📉 Why Most Algorithmic Traders Fail [Curve Fitting Explained]
Today, we'll discuss one of the main reasons why algorithmic traders are often unsuccessful in actual trading, even though their test results are perfect: curve fitting.
In this post, we will take a quick dive into what curve fitting is and how it is manifested, looking at one particular example for additional clarity on the matter.
First things first – definitions.
What is curve fitting?
It’s basically the process of creating a trading strategy that is overly optimized to fit historical data. This involves tweaking a trading model to the point where it performs exceptionally well on past data but fails to generalize to new, unseen data.
Curve fitting is often associated with backtesting, where traders test their strategies using historical market data to evaluate their potential effectiveness.
Why does it happen?
The answer is diverse, as curve fitting comes in all shapes and sizes. There are countless ways to curve-fit the algorithm to past data so that it will only perform well on the data it has seen, but there are only a few ways to get it right.
One of the most frequent ways it happens is by having too many core parameters and optimizing all of them together. The solution to this is to have simpler models that are complex just enough to capture the essence of existing market inefficiencies but not too complicated to avoid curve fitting. It may be counterintuitive, but often, a simpler system is a better one.
The gist is that each part of your trading model should capture real, existing market inefficiencies. A good trader should understand how each part of the trading system connects to the underlying market effects it is designed for. If some part of your system captures noise instead, it will lead to curve fitting.
How can one avoid curve fitting?
The simplest answer is that each part of the trading system should capture an existing market inefficiency in a robust way. Let’s clarify this with a simple example.
Suppose we are designing a simple recommendation system that tells us when to buy the S&P 500 index and when to sell it. We’ve taken the last 10 years of data and noticed one particularity – in 8 years out of 10, June closed at a loss. Suppose the probability of closing the month at a loss is 50%. In this case, the probability of having 8 negative months out of 10 is 45/1024, or about 4.4%. If we have a 95% probability threshold to consider something an inefficiency, we satisfy it as 100-4.4=95.6>95%
The calculation is correct, but the main mistake here is that we have also looked through each other month, and only June had 8 negative years out of 10. If we consider the fact that we studied data from all 12 months, the probability of having 8 negative months out of 10 increases significantly to 1-(1-0.044)^12=41.7%. So, we can have 8 negative months out of 10 simply by chance! And the “not trading in June” criteria will likely capture random noise, not an existing market inefficiency.
In reality, even having 10 Junes or Octobers closed at a loss in a row is not that improbable. Almost always, taking a particular month out of trading hurts more than it helps. But that’s just an illustration of a more general case. In trading, there are all kinds of “random noise” mistakes one can make, and very often, using logic, reason, and common sense is the best way to avoid them
There are various ways of dealing with curve fitting: cross-validation, out-of-sample testing, walk-forward analysis, regularization, and many other complicated trading terms.
The most important one, at least from our point of view, is using sound logic when developing the system to make sure that each part of it captures an existing market tendency.
For example, the logic used when developing the Algocrat AI proprietary trading system.
Hope you find this helpful!
Best regards,
The Algocrat AI Team
Today, we'll discuss one of the main reasons why algorithmic traders are often unsuccessful in actual trading, even though their test results are perfect: curve fitting.
In this post, we will take a quick dive into what curve fitting is and how it is manifested, looking at one particular example for additional clarity on the matter.
First things first – definitions.
What is curve fitting?
It’s basically the process of creating a trading strategy that is overly optimized to fit historical data. This involves tweaking a trading model to the point where it performs exceptionally well on past data but fails to generalize to new, unseen data.
Curve fitting is often associated with backtesting, where traders test their strategies using historical market data to evaluate their potential effectiveness.
Why does it happen?
The answer is diverse, as curve fitting comes in all shapes and sizes. There are countless ways to curve-fit the algorithm to past data so that it will only perform well on the data it has seen, but there are only a few ways to get it right.
One of the most frequent ways it happens is by having too many core parameters and optimizing all of them together. The solution to this is to have simpler models that are complex just enough to capture the essence of existing market inefficiencies but not too complicated to avoid curve fitting. It may be counterintuitive, but often, a simpler system is a better one.
The gist is that each part of your trading model should capture real, existing market inefficiencies. A good trader should understand how each part of the trading system connects to the underlying market effects it is designed for. If some part of your system captures noise instead, it will lead to curve fitting.
How can one avoid curve fitting?
The simplest answer is that each part of the trading system should capture an existing market inefficiency in a robust way. Let’s clarify this with a simple example.
