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Xplore Stocks and build your own investing strategy

1. Welcome to Xplore Stocks

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Back to topic: 6. Xplore Stocks - Create your own strategies

Aikido

February 2023 · 5 min read

Welcome to Xplore Stocks! You have just taken the first step to bringing your personal investing ideas to life.

With Xplore Stocks you have the tools and framework to design personal investment strategies and build investment portfolios all of which are based on the Style Factor investing method.

Why use Xplore Stocks?

This means you are following a rules based approach, grouping stocks based on one or more criteria from company financial data. Leaving emotion and subjectivity at the door, your investing strategies will be based on facts and backed by data.

Compare this to the exhaustive work, time and effort you could be spending on researching and tracking individual stocks, reacting to volatility and chasing returns, not to mention the emotional bias you will inherently place on your choices.

Instead your Xplore Stock portfolio will include a diverse collection of the top ranked stocks selected by the investment strategy you create.

Creating your strategy

You will build your Style Factor strategy in 3 simple steps

  • Create your Universe
    • Rather than trawling through all US stocks, we’ve made a few simple categorisations to create the Aikido Universe. It ranges in size from ~2700 to ~4500 stocks.
    • Now you can make choices on company value size and sector that will refine that further. This is your Universe.
  • Filter using factors
    • Set your rules to refine the stocks down to only those that meet your criteria. These are your Factors and will relate to the overall Style Factor strategy you are aiming for eg. factors that relate to Value.
  • Apply your sorting
    • You could have a few hundred stocks in the final group that meet all your criteria and you will want to identify the top stocks for your portfolio. 
    • Choose from the many sorting options, like liquidity, momentum or gross-margin.

That's it!

Add a personalised name for your strategy or leave the bespoke automated name.

Either way, each strategy that you create remains your intellectual property.

Hit Save.

Use the Xplore universe, filter and ranks to generate your automatic portfolio.
Use the Xplore universe, filter and ranks to generate your automatic portfolio.
Testing your strategy

By now you have discovered that creating an Xplore investing strategy is quick and easy, whether you are a total novice or a seasoned investor. But how do you know if your investment hypothesis and your strategy is any good?

This is where you get to tap into the extraordinary engine of Aikido, built with all the functionality of a quantitative hedge fund. Aikido uses powerful computing to run your strategy through proprietary statistical and mathematical models using the world's largest dataset of companies' financial data.

All you need to do is click Run Backtest and wait for a moment while Aikido uses these algorithms to assess how your strategy would have performed at any period of time within the past 12 years.

Keep an eye on the notifications on the left side while the number crunching is taking place. It won’t be long before your Backtest overview is ready to view on screen. This gives you the headline results of your strategy and compares it to the S&P 500 benchmark. If the topline numbers are looking good and you want more, click for your Tearsheet which provides detailed graphs, charts, and analysis.

This downloadable PDF is your personal strategy paper, with your bespoke strategy name and you as the author. If you just see “Strategy by Anonymous”, go to My Profile on the main page to enter a Display Name for yourself.

The tearsheet covers a range of outputs to help you make your decision whether to invest using the strategy or go back and change some parameters and try again.

Time to enjoy Xploring, the permutations are endless and your creativity will be unleashed.

Create a portfolio

It won’t be long before you are ready to put your strategy into action.

When you click Create Portfolio, you will have a number of options available to you.

  1. 1-click Paper portfolio.
    • A simulated live trading environment with a hypothetical $10k. Track your strategy performance with no real money at risk.
  2. Manual Entry portfolio.
    • Execute the trades separately with your broker, keeping a track of them on your Aikido portfolio page.
  3. Integrate with your online broker.
    • Automate your trading by connecting Aikido to your online IBKR or Alpaca accounts.

Let's assume you chose option 3.

You’ve created an investment strategy and you’ve automated your portfolio with your broker - look at that - you are now Quant Investing with the Style Factor method. Bet you werent expecting that to be so simple!

Learn more

This post has given you a topline overview of how Xplore works. We recommend that to get the most out of Xplore, you refer to the Glossary and check out the additional Tutorials on Universe, Factors, Sorting, and Backtests. There are also two posts showing the construction of two sample strategies, Value and Quality.

If you are not already familiar with Style Factors there are beginner and intermediate Tutorials available.

If it's your first time creating a portfolio, or using Aikido, you’ll find lots of help in the How To Guides and Tutorials on investing and portfolio management.

Now that your trading is automated, you can use that re-found time to Xpand your mind with our tutorials to help inspire your next investment.

Factor investing is for the patient investor who is committed to riding the highs and lows for long-term gain.  At Aikido we are committed to empowering investors with the strategies and skills to have that confidence and commitment. Markets are variable and portfolio performances can go up or down. That's why at Aikido our goal is to enrich an investor's self-belief and enhance their ability to stand firm and achieve their long-term investing ambitions.

Back to topic: 6. Xplore Stocks - Create your own strategies

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Introduction to Xplore Stocks. Design, create and invest in your own factor investing strategy
0. Introduction to Xplore Stocks
November 09, 2022 · 2 min read