Ayondo Portfolio Builder and Money Management (Portfolio Tutorial)
Portfolio Building is one of the major benefits provided to you when joining Ayondo. Ayondo Portfolio Builder provides you with the opportunity to construct your own Top Trader investment portfolio.
In this lesson you will learn how to create a sustainable portfolio and to maximise returns. In order to take full advantage of the options available in the portfolio builder, you will need to have understood the information from the previous lessons;
- The Ayondo Top Trader Career
- How to find the best Ayondo Top Trader
- Ayondo Operational characteristics
The Ayondo Portfolio Builder is a great analysis and simulation tool. It is not too complicated and does not have an overload of functions, which makes it easy to use and valuable to traders.
Once you are logged into your account, accessing the Portfolio building section is straightforward. You simply click on the Follower section and then proceed to the Portfolio Builder heading.
The portfolio builder is first and foremost an instrument of analysis and simulation, prior to being an active tool. This means that what you undertake in this section will not be automatically executed on your account (demo or real).
Only once you have run your simulations and optimisation can you decide to connect it to your account, to make actual transactions.
Creating your portfolio with Ayondo Portfolio Builder
Once you have selected the section Portfolio Builder, you will find yourself with the page below.
The main feature of this page is your ability to select and include 5 top traders, you best see fit. The portfolio analysis is the sum of the various Top Traders transactions that you have selectedselected, and this analysis will appear graphically in the lower space.
With Ayondo Yyou can only manage and replicate a maximum of 5 top traders at one time, although you may choose to select less, that’s why you have a limit of 5 traders also here in the simulator.
This is a restriction Ayondo also places on the number of test portfolios you can have at the same time (five test portfolios).
As you can see in the image, four test portfolios have been launched (test1, test2, test3, test4) and in the lower left there is the option to “Create new portfolio.”
In order to create another portfolio;
- Click on the “Create new portfolio” tab
- Create a name in the box that will appear (towo short names are not accepted)
- Click OK.
As you can see from the image below, the new portfolio (test5) was included in the top tab, and the “Create new portfolio” button disappeared at the bottom, confirming the limit of 5 test portfolios.
Each portfolio acts as a separate entity. There is no connection between the portfolios and you can choose to build each one differently in order to test different outcomes and compare the results.
You can also test the same Top Trader in different scenarios, to examine the trader closely and maximise their presence within your portfolio. (This will be explained in more detail later on, which will allow you to customise your portfolio settings).
Insert/Drag the Top Trader into the Portfolio
Let’s start by looking at how to include Top Traders within the Portfolio Builder.
You have two options.
1. Using Dragging Function
To take advantage of this click and hold down the mouse on the top trader that interests you in the left column. Drag the trader into one of the five dotted portraits at the top of your portfolio.
In the left column you have a list of Top Traders that you can filter by using the function “advanced filter”. The Advanced Filter of the Portfolio Builder is not as comprehensive as the one you find in the rankings list. For this reason, I prefer to use the second option (which I’ll discuss shortly), or exploit the advanced filter “trader name” if you already know the name of the Top Trader.
2. Using the Ranking List
The ranking list is the second and preferred option as it allows you to select the Top Trader directly from the advanced search results.
As you can see from the image below, to the right of the Top Trader profile is the option to follow. By selecting follow you will be placing the trader inside the portfolio builder.
Manage a Top Trader within the Portfolio Builder
Once you have inserted the Top Trader inside the portfolio builder, you will be provided with the following display. The options you have are essential to top trader management;
- Click on X to remove it from the portfolio;
- Click on the Top Trader name to enter into their profile;
- Click on the Settings selection. When you make this settings selection the following window will be displayed. This will give you the ability to select the type of signal replication you wish to implement. The replication range ranges from 0.5X to 10X.
The replication formula is as follows:
- 0.5X: If the Top Trader opens a 20% risk and you select a 0.5X signal replication. The replicated risk will be 0.5 X 20% = 10%
- 1.0X: If the Top Trader opens a 20% risk and you select a 1.0X signal replication. The replicated risk will be 1.0 X 20% = 20%
- 2.0X: If the Top Trader opens a 20% risk and you select a 2.0X signal replication. The replicated risk will be 2.0 X 20% = 40%
And so on…
Since Ayondo replicates in terms of percentages, all the replications will be reflected in terms of the size of your account
Eg. If the Top Trader has an account of € 100,000 and risks € 20,000 for an operation (20%), on your € 1,000 account a risk of 20% will be replicated as € 200.
You have the option of implementing these settings in two ways;
The first is to use the identical replication settings on all of the tools handled by the Top Trader. You can implement this by selecting the “All Instruments” option. This type of setup must only be adopted when you fully trust the Top Trader’s strategy.
