There Are Two Ways of Approaching Algorithms in Finance and Trading
Before examining how algorithms can positively impact investment success, we need to understand the term "investment algorithm". There are two related but sufficiently distinct ways to use them in a trading context.
Why Investors Can Benefit Significantly From CARL’s Quants
Quants are still a relatively new thing in the trading world, even among savvy investors. This is mainly because using trading algorithms seems like a daunting proposition at first. Many investors – new ones in particular – find it easier to relate to human fund managers than to a trading software supervised by computer scientists and mathematicians. Which is why they often open their portfolios to the possibility of bad calls made by a manager instead.
Recent history has shown that mistrust in algorithmic trading strategies is wholly unjustified, as even during market crashes and recessions, quants have typically performed better than traditional funds. This is no surprise to those in the know, as financial algorithms are rigorously backtested before they're employed. "Backtesting" means an algorithm is put in a sandbox environment and fed data on a historical market situation. The system is then asked to make investment decisions in this sandbox. The results are compared to actual market developments from that historical point onward. Only if the algorithm managed to beat the market in this historical sandbox environment can it even be considered ready to be employed for actual decision-making. Such backtests are done frequently during the development of the algorithm to ensure the final version of the software will be as refined and as accurate as possible.
In short: The algorithmic systems used by quants are typically highly reliable, and they tend to outperform other hedge funds. For example, CARL's quants feature 15%+ targeted returns, which provides your investment with significantly greater growth potential than most other investment opportunities – including alternative and traditional investments such as mutual funds, exchange-traded funds (ETFs), the stock market, etc.
How to Spot a Reliable Algorithm
Even if you have already spent years actively investing in the market, you likely won't know how to assess quants. This is because their financial decisions are made by anonymous trading software. This software is being programmed by people who might have made a name for themselves in the information technology sphere – but probably not in the financial world. All you have to go on are:
- Computer or data science credentials
- A proof of concept using the algorithm
- Information from the quant's prospectus
You might think that it's a daunting task for someone not well-versed in the IT world to identify reliable quants. And you'd be right – but that's where CARL comes in. All of the quants in our portfolio go through our due diligence process to determine whether they are a promising and trustworthy investment vehicle for you.
That's not a guarantee of success – all hedge fund investments naturally carry a certain amount of risk. But it does mean you're not on your own when it comes to figuring out your investment options. You won't need to spend time and money researching which funds are currently open to investors and which of those are feasible based on their trading strategy, the talent involved, etc.
All you need to do is qualify as an accredited investor, set up your CARL account, and you're good to go. The CARL app provides you with all of the relevant information, from annualized volatility to historical performance, making your investment decision much easier.
Making Algorithm-Based Funds Part of Your Strategy
Sometimes, you may not want to invest all of your money into algorithmic trading vehicles. Perhaps you're not aiming to get the greatest profit possible. Maybe you prefer to put some of your money into funds that don't use trading algorithms because you think supporting them is a worthy cause.
Quants trading via algorithms don't need to be the focus of your portfolio – they can also be used for diversification.
In that case, you can use algorithmic funds like CARL's quants to diversify your portfolio. As they're entirely data-driven and use hedging strategies as a risk control method, quants offer significant gains at manageable risk. While they're not risk-free, this does allow you to control the overall risk that your portfolio is exposed to. So if, for example, you're putting a significant amount of money into a worthy cause that may be highly volatile or doesn't offer great returns, you can use quants to pick up the slack.
Get Started
3 Easy Steps to Start Investing With CARL
Investing in quants is as easy as pie if you've got CARL on your side. Investors can set up an CARL account quickly and easily.
Set Up Your Account
Quickly and securely create your account, verify your investor status and become a member of our community.
Analyze Investments
Using the tools within the CARL app, determine which strategies at what allocations are right for your investment goals.
Fund Your Investment
Simply save your portfolio settings and on the next strategy funding cycle your investment will be live!
Enjoy the Benefits of Investing Algorithms
With the CARL app, you can access to sophisticated quants and benefit from investment opportunities based almost entirely on data. Avoid human-induced trading errors and profit from 15%+ targeted returns at a minimum investment of only $20,000, with built-in risk controls. Add CARL to your portfolio today.