Suppose we are designing a simple recommendation system that tells us when to buy the S&P 500 index and when to sell it. We’ve taken the last 10 years of data and noticed one particularity – in 8 years out of 10, June closed at a loss. Suppose the probability of closing the month at a loss is 50%. In this case, the probability of having 8 negative months out of 10 is 45/1024, or about 4.4%. If we have a 95% probability threshold to consider something an inefficiency, we satisfy it as 100-4.4=95.6>95%
The calculation is correct, but the main mistake here is that we have also looked through each other month, and only June had 8 negative years out of 10. If we consider the fact that we studied data from all 12 months, the probability of having 8 negative months out of 10 increases significantly to 1-(1-0.044)^12=41.7%. So, we can have 8 negative months out of 10 simply by chance! And the “not trading in June” criteria will likely capture random noise, not an existing market inefficiency.
In reality, even having 10 Junes or Octobers closed at a loss in a row is not that improbable. Almost always, taking a particular month out of trading hurts more than it helps. But that’s just an illustration of a more general case. In trading, there are all kinds of “random noise” mistakes one can make, and very often, using logic, reason, and common sense is the best way to avoid them
There are various ways of dealing with curve fitting: cross-validation, out-of-sample testing, walk-forward analysis, regularization, and many other complicated trading terms.
The most important one, at least from our point of view, is using sound logic when developing the system to make sure that each part of it captures an existing market tendency.
For example, the logic used when developing the Algocrat AI proprietary trading system.
Hope you find this helpful!
Best regards,
The Algocrat AI Team
📈 July 2024 [Monthly Performance]
Hi there,
As we wrap up another incredible month, we're thrilled to share the latest performance results from Algocrat AI.
July has been outstanding, marking our best month so far this year with an impressive account growth of 37.8%!
Additionally, we managed to keep the maximum drawdown to just 6.84%.
We want to extend our heartfelt congratulations to the 177 accounts on our network who benefited from this month's profits.
As always, for a comprehensive overview of our performance, you can visit our verified MyFxBook track record:
🔗 Click Here To Access Our MyFxBook Track Record
Best regards,
The Algocrat AI Team
Hi there,
As we wrap up another incredible month, we're thrilled to share the latest performance results from Algocrat AI.
July has been outstanding, marking our best month so far this year with an impressive account growth of 37.8%!
Additionally, we managed to keep the maximum drawdown to just 6.84%.
We want to extend our heartfelt congratulations to the 177 accounts on our network who benefited from this month's profits.
As always, for a comprehensive overview of our performance, you can visit our verified MyFxBook track record:
🔗 Click Here To Access Our MyFxBook Track Record
Best regards,
The Algocrat AI Team
💰$12,500,000 in Assets Under Management [Milestone]
We're excited to share that Algocrat AI has reached a new milestone with over $12,500,000 in assets under management (AUM), just a few months after our official launch.
This remarkable growth underscores the trust you place in our cutting-edge crypto trading solutions and reaffirms our commitment to delivering exceptional results.
We are immensely grateful for your ongoing support, which drives us to achieve greater heights.
As we look ahead, it's important to note that our AUM limit for Q3 of 2024 remains at $20,000,000.
With more than 60% of our availability already taken, now is the perfect time to join Algocrat AI.
To ensure you don't miss out on being part of our growth, link your Binance, MetaTrader, or ByBit accounts today.
Here’s how you can connect:
- Binance: Connect Your Binance Account
- MetaTrader: Connect Your MetaTrader Account
- ByBit: Connect Your ByBit Account
If you haven't joined us yet, don't wait any longer. Apply now and secure your spot in the future of crypto trading:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
We're excited to share that Algocrat AI has reached a new milestone with over $12,500,000 in assets under management (AUM), just a few months after our official launch.
This remarkable growth underscores the trust you place in our cutting-edge crypto trading solutions and reaffirms our commitment to delivering exceptional results.
We are immensely grateful for your ongoing support, which drives us to achieve greater heights.
As we look ahead, it's important to note that our AUM limit for Q3 of 2024 remains at $20,000,000.
With more than 60% of our availability already taken, now is the perfect time to join Algocrat AI.
To ensure you don't miss out on being part of our growth, link your Binance, MetaTrader, or ByBit accounts today.
Here’s how you can connect:
- Binance: Connect Your Binance Account
- MetaTrader: Connect Your MetaTrader Account
- ByBit: Connect Your ByBit Account
If you haven't joined us yet, don't wait any longer. Apply now and secure your spot in the future of crypto trading:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
📈 August 2024 [Monthly Performance]
Hello,
Once again, we're beyond excited to share August's performance results from Algocrat AI.