The second is to use custom settings, depending on the type of financial instruments that the Top Trader uses. It is recommended to use this ‘custom settings’ option in five different cases:
- When some tools are too volatile or risky for the account, and therefore there is a need to decrease their replication
- When some tools are too little volatile or attractive for the account, and therefore there is a need to increase their replication
- When the trader has not achieved satisfactory results in terms of risk/yield on a particular tool (prior, the open position inside the top traders accounts must be analysed in depth) and therefore you want to decrease its replication
- When the trader is very skilful with one instrument in particular in terms of risk/yield (prior, the open position inside the top trader accounts must be analysed in depth) and therefore you want to increase its replication
- When we acknowledge that the tools used by the trader in their current portfolio
Considering all the instruments used by the traders within your portfolio, a trader has an overarching exposure to a given financial instrument. In this case, you will adjust your portfolio to replicate those financial instruments traded simultaneously by the majority of traders, in order to prevent an unexpected, negative event impacting on your portfolio performance.
In order to work on individual financial instruments, you need to click on the “set individual amounts” button, and you will find yourself facing the display window below.
If you are not an investor with a lot of experience, it is not recommended to set individual assets, as it would reduce/restrict the impact of the Top trader trading strategy.
We at InvestinGoal tend to give confidence to the Top Trader strategy by increasing the top trader’s reflection on your portfolio and relying heavily on the strategy success. This is because this strategy has been carefully developed by experts.
Once you have completed the ‘size of the replication’ settings, you can confirm the changes by clicking the green “Confirm Settings” button.
Analyse the performance of your Portfolio Builder
Once you have inserted the various Top Traders within your portfolio you will be able to analyse your potential portfolio performance. You will be faced with the display below.
At the top of your screen you have the option to select which profile you want to view. Below the portfolio tabs you will see the portrait images of your selected top traders and underneath your traders you will have your performance chart.
The Performance Chart and the detail graph that is presented is an extremely useful portfolio management accessory. You are able to view the daily performance of each Top Trader, while the total potential portfolio performance is shown with the blue dashed line (sum of the individual performances). On the vertical axis you are shown the percentages of yield, and on the horizontal axis, the time.
As you can see from the example (purely indicative and didactic), the account undergoes a major downturn beginning around September and the position was not regained throughout the time-frame presented.
The portfolio performance is less than 10%, and lower than the values recorded prior to September. The cause of this decline seems to be partly determined by the performances of the “orange line” trader, “EdleMetalle”, and partly by the blue line “FCInvestment2012”.
How to improve the situation then?
As described in the previous paragraph, you need to work on Top Trader settings to improve portfolio performance, and from the image below you can see the impact of applying the right settings.
The simple changes that were made was I overstated and increased the effect of the traders I considered better current performers and I understated and decreased the impact of the traders I felt were underachieving.
The profound DrawDown turned into a far better position with long-term lateral, because in April the negative result series has dimmed and the performance has started to rise.
The end result is a near a 15% yield, with a very low Drawdown, unlike the previous situation that saw performance below 10% and very deep Drawdowns.
This shows the potential, positive impact that you can have when instigating the best settings for your portfolio.
For this example, I took 5 Top Traders completely at random without paying any attention to performance and strategy. When you’re going to make the optimizations, always make sure you have Top Trader with a strategy that you like. Although this is one example shows how you can inflict positive results, adjusting the settings doesn’t always achieve satisfactory consequences.
Also, keep in mind that past performance is not a guarantee of future results. Therefore, it is suggested that you don’t over exaggerate your settings/decisions and always take into account the worst scenario by always protecting yourself.
As previously stated, with the ability to mix and match with a number of portfolios, different top traders and different settings within, you can gain insight on how each portfolio can perform.
Connect the Portfolio Builder to the Live or Demo account
When you are convinced that you have found a portfolio that suits you in terms of risk and return, you can then decide to transfer the built portfolio onto your Demo or Live account. (clearly, it’s always better to use the demo account prior to do your own tests).
The operation is really very simple, just select:
- “execute on demo account” if you want to replicate the signals on a demo account;
- “execute on live account” if you want to replicate the signals on your account with real money.
Regardless of whether you want to attach the portfolio that you built to your Demo or Live Account, after clicking the button Execute, even if only one of the Top Traders that you have chosen has open market operations, a pop up will appear similar to the image below.
The system will display each individual trader and the amount of different operations open in the market. You will then be asked if you would like to open it yourself.
ATTENTION! The positions will be opened to the conditions (prices) that the market is offering at that point in time (therefore they might be better or worse than when the trader opened them).
It is well explained in the pop up, that by placing a flag within the trader’s corresponding ‘box’, all of the transactions that the top trader has open in the current market will be replicated.
By not selecting any of the trader ‘boxes’, it will begin to replicate Top Trader’s operation from their next useful transaction.
Given that the effectiveness of a portfolio is highly related to the strategy being implemented and the management of the portfolio (patience; knowing how to wait), we at InvestinGoal as a general rule in the process of attaching the portfolio to our account ,will avoid duplicating operations already on the market. It would be a bit like trying to get on a running train: high risk and dangerous.
However, some exceptions must be taken into consideration:
- The operations may have just been opened and their entry price corresponds to the current market price;
- Most operations are in decline and perhaps even close to stop loss. In these cases, it may be worthwhile to enter into the market to take advantage of the price. If the transaction was to be completed in profit it would yield greater returns otherwise the loss would be limited, in any case lower than the trader’s plans (basically, an opportunity for a maximal profit and minimal losses).
Note that in order to evaluate these exceptions, you must be able to read the open positions within the trader’s profile very well.
Once you decide how to proceed click on the execute portfolio button.