81
STAGE 1: Overview
CHAPTER ◆ 7
The spiral stage structure of K|V begs two perspectives—one, that of the loops; and two,
that of the steps. One can look at the four steps that comprise a single loop, or the three
loops that comprise each step. We will do both. This chapter will present an overview of
the three loops. The following four chapters will examine each of the four steps and each
pass over each step. The number of loops is not by any means fixed. (We decided that
three iterations were sufficient to cover the commonly encountered substeps.)STEP 2:
Research
quantitative
methodsSTEP 3:
Build prototype
in modeling
softwareSTEP 4:
Check
performanceSTEP 1:
Describe the
trading idea3
2
1 123(^33)
2 2
11
FIGURE 7-1
“ Quality must be built in at the design stage, ” according to W. Edwards Deming. Stage 1
is design and analysis, that is, problem solving, a process of gathering requirements for
the implementation of the trading/investment system, and testing and managing changes
to the design. The requirements gathered will be the solutions to the design problems
presented by the project ’ s vision and scope, the Money Document. At the start of Stage 1,
the product team has a complete Money Document (approved by the seed capital inves-
tor, be it management or an outside entity) and has been provided with sufficient capital
to complete the stage. Stage 1 is also opportunity analysis, translating opportunities into
well-defined business logic over several iterations (the duration of each loop should be no
more than a few weeks). Design should focus on high-level strategies, such as the quan-
titative methods and how they will work together, as well as some lower-level designs,
such as how individual components will work, the graphical user interface design, and
data design. During this stage, the product team defines the specifications of the imple-
mentation software, developed in later stages.