This month, we achieved a solid account growth of 15.2%, demonstrating consistent performance across the board.
Said growth came with a maximum drawdown of 11.24%.
Congratulations to the 200+ investors on our network who are enjoying the profits this month!
As always, for a detailed overview of our performance, you can visit our verified MyFxBook track record:
🔗 Click Here To Access Our MyFxBook Track Record
Best regards,
The Algocrat AI Team
Hello,
Once again, we're beyond excited to share August's performance results from Algocrat AI.
This month, we achieved a solid account growth of 15.2%, demonstrating consistent performance across the board.
Said growth came with a maximum drawdown of 11.24%.
Congratulations to the 200+ investors on our network who are enjoying the profits this month!
As always, for a detailed overview of our performance, you can visit our verified MyFxBook track record:
🔗 Click Here To Access Our MyFxBook Track Record
Best regards,
The Algocrat AI Team
💰 $15,000,000 in Assets Under Management [Milestone]
We’re thrilled to announce that Algocrat AI has now surpassed $15,000,000 in assets under management (AUM) as we continue our rapid growth in the crypto trading space.
This significant achievement, coming so soon after our last update, reflects the trust you place in our advanced trading solutions and motivates us to push for even higher performance.
As always, we deeply appreciate your support and commitment to Algocrat AI’s journey.
Looking ahead, our AUM limit for Q3 of 2024 remains at $20,000,000.
With more than 75% of our capacity already filled, time is running out to join us.
To ensure you don't miss out on being part of our growth, link your Binance, MetaTrader, or ByBit accounts today.
Here’s how you can connect:
- Binance: Connect Your Binance Account
- MetaTrader: Connect Your MetaTrader Account
- ByBit: Connect Your ByBit Account
Haven’t signed up yet? Now’s your chance! Apply today and become part of the future of crypto trading:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
We’re thrilled to announce that Algocrat AI has now surpassed $15,000,000 in assets under management (AUM) as we continue our rapid growth in the crypto trading space.
This significant achievement, coming so soon after our last update, reflects the trust you place in our advanced trading solutions and motivates us to push for even higher performance.
As always, we deeply appreciate your support and commitment to Algocrat AI’s journey.
Looking ahead, our AUM limit for Q3 of 2024 remains at $20,000,000.
With more than 75% of our capacity already filled, time is running out to join us.
To ensure you don't miss out on being part of our growth, link your Binance, MetaTrader, or ByBit accounts today.
Here’s how you can connect:
- Binance: Connect Your Binance Account
- MetaTrader: Connect Your MetaTrader Account
- ByBit: Connect Your ByBit Account
Haven’t signed up yet? Now’s your chance! Apply today and become part of the future of crypto trading:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
📈 September 2024 [Monthly Performance]
Hi,
As we close out September, we're pleased to share Algocrat AI's performance for the month.
Despite a more conservative month, we still delivered a respectable account growth of 3.79%, while managing a maximum drawdown of 12.22%.
We want to congratulate the 200+ investors on our network who continue to profit alongside us!
As we move into the final quarter of the year, we’re excited to keep building on this momentum and working towards even more success.
For a detailed breakdown, don’t forget to check out our verified MyFxBook track record:
🔗 Click Here To Access Our MyFxBook Track Record
Best regards,
The Algocrat AI Team
Hi,
As we close out September, we're pleased to share Algocrat AI's performance for the month.
Despite a more conservative month, we still delivered a respectable account growth of 3.79%, while managing a maximum drawdown of 12.22%.
We want to congratulate the 200+ investors on our network who continue to profit alongside us!
As we move into the final quarter of the year, we’re excited to keep building on this momentum and working towards even more success.
For a detailed breakdown, don’t forget to check out our verified MyFxBook track record:
🔗 Click Here To Access Our MyFxBook Track Record
Best regards,
The Algocrat AI Team
Hi there,
As we wrap up Q3 (July to September) of 2024, we're excited to reflect on our best quarter of the year at Algocrat AI.
Throughout Q3, we achieved a remarkable account growth of 62.78% and managed a maximum drawdown of 15.06%.
Our assets under management (AUM) surged from $10M to over $15M at its highest point, a strong signal of the trust and growth in our network.
Looking ahead, we're eager to build on this success as we approach the year's final quarter.
