The HF Systems Model Trading Portfolio (MTP) service offers asset managers and well-capitalised traders access to a wide range of tried, tested and proven trading systems or algorithmic trading strategies delivered in real time over the Metatrader (MT4/MT5) platform. (Note: a stripped down version is available to TradeStation and MultiCharts users). The service is viewed as an attractive, ethical and cost-effective alternative to the managed trading account.
HOW DOES IT WORK?
1) Client selects a range of systems to be included in their portfolio. (FX, futures or both)
2) Client opens a Metatrader demo account at any MT broker in a size which matches any live accounts they may wish to link up.
3) Client determines the percentage of the account to be placed at risk (risk level).
4) HF Systems copies trades the system trades to the client's demo account in the appropriate sizes to reflect the account risk.
5) Client elects to take any, all or none of the trades and has the option of copying trades to other MT accounts via trade copier.
Each portfolio is comprised of a selection of short-term trading systems which have proven their alpha-generating qualities over a long period of time. The blending of multiple, lowly-correlated systems (in terms of monthly P & L distribution) provides a high level of diversification which keeps risk contained during those inevitable drawdown phases.
As a rule of thumb, each portfolio is structured to aim for yearly returns in excess of two times the amount of capital placed at risk. As an example, a $100,000 account which trades on a 20% risk mandate ($20,000 maximum drawdown) would have a target yearly return of at least $40,000.
The illustration below provides an indication of the risk/reward profile of the portfolio. Risk metrics such as Sharpe, Sortino ratios and Annualized Volatility are all at very healthy levels and losses in terms of down months is limited. Maximum drawdown (high watermark basis) is a small percentage of both annualized and total returns, in sharp contrast to many of its peers.