Alpha Trends is designed for investors who invest based on trend changes. Alpha Trends identifies up to five instruments that are trending up from a basket of large-cap and mid-cap companies that have derivatives. These stocks are selected, if Spotalpha’s trend algorithms identify a high probability of success. Alpha trends are therefore ideal for active investors who use derivatives for leveraging or hedging their trades.
Portfolio Alpha Trends is the more aggressive allocation model, where all available capital is allocated to a maximum of five bullish trend signals. For example, if two stocks are trending, 50% is allocated to each in cash. If three stocks are trending, 33% is allocated to each, and so on. This aims to maximize returns in highly liquid large-cap and mid-cap stocks.
Dynamic Alpha Trends dynamically is the more conservative allocation model, where 20% of capital is allocated to each bullish trending stock, up to 5 stocks at maximum. For example, if two stocks are trending, 20% is allocated to each and 60% in cash. If three stocks are trending, 60% is allocated to stocks and 40% in cash, and so on. This aims to maximize risk-adjusted-returns in highly liquid large-cap and mid-cap stocks.
Portfolio Alpha Trends is aggressive and ideal for hedging strategies (for example, a bull-call spread). Dynamic Alpha Trends on the other hand is more conservative, delivers a smoother equity curve (performance) and is therefore ideal for leveraging using derivatives.
Another point to note is that Spotalpha’s flat fee structure enhances profitability as fees is not linked to amount invested.
In summary, Alpha Trends identifies bullish trending stocks that have a high probability of profit and are ideal for advanced investors. With Portfolio and Dynamic alpha trends, traders can maximize returns while managing risk without much complexity as maximum number of stocks selected at any time are limited to five.