For more insights and a detailed breakdown, feel free to explore our verified MyFxBook track record:
🔗 Click Here To Access Our MyFxBook Track Record
Haven’t you signed up yet?
Apply today and become part of the future of crypto trading:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
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🚀 Bybit MT5 Accounts Now Supported
We’re excited to announce that Algocrat AI now officially supports Bybit MT5 accounts!
In June of this year, Bybit announced their transition from MT4 to MT5, retiring MT4 accounts entirely.
As a result, we had to discontinue support for Bybit MT4 accounts.
However, we acted quickly—connecting our own Bybit MT5 accounts as soon as the platform became available and conducting intensive testing to ensure it met our standards.
After a couple months of rigorous evaluation, we are pleased to confirm that Bybit MT5 offers solid trading conditions, making it a good option for Algocrat AI clients.
If you’re already part of Algocrat AI, you can now seamlessly connect your Bybit MT5 account:
🔗 Click Here To Learn How To Connect Your Bybit MT5 Account
Not a client yet?
Join us today and take advantage of our powerful trading solutions:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
We’re excited to announce that Algocrat AI now officially supports Bybit MT5 accounts!
In June of this year, Bybit announced their transition from MT4 to MT5, retiring MT4 accounts entirely.
As a result, we had to discontinue support for Bybit MT4 accounts.
However, we acted quickly—connecting our own Bybit MT5 accounts as soon as the platform became available and conducting intensive testing to ensure it met our standards.
After a couple months of rigorous evaluation, we are pleased to confirm that Bybit MT5 offers solid trading conditions, making it a good option for Algocrat AI clients.
If you’re already part of Algocrat AI, you can now seamlessly connect your Bybit MT5 account:
🔗 Click Here To Learn How To Connect Your Bybit MT5 Account
Not a client yet?
Join us today and take advantage of our powerful trading solutions:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
With the increased likelihood that Trump may emerge as the winner in the 2024 U.S. presidential election, we saw a rally in Bitcoin that brought it close to all-time highs.
The Binance spot high on October 29 was 73,620, just slightly below the all-time high of 73,777 by a margin of a bit more than 150 dollars.
Here's how Algocrat AI handled these events:
First, a small disclaimer: we'll examine the results of Algocrat AI's verified, public track record, available here.
Results from individual trades on other brokers may vary due to differences in quotes, fees, and execution, although the long-term results remain comparable.
Now, why the rally?
Markets never give us all the answers, but the primary reason appears to be the increased likelihood of Trump winning in key swing states.
Trump has publicly advocated for the crypto industry, which could lead to increased U.S. investment in Bitcoin, potentially triggering a significant rally or even a new bull run.
Consequently, it’s reasonable for the market to price this in advance.
How did Algocrat AI systems perform during this rally?
They timed entries and exits with precision. Positions were entered above 69k, just before the rally past 70k.
Some exited early, locking in profits, while others continued to ride the trend, exiting close to the peak at 72,900.
As a result, the Algocrat account reached an all-time high, surpassing the previous peak achieved a week earlier on October 23.
Here's how Algocrat’s results with Bitcoin's performance over the last year:
In one year, Bitcoin achieved an impressive growth of over 100% on Binance's spot section, currently up by 108% from a year ago.
The maximum drawdown during this period was 33.6%, calculated as (73,777 - 49,000) / 73,777.
During the same period, Algocrat achieved growth of 226.68%, with a maximum drawdown of 24.47%.
The overall return-to-risk, measured by the Calmar ratio, is therefore (226.68 / 24.47) / (108 / 33.6) = 2.88 times higher for Algocrat AI compared to Bitcoin.
Despite Bitcoin’s impressive growth over the past year, Algocrat surpassed this growth by almost three times in terms of return-to-risk ratio.
Ready to capitalize on the crypto market's volatility?
🔗 Apply Now and Secure Your Spot
Best,
The Algocrat AI Team
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📊 +19.08% - October 2024 [Monthly Performance]
Hi there,
We’re thrilled to share the performance results for October 2024, marking an impressive start to Q4 at Algocrat AI.
In October, we achieved an account growth of 19.08%, making it one of the best-performing months of the year so far.
Our risk management strategies kept the maximum drawdown at 8.98%, demonstrating our commitment to balancing growth with stability.
This month’s results set an excellent tone as we head deeper into Q4, positioning our investors for continued success.
As always, for a detailed overview and to follow our track record, check out our verified MyFxBook:
🔗 Click Here To Access Our MyFxBook Track Record
And if you're ready to join the winning side crypto trading:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
Hi there,
We’re thrilled to share the performance results for October 2024, marking an impressive start to Q4 at Algocrat AI.
