, I moved to Energy & Utilities section with particular
responsibility for site-wide projects. In the same period,
I carried out ten projects, identifying savings of millions
of pounds a year for the company. I was also given research
funding which, I believe, was the largest tranche of funding
given to a single project from ICI's SRF fund."
Then, with the changeover when ICI split into ICI and Zeneca,
the engineering base was cut back and a lot of people were
let go. At that time, explains Dr Dhallu, he had begun looking
at the stock market and had become quite successful in trading,
so much so that he was happy to take the redundancy package.
"But after trading for only a few months, I went on vacation
to India for three weeks and when I came back I discovered
that my broker had run off with all my money! My wife had
just had a baby and she could not work any more either. We'd
come back to this country to find ourselves with no jobs and
no money. That was quite a shock. But I asked her to give
me 6 months to set up this new company." |
"The FIRST system is based on the kind of targeting concept
that I had been doing in my previous career. At South Bank,
I researched energy targeting. At ICI, it was energy and environmental
targeting. Now, I was moving into financial targeting. Having
traded myself for a few months, I realised that there was
no program specifically for day traders. The programs that
are in use are adapted from longer term trading techniques
and basically they go back to systems devised at the turn
of the 20th century. I set about the task as a project of
pure research, applying my background and research experience.
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"The program collects all the data information that comes through
satellite in real time and puts it into a format suitable
for producing a forecast. The 'pings' you have been hearing
are signals to buy or sell, which are shown up by red or green
arrows. The program is leased on a monthly basis to individuals
or groups of traders. 5D staff provides technical help and
training for our clients. Iıve now entered into partnership
with a Japanese company and they are looking to market the
program worldwide, through Global Investment Technology Inc.
So, there I am. From very small beginnings I've gone international.
They intend to float on the NASDAQ in three years."
FIRST is an inter-active
computer system especially designed for real-time, intra-day
analysis of financial markets. It relies on anticipating the
start and finish of intra-day market moves, which many believe
to be impossible. It is a unique trading system that is the
result of three years research into mathematically modelling
trading behaviour. FIRST is based on the market hypothesis:
'The market moves in accordance to the fixed laws of computable
numbers involving price and time. If these numbers are known
in advance then the future direction of the market can be
determined with perfect accuracy.'
When asked why no one else has come up with this idea, Nirmal
says: "I donıt know the answer. My professor, Bill Johns,
at South Bank used to say to me, when I was doing the literature
review for my PhD and concerned that the problem in hand was
unsolvable - 'The whole reason youıre doing this PhD work
is that it hasn't been done yet by anyone else!' In a similar
way, I felt with this project that there was an answer somewhere
down the line. One thing about higher education and in particular
Chemical Engineering is that you learn so much about a range
of subjects, that it helps you adapt to many problems in life."
One of the shortcomings of the current program is that licensees
can only trade from a specific computer all day long as it
is connected to a real time data-feed. With investment income,
the plan is to launch the system on the Internet that will
enable users to log on from any site of their choice.
Nirmal has countless stories from satisfied clients. From
the Asian newsagent who has packed up his corner shop to make
money this way, to the Cambridge Professor of Economics who
has been watching the markets for 18 years and has evaluated
every model. FIRST is the system he now uses to do his own
trading.
"Day trading is huge in the US. On one market S&P, for
example, every minute the market is open about $80 million
is changing hands - per minute! The CME market in the US has
a turnover that is eight times the US GDP. Now that the old-fashioned
stock market method of trading has come to an end, this is
the first time the private trader is really competing with
the professional trader at the same level. We're at the start
of something very big that is going to become increasingly
popular." |
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