If you systematically manage your portfolio with algorithms, you don't worry about a few percent drop in the portfolio. It is clear that every system makes profits and losses. If a system is designed so that it makes no losses, then it also makes (almost) no more trades and the statistical significance in Portfolio management is not given. The Traderama Quant Portfolios make about 100 trades per year. This is a good basis for compiling statistics over several years.

Every investor knows that setbacks are usually buying opportunities. Investors often look for the "right" entry point. But there is no such thing. There are only probabilities for each trade. In conjunction with the appropriate risk and money management, the basis for systematic asset management is given.

It is particularly exciting when conditions are linked to probabilities. In connection with the recurring, usually short but violent downward phases on the stock markets, we ask the following question:  "What is the probability that a deposit can lose 5% or more a month.?

Of course, a Quant Portfolio can also lose 5% in value. However, this does not happen that often. The following graph shows the probability that a Quant Portfolio loses 5% or more in a month.

The offensive MOUNT Portfolios have a higher probability of a monthly drawdown of at least 5% compared to the ARROW and SOLID Portfolios. This is also intentional and part of the Quant logic. Return-oriented, more offensive systems generally have a higher probability of drawdowns versus defensive systems. However, all probabilities are still below 10%.

Based on the statistics, one can now ask a second question: "What was the return one month, or over three months thereafter, if a month previously closed in the red 5%?").


The analysis shows that only two Quant Portfolios on average have another negative month after a 5% drawdown in one month. All other systems have a positive return in the next month. It gets even better when you look at the return over the next 3 months. Here there is no negative value and 5 of the 12 Quant Portfolios have already more than made up for the drop.

Comparing the 3-month return after a 5% collapse on a monthly basis versus the average 3-month return yields a more-return factor. A value of 2 means that the 3-month return after a 5% collapse is twice as large.

Conclusion: Finding an exact time for the optimal entry is hardly possible. It is always only about probabilities. The probability of an attractive return increases when investing systematically with Traderama, for example, if a previous month has closed in the red. However, this also means that you cannot simply stop - when things are "going down" in the portfolio - and then start again at some point. Otherwise you miss the best opportunities and profits. For us humans, this is sometimes emotionally difficult. But that's exactly why we use Quant systems, to turn off the emotion.