In October, we achieved an account growth of 19.08%, making it one of the best-performing months of the year so far.
Our risk management strategies kept the maximum drawdown at 8.98%, demonstrating our commitment to balancing growth with stability.
This month’s results set an excellent tone as we head deeper into Q4, positioning our investors for continued success.
As always, for a detailed overview and to follow our track record, check out our verified MyFxBook:
🔗 Click Here To Access Our MyFxBook Track Record
And if you're ready to join the winning side crypto trading:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
🧐 Why Algocrat Did Not Trade During The US Elections [Strategies Analysis]
The last few days we saw notable price movements in the crypto market. Algocrat AI’s systems, however, did not take any positions.
Given that Algocrat AI typically trades the major cryptocurrency pairs, many clients have asked why there was no trading activity.
Here’s why:
Algocrat AI operates as a fully automated trading portfolio. There is no manual intervention unless there’s a force majeure event that requires risk management action.
In this case, our systems determined that the potential risk outweighed the benefits, so they remained on the sidelines.
As shown in our verified track record, it’s common for Algocrat to step back in uncertain conditions, and this approach is core to our risk management.
The spike in movement hinted that certain groups might have had an informational advantage, possibly due to early insights into Trump’s lead.
Yet, markets reveal their intentions only in hindsight. The day before the election, even seasoned analysts lacked certainty on the outcome.
There’s limited data on how elections impact markets, so there’s no statistical foundation for trading on these events. Algocrat AI is built on objective systems, not speculation.
In trading, accuracy in predicting the market’s direction doesn’t always translate to profit. Even correct predictions can lead to losses due to volatility triggering stop-losses.
When these risks are high, it’s often more profitable to sit out a trade than to risk unnecessary loss. Our systems are built to measure and mitigate these risks in every decision.
Consistency drives Algocrat AI. Manual trading, by contrast, rarely delivers reliable long-term results.
Over the years, we’ve observed that very few manual traders maintain strong, consistent performance.
Algocrat AI’s automated approach is designed to produce steady, systematic growth over time.
In this instance, we trusted our systems to make the final decision, and they chose to stay out.
While they won’t always make the “perfect” call, they are consistently correct over time.
Real profit in trading comes from a strategy that works again and again, not from lucky guesses.
If you're ready to profit from such strategies, then take action and join us right now:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
The last few days we saw notable price movements in the crypto market. Algocrat AI’s systems, however, did not take any positions.
Given that Algocrat AI typically trades the major cryptocurrency pairs, many clients have asked why there was no trading activity.
Here’s why:
Algocrat AI operates as a fully automated trading portfolio. There is no manual intervention unless there’s a force majeure event that requires risk management action.
In this case, our systems determined that the potential risk outweighed the benefits, so they remained on the sidelines.
As shown in our verified track record, it’s common for Algocrat to step back in uncertain conditions, and this approach is core to our risk management.
The spike in movement hinted that certain groups might have had an informational advantage, possibly due to early insights into Trump’s lead.
Yet, markets reveal their intentions only in hindsight. The day before the election, even seasoned analysts lacked certainty on the outcome.
There’s limited data on how elections impact markets, so there’s no statistical foundation for trading on these events. Algocrat AI is built on objective systems, not speculation.
In trading, accuracy in predicting the market’s direction doesn’t always translate to profit. Even correct predictions can lead to losses due to volatility triggering stop-losses.
When these risks are high, it’s often more profitable to sit out a trade than to risk unnecessary loss. Our systems are built to measure and mitigate these risks in every decision.
Consistency drives Algocrat AI. Manual trading, by contrast, rarely delivers reliable long-term results.
Over the years, we’ve observed that very few manual traders maintain strong, consistent performance.
Algocrat AI’s automated approach is designed to produce steady, systematic growth over time.
In this instance, we trusted our systems to make the final decision, and they chose to stay out.
While they won’t always make the “perfect” call, they are consistently correct over time.
Real profit in trading comes from a strategy that works again and again, not from lucky guesses.
If you're ready to profit from such strategies, then take action and join us right now:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
🤝 Real Profits First, Performance Fees Second [High-Water Mark Principle Explained]
One of the main aspects Algocrat AI clients appreciate about the product is that they only pay if they have already achieved profits.
Unlike most products on the internet, there are no upfront fees, management fees, subscription fees, or any cost until profits are realized.
Clients simply pay a portion of the profits after they have received them.
