Stock Picker: Profitability Model for Small Cap Stocks, Long Only (FA)

Overview and Suitability: The robot is specifically designed for traders who focus on small-cap stocks, utilizing a fundamental analysis (FA) approach to profitability. This robot targets investors looking to capitalize on the potential of small-cap companies by analyzing key profitability indicators. Its strategy is tailored for long-term holding periods, ensuring that positions are thoroughly vetted before trades are made. Additionally, the robot operates with limited simultaneous open trades, making it a great fit for both novice and advanced traders managing their IRA accounts or those who prefer less frequent, high-quality trading signals.

Its setup is ideal for users who are seeking a long-only strategy and want to trade without the complexity of margin. By focusing solely on fundamental analysis, this robot leverages the most critical aspects of financial health—profitability, income growth, and operational success—to generate trading signals.

Strategic Features and Technical Basis: The robot operates on a highly sophisticated algorithm developed by expert quants, combining two complementary methods of profitability analysis to maximize returns:

1. Proprietary Profitability Analysis: The algorithm relies on a comparative analysis of various profitability indicators, such as Total Revenue, Net Income, EBITDA, and more. The focus is not just on current profitability but also on the changes and trends over time. Using this proprietary method, the algorithm assigns each stock a score based on its overall financial health and profitability trajectory. From this process, the top 30 companies showing the strongest performance are selected for potential trades.
2. Ian Wyatt-Inspired Method: Drawing from the methodologies of famed investor Ian Wyatt, the Trend Trader takes profitability analysis a step further by ranking stocks based on Operating Income, Earnings Per Share (EPS), and the overall dynamics of growth in profitability indicators. This ranking process allows the robot to zero in on small-cap companies that not only have stable profitability but are also demonstrating a strong upward trend in profitability growth.

By blending these two approaches, the robot's algorithm ensures that selected stocks exhibit both consistency in their average profitability and a high growth rate in key financial metrics. This makes it an effective tool for capturing value in small-cap stocks, especially those on the cusp of growth breakthroughs.

Position and Risk Management: The robot employs robust risk management techniques to safeguard capital and optimize profitability:

• Fixed Stop Loss: Upon entering a position, the robot automatically sets a Stop Loss order at 20% of the opening price. This fixed stop-loss ensures that potential losses are minimized if a trade moves unfavorably.
• Monthly Rating Review: At the beginning of each month, the algorithm reviews its list of selected stocks. If any stock's profitability score drops below a predefined threshold, the robot will close the position regardless of whether the stop loss was triggered. This feature helps prevent holding onto underperforming stocks and mitigates risks in declining markets.
• Timed Signals: To enhance usability and liquidity for traders, the robot delivers its trading signals two hours after the market opens. This strategic timing ensures that traders can capitalize on optimal liquidity conditions while allowing for more informed decision-making.

This AI robot is designed to trade conservatively by using a $2,500 position size for each trade, ensuring that users can maintain diversified exposure while mitigating large losses. This strategy is especially advantageous for users managing smaller portfolios, as it limits overexposure to any single stock while optimizing for growth.

This robot is ideal for traders who are looking for a fundamentally driven, long-only strategy in the small-cap stock space. Its profitability model is perfect for individuals who prefer a steady, data-backed approach without the need for complex technical indicators or short-term speculation. Whether you're a novice trader learning the ropes of the stock market or an experienced investor seeking to manage your IRA or retirement fund, this robot offers an excellent solution.

All trading signals are displayed without the use of margin, and users can view comprehensive trading statistics to gauge the performance of the robot. By clicking on the "Show All Stats" button, traders can dive deep into the results and performance history, accessing both open and closed trades.

• Open Trades: Traders can follow the AI robot in real time to see how it selects equities, opens positions, and manages ongoing trades. This transparency allows users to understand the thought process behind each trade and to gain confidence in the robot's decision-making capabilities.
• Closed Trades: Reviewing previous trades is a crucial part of assessing the performance of any trading system. The "Closed Trades" tab provides a full history of all past trades executed by the robot, allowing users to evaluate profitability, success rates, and risk management in practice.

With its methodical approach to profitability, disciplined risk management, and strong technical foundation, the Trend Trader AI robot stands as a reliable choice for anyone seeking to profit from small-cap stocks through fundamental analysis.

Trading Dynamics and Specifications:

• Maximum Open Positions: Medium, allowing for diversified exposure while managing concentration risk.
• Robot Volatility: Medium, offering a balanced approach between capturing significant market movements and mitigating sharp declines.
• 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 able to tolerate and manage greater levels of risk in exchange for potentially higher returns.
• Optimal Market Condition: This robot shows its best performance when market volatility is high, making it particularly adept at navigating turbulent market phases.

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.