The Top Trader Profile

The ayondo Top Trader profiles are structured like professional hedge fund reports. In general, the following applies: Always compare the historic risk of a financial investment with the return and compare this to a benchmark value (e.g. share indices like the DAX or S&P500).

First of all, the performance history for Top Traders is very important. But keep in mind that profits shown in the history are not necessarily an indication of future profits. Additionally, a percentage performance always relates to a specific time span. A trader who achieved a performance of 45 percent over the last twelve months may also have realised 13 percent in the last 30 days.
Alternatively, another trader may have achieved a performance of 18 percent over six months and then realised 29 percent in the last 30 days. These examples clearly indicate that performance should be viewed across several time spans.

After considering performance in the different time spans, let's take a look at risk. How is risk expressed? The indicators "Maximum drawdown" and "Volatility" are particularly useful for this. 

The max. drawdown describes the highest level of the traders capital curve as a percentage. 

The second important risk indicator is the so-called volatility, i.e. the standard deviation of a row of numbers. In simple terms, it is a measure of the fluctuation of investment products. The lower the fluctuation, the better we can sleep. 

The historical performance of a Top Trader is represented as a graph. This visualisation shows the price performance, achieved by the signal providers' trading returns. The calculation of the data is not displayed in real-time. The information is indicative.

Generally, we can only tell how many trades a trader carries out per month and how long he is on the market for on average based on his past. Additionally, each user can use statistics like the trade history. 
The trading strategy description in the Profile can be helpful, too.

In each trader profile you will find information stating whether they are a spread bet or CFD trader.

"Exit" means that the trader manually closed the position.

The blue symbol stands for "going long", this means that it is a trade betting on rates going up.The red symbol "going short" stands for a trade betting on falling rates.

Essentially, the ‘Trader Risk Score’ (‘TRS’) is primarily based on the money management of a Top Trader and their appetite for (and use of) leverage. We use various smoothing algorithms, so that changes in Top Trader’s behaviour can be reflected almost instantaneously whilst keeping ‘noise’ to a minimum.

This concept can provide Followers with an indication of the associated risk (and consistency) of a Top Traders’ money management. It allows ayondo to alert followers to any significant changes in a Top Trader’s approach to risk.

The TRS continuously aggregates individual Top Trader data over a period of time in order to produce a TRS between 1 (lowest perceived risk), and 10 (highest perceived risk). The score is aimed to reflect the current ‘riskiness’ of the Top Trader. The score does take into account time and therefore, if a Top Trader changes his approach to risk/money management over time, the TRS will change accordingly.

ayondo offers its products on a leveraged basis (only a portion of the overall trade size needs to be lodged as margin). Leverage is set on a per product basis and all Top Traders trade on a standard set of products bearing the same leverage rates. However, the extent to which a Top Trader utilises the overall leverage on his/her account (ratio between cash balance and total size of open positions) differs from one Top Trader to another.

Consider the following two scenarios:

Scenario A:

Top Trader Balance: EUR 100,000
Total Notional Size of Open Positions: EUR 50,000
Open Positions to Balance Ratio: 1:2


Scenario B:

Top Trader Balance: EUR 100,000
Total Notional Size of Open Positions: EUR 2,000,000
Open Positions to Balance Ratio: 20:1

In scenario B, the Top Trader clearly has a much higher exposure to the fluctuation of prices of the products in which he/she holds positions. Both Top Traders are holding the same account balance to collateralise their positions however. As a result, profits and losses are far more likely to accrue (in terms of absolute value and as a % of the overall cash balance) at a much faster and aggressive rate in Scenario B than Scenario A.

The TRS does not give information about whether a Top Trader will make or lose money now or in the future. Rather, it conveys information regarding the sensitivity of the Top Traders account to change in returns and indicates if a trader could potentially be driven by emotions and act irrationally, for example by reinforcing a losing position in order to make up losses, or by putting too much risk on a personal conviction.