To ensure this, we use the high-water mark principle to calculate the performance fee.
How does it work?
In simple terms, the high-water mark principle ensures that a manager (in this case, the Algocrat AI team) only earns performance fees when the account’s value surpasses its previous peak, or “high-water mark”.
If the account’s value drops, we must first recover these losses before earning additional fees.
This protects our clients from paying extra fees if the overall performance is down.
The high-water mark principle concept is illustrated in the attached image.
In this image, the light blue area represents periods where the account balance is below its high watermark, meaning that no performance fee is charged.
Once the balance exceeds the high watermark, a performance fee applies to the gains above this threshold, as shown by highlighted portions of the graphic bars.
Why is this the most convenient pricing structure for you?
It’s straightforward: real profits first, performance fees second.
This may not be the usual approach for those accustomed to trading, Expert Advisors, signals, and copy trading, but it’s the most honest way of doing things.
We make a profit for you, and you share a portion of it with us - a win-win scenario.
In most cases, that's not how things work. With EAs and other similar products, people typically pay an upfront fee and then attempt to recover it through trading.
This creates a conflict of interests between the client and the developer.
With Algocrat AI, your interests are perfectly aligned with ours.
Clients only make money when we do, which is why we do our best to ensure positive and consistent results.
If you're ready to pay only if you make real, long-term profits, then take action and join us right now:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
One of the main aspects Algocrat AI clients appreciate about the product is that they only pay if they have already achieved profits.
Unlike most products on the internet, there are no upfront fees, management fees, subscription fees, or any cost until profits are realized.
Clients simply pay a portion of the profits after they have received them.
To ensure this, we use the high-water mark principle to calculate the performance fee.
How does it work?
In simple terms, the high-water mark principle ensures that a manager (in this case, the Algocrat AI team) only earns performance fees when the account’s value surpasses its previous peak, or “high-water mark”.
If the account’s value drops, we must first recover these losses before earning additional fees.
This protects our clients from paying extra fees if the overall performance is down.
The high-water mark principle concept is illustrated in the attached image.
In this image, the light blue area represents periods where the account balance is below its high watermark, meaning that no performance fee is charged.
Once the balance exceeds the high watermark, a performance fee applies to the gains above this threshold, as shown by highlighted portions of the graphic bars.
Why is this the most convenient pricing structure for you?
It’s straightforward: real profits first, performance fees second.
This may not be the usual approach for those accustomed to trading, Expert Advisors, signals, and copy trading, but it’s the most honest way of doing things.
We make a profit for you, and you share a portion of it with us - a win-win scenario.
In most cases, that's not how things work. With EAs and other similar products, people typically pay an upfront fee and then attempt to recover it through trading.
This creates a conflict of interests between the client and the developer.
With Algocrat AI, your interests are perfectly aligned with ours.
Clients only make money when we do, which is why we do our best to ensure positive and consistent results.
If you're ready to pay only if you make real, long-term profits, then take action and join us right now:
🔗 Apply Now and Secure Your Spot
Best regards,
The Algocrat AI Team
🥊 Algocrat AI vs Bitcoin: Round 2 [Performance Analysis]
Due to Algocrat AI’s pause in trading over the past two weeks, many people have started questioning the algorithms.
While it’s true that high volatility is detrimental to momentum trading, it’s frustrating to see Bitcoin jump 20-30% without any trades on the accounts, even if that was the right decision.
However, as Fyodor Dostoevsky, one of the world’s greatest novelists once said, "The big picture is seen from a distance".
This is even more applicable to trading, where the results of just a few months can often be misleading.
Let’s compare Algocrat’s performance to Bitcoin:
To make the comparison as unfavorable to Algocrat as possible, we’ll measure the performance of the two starting from Bitcoin’s lowest point in 2022 — at the peak of the FTX collapse.
Imagine we were oracles with perfect foresight and decided to buy Bitcoin at its low.
Fast forward a little over two years and Bitcoin would have become one of the world’s best liquid investments, delivering a 388% return to date.
How did the Algocrat portfolio perform over the same period?
As you can verify yourself here, it achieved three times that amount on Pepperstone, an astonishing return of 1,031%.
Even buying Bitcoin at the very bottom of a bear market couldn’t come close to matching Algocrat’s performance.
Of course, we are comparing Bitcoin to the high-risk performance of Algocrat. After all, just two years ago, Bitcoin was in a 77% drawdown, and before that, it experienced a drawdown of more than 80%.
It’s only fair to use a comparable risk level when evaluating Algocrat.
