Algorithmic strategies developed along side the advancements in computer technologies over the past couple decades. It is now assumed that the majority of trading volume on the world’s exchanges are made up of computer, not human, traders. If this all sounds a little intimidating, perhaps it won’t once it is thoroughly explained. These programs can often be used to add a more mechanical, disciplined and specific approach to investing. Sometimes not having the element of emotions overwhelming difficult trading situations by using a well tested, thoroughly researched algorithm is a great approach for at least a portion of ones portfolio.
Pacific Trust has partnered with programmers and helped develop strategies that seek to outperform certain indexes over the long run. PTWM is encouraged by the results and believe that for a small portion of ones portfolio, this makes a lot of sense. The firm could even see expanding this offering in the near future. We look forward to discussing this dynamic area of the market.
Like any model, there are limitations on it’s effectiveness. The firm tries to balance the risk of any computer model, with rigorous risk management oversight by the manager. As there is risk getting on the freeway to drive to work, there is risk with any human, computer model, or technologically assisted purchase of a risk asset.