Swing Trader for Small Caps: Evaluating True Intrinsic Value (FA)

Overview and Suitability: The primary objective of the Swing Trader for Small Caps robot is to analyze the fundamental aspects of companies to identify those whose intrinsic value exceeds their current stock price. This approach, known as "Value" investing, is ideal for investors who seek to capitalize on market inefficiencies by investing in undervalued small-cap stocks.

Strategic Features and Technical Basis: The strategy employed by this robot focuses on trading small-cap stocks. The core mechanism involves the intersection of several types of Rankings: Piotroski, Debt, Gain, NCAV, and Greenblatt Rankings.

Piotroski Ranking: This evaluates the financial health of a company and predicts its future stock performance. It combines various financial criteria into a single score ranging from 0 to 9, with higher scores indicating better financial strength.

Debt Ranking: This seeks companies with sound creditworthiness.

Gain Ranking: This emphasizes companies with active and healthy growth.

NCAV Ranking: This identifies stocks trading at a significant discount to their intrinsic value, typically below their net tangible assets or liquidation value. The NCAV strategy exploits market inefficiencies by targeting undervalued stocks that have been excessively punished by the market. It involves rigorous quantitative analysis focusing on metrics such as the price-to-book ratio and net current asset value (NCAV). The fundamental principle here is the margin of safety, aiming for short-term gains by selling stocks once their prices recover to reflect their intrinsic value.

Greenblatt Ranking: Based on Joel Greenblatt's Magic Formula, this Ranking measures a company's efficiency in generating profits from its capital, indicating overall quality. It uses two key metrics: Return on Capital (ROC) and Earnings Yield, to identify high-quality, undervalued companies.

Position and Risk Management: The robot manages risk by limiting the maximum number of open trades to 35, with a fixed stop loss set at 25%. After ranking the stocks, it selects those with the highest scores to initiate long positions. Trades are executed using market orders within 1-2 hours after the market opens, ensuring optimal liquidity and favorable entry prices.

Trading Dynamics and Specifications:

• Maximum Open Positions: Medium, allowing for diversified exposure while managing concentration risk.

• Robot Volatility: High, suited for navigating and capitalizing on market swings.

• Universe Diversification Score: Medium High, indicating a moderate array of instruments to hedge against sector-specific downturns and enhance profit opportunities.

• Profit to Dip Ratio (Profit/Drawdown): High, suitable for traders who are focusing either on high profit or low drawdown for potentially higher returns that makes it an ideal for all levels.

• Optimal Market Condition Medium: If the current market volatility is Medium then you should use the Best Robots in Medium Volatility Market (VIX is Medium - this indicator is coming soon).  

Disclaimer:  Disclaimers and Limitations 

Simulated Performance: All simulated performance results are derived solely from real-time calculations using historical data. Algorithms receive minute-by-minute historical prices and other data from Morningstar and generate trades in real time based on these historical inputs, effectively eliminating any hindsight bias. 

Actual Performance: All actual performance results are derived solely from real-time calculations using current data. Algorithms receive minute-by-minute current prices and other data from Morningstar and generate trades in real time based on these current inputs, effectively eliminating any hindsight bias. 

Gross Performance: Gross performance results do not deduct any fees or expenses. These results reflect the total returns generated by the AI Robots without considering the costs associated with accessing the service. 

Net Performance (current performance chart): Net performance results deduct fees to provide a more accurate representation of returns experienced by the user. These deductions can include: Model Fee Deduction: Net performance results may deduct a model fee equivalent to the highest subscription fee charged to the intended audience. Actual Subscription Fees: Net performance results may also deduct the actual subscription fees paid by the user for access to AI Robots.