Naturally, any investment can underperform Bitcoin during certain periods.
However, Algocrat consistently outperforms Bitcoin in the long run, even during bull market phases. And these are not just words, you can easily check all the numbers.
It's also worth mentioning that there is zero correlation between Algocrat and Bitcoin, making it an excellent choice for one's investment portfolio.
If you're ready to incorporate Algocrat AI to our investment portfolio, then take action and join us right now:
🔗 Apply Now and Secure Your Spot
Best Regards,
The Algocrat AI Team
P.S. If we make a "fairer" comparison of Algocrat over the entire lifetime of this account, the return would be over 1,600% compared to Bitcoin’s 135%. This is "fairer" because we are certainly not at the market’s low point right now, making it impossible to capture the same kind of bottom as in the earlier example.
Due to Algocrat AI’s pause in trading over the past two weeks, many people have started questioning the algorithms.
While it’s true that high volatility is detrimental to momentum trading, it’s frustrating to see Bitcoin jump 20-30% without any trades on the accounts, even if that was the right decision.
However, as Fyodor Dostoevsky, one of the world’s greatest novelists once said, "The big picture is seen from a distance".
This is even more applicable to trading, where the results of just a few months can often be misleading.
Let’s compare Algocrat’s performance to Bitcoin:
To make the comparison as unfavorable to Algocrat as possible, we’ll measure the performance of the two starting from Bitcoin’s lowest point in 2022 — at the peak of the FTX collapse.
Imagine we were oracles with perfect foresight and decided to buy Bitcoin at its low.
Fast forward a little over two years and Bitcoin would have become one of the world’s best liquid investments, delivering a 388% return to date.
How did the Algocrat portfolio perform over the same period?
As you can verify yourself here, it achieved three times that amount on Pepperstone, an astonishing return of 1,031%.
Even buying Bitcoin at the very bottom of a bear market couldn’t come close to matching Algocrat’s performance.
Of course, we are comparing Bitcoin to the high-risk performance of Algocrat. After all, just two years ago, Bitcoin was in a 77% drawdown, and before that, it experienced a drawdown of more than 80%.
It’s only fair to use a comparable risk level when evaluating Algocrat.
Naturally, any investment can underperform Bitcoin during certain periods.
However, Algocrat consistently outperforms Bitcoin in the long run, even during bull market phases. And these are not just words, you can easily check all the numbers.
It's also worth mentioning that there is zero correlation between Algocrat and Bitcoin, making it an excellent choice for one's investment portfolio.
If you're ready to incorporate Algocrat AI to our investment portfolio, then take action and join us right now:
🔗 Apply Now and Secure Your Spot
Best Regards,
The Algocrat AI Team
P.S. If we make a "fairer" comparison of Algocrat over the entire lifetime of this account, the return would be over 1,600% compared to Bitcoin’s 135%. This is "fairer" because we are certainly not at the market’s low point right now, making it impossible to capture the same kind of bottom as in the earlier example.
🔎 Beyond Bitcoin: Why Algocrat AI Thrives Regardless of Market Trends [Strategy Analysis]
After the last post, a few clients asked us to elaborate further on the correlation aspect.
How can it be that there is zero correlation between Algocrat AI results and Bitcoin dynamics?
After all, Algocrat seems to trade trends, right? It should have some correlation - for instance, performing better during an uptrend dynamic, making the overall correlation at least slightly positive.
Well, not quite.. let's dive deeper into this topic.
The first misconception about Algocrat is that it’s a trend-following system.
What is trend-following in simple terms?
It's buying when the price is moving up significantly and selling when it goes down.
This means staying in the market most of the time, going either long or short depending on the prevailing trend. Such systems perform well during trending market periods and on trending instruments, such as Bitcoin.
Our team has developed similar systems and observed their results from other developers. Practice shows that while these systems can outperform Bitcoin over the long term, they fail to outperform Algocrat.
More importantly, they depend heavily on the overall market trend. If there is no significant trend in either direction, they tend to lose money. These periods of sideways movement can last for months.
For instance, we recently had over six months of sideways movement, from mid-March until November’s Trump rally.
Algocrat AI achieved a +150% gain during these months, even though the market wasn’t trending. Such results would be impossible for any trend-following system in the absence of a trend
What's Algocrat AI's strategy?
It’s a diversified portfolio of (mostly) intraday trading systems that capture short-term market dynamics.
We do not rely on sustained trending movements. Instead, we exploit short-lived momentum market inefficiencies when there is a high probability of capturing them.
