Trading algorithms have become ever-more popular amongst both private and institutional traders due to many factors, principally the ability of an algorithm to react quicker than a human, be more disciplined than a human and be able to perform complex mathematical equations in a split-second.
Algorithms vary in complexity, from complex deep-learning solutions to little more than indicators or trade shortcuts. Some algorithms trade with what is called ‘scalping’ techniques (very fast and frequent trade execution), whilst some take positions that will last months on end before taking profit. Algorithms with a high amount of trades per year will often see what are called loss-runs due to the sheer amount of trades executed per month, while what one could consider a more ‘patient’ approach may have less recorded loss per year, but will have rather high drawdown (unrealised loss in an open trade or set of trades). Algorithms will vary in both technique and method in delivering annual yield.
The team at Tower Technology has noticed over time that what a lot of the algorithms competing against us lacked was balance. We see algorithms that see similar Return on Investment (ROI) as ours, but have a staggeringly high Drawdown compared. Our average yearly drawdown is around 4% with an average ROI of around 130%. We have seen competing algorithms at 50-90% drawdown. We have close algorithm-development competitors when it concerns average ROI, but we have yet to see similar yields with such low drawdown. They most likely exist in a bank-basement, but they aren’t going to be public-facing.
Tower Technology algorithms use mathematical techniques to actively and dynamically enter the markets at periods of peak volume, instead of relying of predicting future trends. Our algorithms automatically manage trades and mitigate risk in real-time, with our team consistently focussing on best way to reduce risk and optimise our strategies.
We know that most people trading their hard-earned money prefer a smooth equity line and a low drawdown when they log in to check their trading account balance.
We do too.