Adaptive Planning (Agile Project Management) Framework for Trading (Part 1).

A trade launch countdown (just like a rocket launch) process for every trade

Applying Agile in Trading: How to Adapt to a Dynamic Market
By J Mahay |Apr. 5th, 2023

Cross-functional software developer teams have been using agile project management methodology for nearly twenty years. Agile teams collaborate on complex tasks or problems to plan, design, create, and deliver new products and application through continuous process of customer feedback and product iterations.

Let’s see if there is a common ground between agile and trading. Agile framework for software development operates in “iterative work cycles” to promote continual development and improvement, whilst being able to rapidly respond to change. A trader seeks to consistently close profitable trades, and prepared to adapt to market fluctuations. It seems to me that the worlds of software development and trading are almost same.

An agile process to develop software is similar to the workflow of an investment. The capital market is a discipline where teams collaborate and make decisions amid uncertainty to deliver a product.

While the Adaptive Planning Canvas was primarily designed for business planning and software development, its flexibility can be adapted to various fields, including stock trading. AP can help traders adapt to the dynamic and ever-changing market environment. However, it’s essential to consider that stock trading involves unique risk factors and requires specialized knowledge. The Blend of technology and human insight can lead to remarkable success in the dynamics of trading various markets.

The processes of developing software and managing an investment portfolio are similar. Equity portfolio managers work as a team to analyze the opportunities continuously presented by the markets and determine which features (stocks) our product (portfolio) requires to delight our end users (investors).

In the ever-evolving world of trading, embracing strategic planning, and applying agile methodologies to trading business can change how you trade forever.

The Adaptive Planning Canvas (AP) is a popular approach within Adaptive Software Development (ASD) to project management.  AP is an agile methodology emphasizing flexibility, continuous learning, iterative development, and collaboration. As mentioned before, ASD is designed to handle the complexities and uncertainties of modern software projects, but I am adapting AP for my trading.

Key Terminology
When starting out in agile methodologies, it’s a great idea to focus on developing a practical mindset/intuition instead of diving head-first into technicalities. To start, read this paragraph:

An equity portfolio manager works as a team to analyze the opportunities continuously presented by the markets and determine which features (stocks) our product (portfolio) requires to delight our end users (investors).

Building on the analogy, an agile process closely resembles the workflow of an investment process. Agile development is typically organized around short cycles of work called sprints that last from one to four weeks. Sprints are constructed around user stories and designed to address a specific customer pain point. To share progress, identify obstacles, and prioritize the next steps with teams, brief daily meetings aka scrums are held during the sprint.

Agile Software

Development

Agile Equity Portfolio

Management

Product Manager determines what product needs & sets feature priorities

Portfolio Manager determines what portfolio needs & sets research priorities

Scrum Master oversees sprint and removes obstacles

Research Director oversees sprint and removes obstacles

Development Team collaborates and delivers incremental product improvements

Research Team collaborates and builds research knowledge base incrementally

The Adaptive Planning Canvas consists of nine interconnected elements. Here’s how you can adapt the Adaptive Planning Canvas to your stock trading strategy:

  1. Customer Segments: What are my target investments or trades?
    • Retail Investors: Individuals who trade for personal gain.
    • Institutional Investors: Large organizations that invest on behalf of clients.
    • High-Net-Worth Individuals: Wealthy individuals with significant investment capital.
  2. Value Propositions: What unique value do I get from my customers? ( to be rephrased)
    • Risk Management: Strategies to mitigate losses.
    • Profitability: Consistent returns on investment.
    • Education: Providing resources and insights to help investors learn.
    • Customization: Tailored trading plans based on individual preferences and risk tolerance.
  3. Channels: How do I reach my customers and deliver value?
    • Online Platforms: Websites, mobile apps, or trading platforms.
    • Social Media: Engaging with potential customers through platforms like Twitter or LinkedIn.
    • Educational Content: Blogs, webinars, or newsletters.
  4. Customer Relationships: What type of relationship do I have with my customers?
    • Transactional: Simple buying and selling interactions.
    • Personal: Building relationships through personalized advice and support.
  5. Revenue Streams: How do I generate revenue from my trading activities?
    • Trading Fees: Commissions on trades executed.
    • Subscription Fees: For premium services or access to advanced tools.
    • Performance Fees: A percentage of profits generated.
  6. Key Resources: What resources are essential for my trading operations?
    • Technology: Trading platforms, and data analysis tools.
    • Financial Capital: Funds for investments and operations.
    • Human Capital: Experienced traders and analysts.
  7. Key Activities: What are the most important activities for my trading success?
    • Market Analysis: Researching market trends and identifying opportunities.
    • Risk Assessment: Evaluating potential risks and developing mitigation strategies.
    • Portfolio Management: Selecting and managing investments.
    • Client Service: Providing support and advice to customers.
  8. Key Partnerships: Who are my strategic partners or suppliers?
    • Data Providers: Sources of market data and analysis.
    • Brokerage Firms: Facilitating trades and providing access to markets.
    • Financial Advisors: Collaborating with advisors to offer comprehensive financial planning.
  9. Cost Structure: What are my major costs associated with trading?
    • Trading Fees: Commissions and fees charged by brokers.
    • Technology Costs: Software, hardware, and data subscriptions.
    • Operational Costs: Office space, salaries, and administrative expenses.

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