Portfolio Strategy

Define a complete investment strategy

The Portfolio Strategy is an intuitive and realistic way to express an investment strategy with rules. This is where many of the Portfolio123 components, such as screening and ranking, converge to create a truly complete investment system, a "virtual portfolio manager." 

The steps to create and launch Strategies are simple:

  1. Convert an investment idea into a rules-based Strategy

  2. Test the Strategy in the past to flag potential problems

  3. Launch the Strategy as a Portfolio

Converting an investment idea into rules

Together with a vast dictionary of data items and functions of both fundamental and technical nature, and a proper framework, Portfolio123 offers a great deal of flexibility in allowing you to formulate a Strategy.

A Strategy is defined in 6 key sections:

  1. General. Here you define things like starting amount, slippage, commission, and management fees.

  2. Rebalance. Here you set position sizing and rebalance frequency.

  3. Universe & Ranking. Here you choose your starting universe, benchmark, and ranking system.

  4. Buy and Sell rules. Here you implement screen-like rules that result in transactions.

  5. Hedging and Stop Loss. This optional section sets up hedging or stop loss rules.

  6. Restrictions. This optional section sets hard restrictions and/or go-to-cash periods.

For more details on each section, please see the A-Z guide in Learn More

Testing a Strategy

Once your system is defined you can run historical simulations using our engines (which are as point-in-time as we can make them), based on realistic assumptions. Together with advanced features like the Optimizer and Rolling Tests, the simulation features of Portfolio123 can be used to test systems before committing real money.


However, these tools can also be misused. It's very easy to fall into a "data-mining" trap where your strategy is modified to produce ever-increasing "simulated" returns. For example, if you have a rule like "PE < 20" to filter for stocks with low PE, but then change it to "PE < 19.63" because you achieved a better-simulated return, then you are most likely data mining. To learn more about how to become a proficient strategy designer see our Courses section.

Launching a Strategy 

When you are done creating your Strategy, launching it with real money (or paper money, if you prefer) is simple. All you have to do is launch a Live Strategy that runs in the Research area. You can then follow it with as many accounts as you want in your Manage Accounts.