1) What are Model 1 and Model 2?
They are 10 stock portfolios. They are similar to long-only shares held in your DEMAT account or the same as a mutual fund.
2) What is the stock universe for these Models?
Models 1 and 3's respective stock universes are the NSE 500 and NSE Midcap 100.
3) How does Algo-based investing select stocks?
The algorithm selects stocks based on the Momentum factor. The momentum of the stocks is decided based on the price of the stocks. Our algorithm generates a momentum 'score' for the stocks and we invest using this score.
We don’t do any fundamental analysis or research.
4) What is the win rate of the strategies?
It is about 50%. So out of 10 stocks, 5 are winners and 5 are losers.
5) Then how do you make money using the strategy?
The answer lies in the 'Payoff Ratio' between the winning stocks and losing stocks. We have a Payoff ratio between 2-3 for all our strategies. That means our winners make 2-3X of what our losers lose.
6) I don't think anyone can 'crack' the market. How do you protect your downside when the market tanks?
We are not claiming to have cracked the market. Momentum is a known factor in the market and is being utilized by investors everywhere.
Since this is a long-only strategy, it loses money when the market goes down. Therefore to avoid huge losses we have 2 levels of protection. One is at an individual stock level and the second is at an overall model level.
1) (Stock level) Trailing stop loss: - Here we are using a 20% trailing stop loss which means approx. loss from the losing bet is 10,000*20%=2,000, which is 2,000/100,000=2% of the overall portfolio. That means if your consecutive 15 bets are going wrong then your portfolio is still only down by 30%.
2) (Market level) Market Trend filter: - We have implemented an overall market-level trend filter. If the market is trending down then this strategy sells all the stocks and sits on cash, which earns interest on that amount. For example, when the market changes its direction then our portfolio might lose 15% while the market will be down by around 30-40% (Like 2008 or 2020).
7) Do I have to send money to you for you to invest? How does it work?
All our products are Do-It-Yourself ones. You run the strategy in your broking account. You retain full control over your money and assets at all times.
We are NOT an end-to-end portfolio management service. The customer (you) has to take action for 5 mins a week based on the model suggestions.
8) What is the minimum amount required to invest in Model 1 and Model 3?
The minimum amount required is 1 lakh each for both Model 1 and Model 3.
9) How to check the performance?
