VORTECS Testing Methodology
Our goal in testing the VORTECS™ Score is to establish Return on Investment (ROI) over a consistently-applied series of strategies.The goal of this analysis is not to create the single best trading strategy; rather, it is to obtain a measure of the efficacy of the VORTECS score with a clearly defined and rigorously applied set of rules.
In other words, we are not doing any complicated rebalancing, or weighting certain assets more than others. We are going into this with minimal assumptions and keeping it as simple as possible to have the fewest “moving parts” in this analysis.
The method is pretty straight forward. It starts with $1.
If the VORTECS Score for a particular asset meets a threshold condition (e.g. Buy when the score crosses 80) it puts the full dollar in*.
If VORTECS later identifies a second asset that meets that condition while the first is also active, it splits the money equally among the two assets.
Example: VORTECS adds $1 into coin A for a day. Then the next day it wants to also buy coin B, but still hold coin A. By this time, the $1 may be $1.10. When it buys coin B, it puts $0.55 from coin A into coin B. While holding both coins, it rebalances every hour to maintain equal holding of each.** Gains and losses are calculated on an hourly basis.
Another way to think of this (and how the code actually performs) is: instead of rebalancing every hour, it treats its entire holdings as one asset. The performance of this asset is the average performance of all of the coins it is holding. This is similar to an equally weighted index fund. Mathematically, this is equivalent to dynamic rebalancing to maintain equal holdings of everything.
Note that when we describe an asset crossing a threshold, we mean that our measure of ROI is based on the price at the exact time that threshold is crossed; timed strategies such as “Sell after 168 hours” are equally precise.Note also that we describe lifetime ROI as beginning on the day VORTECS went live in beta testing, i.e. all lifetime ROI figures are cumulative and begin on January 5th 2021. In all communications we specify the end date on which those numbers are current.
*This is one example of where other strategies may get more complicated - perhaps they only allocate a certain fraction of the dollar. Here, we remove that “moving part” from question and just go all in.
**This sounds intense: rebalancing every hour. But this is another part of the minimal assumptions. If it didn’t rebalance every hour, and one coin went up to $0.65, and the other down to $0.45, what would the allocation be when it wants to add a third coin, coin C? Keeping everything balanced is a safe, no-assumption approach.
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