Raposa: A No-Code Algorithmic Trading Solution
Raposa is a financial technology startup, designed to make systematic (aka algorithmic) trading accessible for the everyday retail investor. Historically, successful systematic trading has required learning how to code to backtest and automate your trades.
While many enjoy coding (we certainly do), not everyone has the time and resources to learn the syntax and trading-specific logic of a new programming language. In addition, we've found that many traders employ only partially developed trading strategies, often neglecting important aspects like risk management.
We here at Raposa want to fix that.
Our easy-to-use, no-code algorithmic trading system allows you to backtest trading strategies and automate buy/sell notifications so that you can start reaping the benefits of systematic trading now. In addition, we offer a comprehensive suite of risk management tools and an extensive library of educational content to upgrade your trading performance.
Is Raposa for me?
If you're interested in any of the following, Raposa is for you:
Generating passive income. This is what trading is all about. Plus it's fun!
Data-driven investment decisions. With our comprehensive backtesting engine, you can analyze how well your strategies would have performed under historical market conditions.
Educational content, including blog posts and youtube videos. Level up your trading knowledge with our library of articles and videos.
Slack community of like-minded traders. Brainstorm and share ideas with other intelligent traders!
Personalized customer support. Our team is eager to help you whether you’re a seasoned veteran or a trader in training.
Access to our product development team. We’re always looking for feedback and new ideas. If there’s something you want that we don’t currently have, feel free to message us on Slack or email us with your suggestion here.
If you're still not sure, you can also try our backtesting tool yourself for free.
How do I start?
The best place to start is by building your own bot and running a backtest to see how it performs.
We want to offer you as many options as possible to customize your bots, but we know the sheer range of choices can be dizzying. So to help you get oriented, we'll show you how to build a simple trend-following bot in five easy steps. Here are the five steps which we'll break down in more detail below:
- Set your account size and select your assets
- Choose your backtest period
- Add a buy signal
- Add a sell signal
- Add position sizing and management
To start, right click here to open up Raposa's Strategy Builder in a new tab. Already tired of looking at words? No problem! Check out our quick tutorial on Youtube.
Also feel free to consult our free trading glossary if you come across any terms you don't recognize or would like more information on.
Before you begin, the Strategy Builder should look like this:
Step 1: Set your account size and select your assets
By default, the account size is $5,000. We'll stick with that for now.
Then we need to select our stocks. If there are any stocks of particular interest to you, feel free to select those. Otherwise, we're going to randomly choose five stocks from five different sectors in the S&P 500:
- OMC—Omnicom Group Inc (Communication Services)
- TSN—Tyson Foods Inc Class A (Consumer Staples)
- VLO—Valero Energy Corp (Energy)
- PFG—Principal Financial Group (Financials)
- VMC—Vulcan Materials (Materials)
Step 2: Select your backtest period
Drag the line till it covers the full backtest period.
All of these stocks have been listed since 2002, so we'll start then to get as much data as possible.
Step 3: Add a buy signal
Click on the When to Buy tab above the Account Size field.
We're going to start with one entry signal, but feel free to add others in the # of Signals field.
Simple Moving Average (SMA) strategies are the bread and butter of algorithmic trading. A basic but effective SMA strategy is to compare a short term price average and a long term price average. Specifically, we're going to use the 50-day and 200-day moving averages.
Set up your buy signal as follows:
This tells us to buy when the 50-day average is greater than the 200-day average, i.e. when the short term price has moved above its long term average, indicating a positive trend.
Step 4: Add a sell signal
Click on the When to Sell tab.
We'll use a simple sell signal: we'll sell when the 50-day average is lower than the 200-day average, indicating our positive trend has reversed.
Let's also add a trailing stop loss. 15% is pretty standard, but feel free to test out different levels to see what works well.
Here's what our screen looks like now:
Step 5: Add position sizing and position management (optional)
Back in the Settings tab, scroll down below the backtest dates to where you see Position Sizing.
What is position sizing?
Position sizing just means determining how much you money you put into a new trade. We highly recommend adding position sizing and management to your portfolio to help mitigate risk. Even a simple method, such as the default "Equal Allocation", already puts you ahead of most other traders.
We'll keep the default selection, meaning our portfolio will be divided evenly between positions. Other options include determining the amount we buy/sell depending on risk as measured by volatility or by ATR.
Position management is similar and just refers to how you adjust your existing positions to control your risk. For instance, a common technique known as volatility targeting will adjust position size based on volatility. As volatility increases, positions are reduced, and risk is kept at a manageable level. For more information on the different options available, check out trading glossary.
My personal preference is to generally hold positions, and also just to keep things simple we'll select "No Risk Management".
Your screen should look like this
Ok so now it's time for the moment of truth. We've built our strategy. Now let's run it and see what we get. Press "Run Backtest" above the graph on the left side of the screen.
The green line represents our strategy's performance and the black line the performance of the S&P 500 (what we would have gotten if we had simply bought and held the index). As the graph above shows, this relatively simple strategy has performed surprisingly well! It has mostly outperformed the S&P and avoided the worst of its drawdowns.
That's the beauty of a trend following strategy. We ride the wave, buying as prices rise and selling as prices fall, so that we catch the upside without giving too much back in a downturn.
Though this strategy isn't bad, it could be improved. Maybe we drop our trailing stop loss percentage so that we hold onto our positions longer? Decreasing the stop loss percentage to -20% does result in a slightly higher annual return (+0.70%).
One major change we could make is to diversify. Right now we're only trading equities, but we could add various types of ETFs to cover multiple markets (note that ETFs are only available for Raposa subscribers).
We're working to develop a full Raposa Backtesting Guide to explain all of the features at your disposal. Until then check out our tutorial page and our YouTube videos,
And of course, Happy Backtesting!