Fully automated portfolio management

Stockworm's autoinvestor strategy is an immensely powerful investing tool which is simple to use. The purpose of the autoinvestor is to automatically issue customized buy/sell/hold recommendations for your Stockworm portfolio on an ongoing basis. If you choose to follow these recommendations, you will execute the trades with your brokerage house and then update your Stockworm portfolio. The next trading day, new buy/sell recommendations will be issued or a 'no action necessary' message will be sent if the autoinvestor considers your portfolio to be in accord with your investing strategy.

The autoinvestor strategy tool is paired with the autoinvestor simulation tool which allows you to fully backtest your strategy by managing a simulated portfolio in past markets using your custom strategy.

Autoinvestor strategy types

To use the autoinvestor, you must first describe your investing preferences as an autoinvestor strategy. You then associate this strategy with one or more portfolios, thereby allowing the strategy to provide recommendations on the associated portfolios. The Stockworm technology set is constantly being evolved and improved upon for the benefit of our customers. For these reason, two strategy types are currently available to you:

• standard strategy - the standard strategy is the latest generation autoinvestor strategy. This strategy allows for multiple open rule sets and allows you to specify how much weight each position will occupy within your portfolio. The primary conceptual difference between the standard strategy and the classic strategy is that the standard strategy does not explicitly have any close rules; rather old positions are closed and new positions opened whenever the strategy rebalances the portfolio and finds that the current holdings do not match the list of stocks generated by the open rule set(s). An additional difference is that the standard strategy does not allow for short positions (this feature will be introduced in the future).
• classic strategy - the classic strategy manages portfolio holdings based upon open and close rule set, both for long and short positions (you specify the mix of long and short positions using a strategy setting). Positions are closed only when the close rules explicitly call for positions to be closed, in contract with the rebalancing approach used with the standard strategy.

Standard strategy

Every autoinvestor strategy is based upon a set of general portfolio preferences (e.g. number of stocks, cash reserve, etc.) along with a collection of trading rules. The standard strategy is the latest generation autoinvestor strategy. This strategy type has the following features (described in more detail in the stockworm manual):

• Portfolio Composition - you can specify the number of stocks and cash reserve.
• Rebalancing - you specify how frequently your portfolio is rebalanced by comparing holdings with the strategy recommendations.
• Liquidity - you can limit your purchases and sales to more liquid stocks if you are trading a high value portfolio.
• Weighting of holdings - you can weight your holdings evenly (all stocks have same holding size), manually (e.g. the 'best' stock has a double position in your portfolio) or using a formula (e.g. weight by market cap).
• Rule sets - You use one or more rule sets to define the ideal stock holdings for your portfolio at any point in time.

It is important to take a moment to contrast the standard strategy with the classic strategy (with which many veteran users of the Stockworm site are familiar). The primary conceptual difference between the standard strategy and the classic strategy is that the standard strategy does not explicitly have any close rules; rather old positions are closed and new positions opened whenever the strategy rebalances the portfolio and finds that the current holdings do not match the list of stocks generated by the open rule set(s). An additional difference is that the standard strategy does not allow for short positions (this feature will be introduced in the future).

Classic strategy

As with the standard strategy, the classic autoinvestor strategy is based upon a set of general portfolio preferences (portfolio composition) along with a collection of trading rules. As the name implies, the classic strategy is an older generation strategy which has been successfully used by many Stockworm customers. This strategy type has the following features (described in more detail in the stockworm manual):

• General options - you can specify the number of stocks and cash reserve.
• Composition - you can specify whether you are interested in a long portfolio, short portfolio, or mix of longs and shorts.
• Open rules - You can use any of the available open rules to define the ideal stock holdings for your portfolio at any point in time.
• Close rules - You can choose when positions are to be closed, based upon stop gains or losses, minimum or maximum hold times, trading signals, and other close rules.

Simulations

Stockworm provides you with full functionality to trade a simulated portfolio using your autoinvestor strategy over the past few years for the purpose of finding an optimal strategy for your investing style and portfolio size. This ability to fully backtest your strategy using your specified initial value, commission rates, etc. is an incredibly powerful feature of the autoinvestor! The autoinvestor simulation tool is described in detail in the stockworm manual.