This means we do not stay in the market all the time. This short-term approach is more sophisticated and tricky than typical trend-following systems.
To remain consistently profitable in the long run, we must be precise with our entries, whereas trend-following focuses more on staying in the market during trends.
The advantage of this short-term approach (apart from being more profitable for deposits under a billion dollars) is that we can generate returns even when the market is stagnant, thanks to these intraday movements.
What's the downside?
Limited scalability.
This approach can manage a few dozen million dollars but not hundreds of millions or billions.
Conversely, trend-following on a liquid pair like Bitcoin can handle significantly larger sums, even in the billions
Since our focus is on maximizing profitability for relatively small amounts, up to a few dozen million dollars, it makes sense to stick with this short-term approach.
Scalability then is irrelevant to us because we are not managing billions of dollars.
On the other hand, trend-following has a major downside: its performance is tied to the “fate” of the instrument being traded.
While the instrument trends, trend-following systems perform well, but during non-trending periods, they lose money.
This creates a significant correlation and coefficient of determination (R^2) between the system and the underlying asset, such as Bitcoin. While correlation is well-known, R^2 is less familiar to the general audience.
Simply put, R^2 explains the percentage of a trading system’s returns that can be attributed to the underlying asset’s dynamics.
For example, an R^2 of 0.5 means that 50% of all returns are explained by Bitcoin’s market behavior.
Trend-following systems often have R^2 values of 0.5 or higher.
In contrast, short-term intraday systems are not dependent on overall market dynamics, so they typically exhibit R^2 values close to zero.
After the last post, a few clients asked us to elaborate further on the correlation aspect.
How can it be that there is zero correlation between Algocrat AI results and Bitcoin dynamics?
After all, Algocrat seems to trade trends, right? It should have some correlation - for instance, performing better during an uptrend dynamic, making the overall correlation at least slightly positive.
Well, not quite.. let's dive deeper into this topic.
The first misconception about Algocrat is that it’s a trend-following system.
What is trend-following in simple terms?
It's buying when the price is moving up significantly and selling when it goes down.
This means staying in the market most of the time, going either long or short depending on the prevailing trend. Such systems perform well during trending market periods and on trending instruments, such as Bitcoin.
Our team has developed similar systems and observed their results from other developers. Practice shows that while these systems can outperform Bitcoin over the long term, they fail to outperform Algocrat.
More importantly, they depend heavily on the overall market trend. If there is no significant trend in either direction, they tend to lose money. These periods of sideways movement can last for months.
For instance, we recently had over six months of sideways movement, from mid-March until November’s Trump rally.
Algocrat AI achieved a +150% gain during these months, even though the market wasn’t trending. Such results would be impossible for any trend-following system in the absence of a trend
What's Algocrat AI's strategy?
It’s a diversified portfolio of (mostly) intraday trading systems that capture short-term market dynamics.
We do not rely on sustained trending movements. Instead, we exploit short-lived momentum market inefficiencies when there is a high probability of capturing them.
This means we do not stay in the market all the time. This short-term approach is more sophisticated and tricky than typical trend-following systems.
To remain consistently profitable in the long run, we must be precise with our entries, whereas trend-following focuses more on staying in the market during trends.
The advantage of this short-term approach (apart from being more profitable for deposits under a billion dollars) is that we can generate returns even when the market is stagnant, thanks to these intraday movements.
What's the downside?
Limited scalability.
This approach can manage a few dozen million dollars but not hundreds of millions or billions.
Conversely, trend-following on a liquid pair like Bitcoin can handle significantly larger sums, even in the billions
Since our focus is on maximizing profitability for relatively small amounts, up to a few dozen million dollars, it makes sense to stick with this short-term approach.
Scalability then is irrelevant to us because we are not managing billions of dollars.
On the other hand, trend-following has a major downside: its performance is tied to the “fate” of the instrument being traded.
While the instrument trends, trend-following systems perform well, but during non-trending periods, they lose money.
This creates a significant correlation and coefficient of determination (R^2) between the system and the underlying asset, such as Bitcoin. While correlation is well-known, R^2 is less familiar to the general audience.
Simply put, R^2 explains the percentage of a trading system’s returns that can be attributed to the underlying asset’s dynamics.
For example, an R^2 of 0.5 means that 50% of all returns are explained by Bitcoin’s market behavior.
Trend-following systems often have R^2 values of 0.5 or higher.
In contrast, short-term intraday systems are not dependent on overall market dynamics, so they typically exhibit R^2 values close to zero.