What is an algo & back testing?

Dive into the World of Algorithmic Trading: An Exciting Journey Through Automated Systems and Backtesting


What is Algorithmic (Algo) Trading?

The long answer short, an algo is a stock market robot that trades for you. Both when the stock market goes up and when it goes down, you can make money. After a simple installation of about 15 minutes, you don't have to do anything else, just let the robot work.

Imagine a world where financial trading isn't just about humans analyzing charts and making decisions. This is where algorithmic trading comes into play. An algo is a highly intelligent robot that follows a set of instructions (algorithms) to execute trades on your behalf. These instructions are based on technical factors, timing, price, quantity, or a mathematical model. Picture it as setting up a sophisticated "if-this-then-that" rule for trading, where you don't have to do anything, the robot does everything for you, from start to finish. The robot can carry out orders for you around the clock without ever getting tired.

Why Automated Trading Systems?

Automated trading systems take algo trading a step further. They are powerful computer programs capable of not just following instructions but also adapting to new data in the financial markets. Imagine a pilot setting an airplane on autopilot; the plane flies itself based on pre-set routes. Similarly, these systems can manage your trades from start to finish, without needing you to be glued to your computer screen. They're fast, precise, and devoid of emotional trading decisions, which is a huge advantage in the rapid-fire world of finance.

The Magic of Backtesting

Before letting your automated system loose on the real market, you wouldn't want to dive in blindly, right? Here's where backtesting comes in. It's like a time machine for your trading strategy. Backtesting allows you to test your algorithm on historical market data to see how it would have performed in the past. Think of it as rehearsing a play before the opening night. It helps you understand the potential risks and rewards without risking a single penny.

The Intriguing Benefits

  • Speed and Efficiency: Algo trading is lightning-fast, making decisions in fractions of a second, much quicker than a human could.
  • Emotion-free Trading: Algorithms don't get overwhelmed by emotions. They stick to the plan, no matter what.
  • Diverse Strategies: You can implement various strategies that suit different market conditions, all running simultaneously.


But, Be Aware of the Risks

  • Technical Glitches: The system is only as good as its programming. Faults or bugs can lead to unexpected losses.
  • Market Unpredictability: Even the most sophisticated algorithm can't predict every market movement, especially during high volatility.
  • Over-Optimization: There's a danger in designing a system that looks perfect on paper (in backtesting) but fails in real markets.

Forward Walk Testing: Ensuring Confidence in Your Trades

At A+ Algos, we believe in thoroughly testing our trading algorithms to ensure they are ready for the real-world markets. One of the key methods we use is called "forward walk" testing.

What is Forward Walk Testing?

Think of forward walk testing like a final exam for our algos. It's a way to prove that they can handle the future, not just the past. We take our algos through a simulation that uses fresh, unseen data — similar to giving them new market scenarios they've never encountered before.

How It Works at A+ Algos

We start by teaching our algos with 70% of historical data, known as "in-sample" data. This is like the study phase, where the algorithms learn patterns and strategies.

Then, the real test begins. We take the remaining 30% of data — the "out-of-sample" data, which our algos have never seen before, and we let them trade this data in a simulated environment. This is the forward walk, where we see if the algos can use what they've learned to make smart decisions about new data.

Focus on Walk Forward Efficiency

Our focus is not just on whether the algos can make successful trades, but on how efficient they are at adapting to new trends and conditions. This efficiency measure tells us if the algo is genuinely skilled or if it just got lucky in the past.

Why It Matters

By emphasizing walk forward efficiency, we ensure that our algos are not just tuned to the past but are also adaptable and robust enough for the unpredictable future. It's our way of stress-testing strategies to build your trust in their performance.

In short, forward walk testing is our commitment to delivering reliable and efficient trading algos that aim to perform well in today's dynamic markets.


Embark on Your Algo Trading Adventure!
Algo trading might sound like a journey into the future of finance, and it is! It's exciting, innovative, and holds the potential for significant rewards. But remember, with great power comes great responsibility. Understanding the risks, learning continuously, and approaching it with a balanced perspective is key.


So, are you ready to step into this brave new world of financial trading? Let the adventure begin!

Are there any risks with algo trading?

All trading is associated with risk, and algo trading is in the class of high risk. Past results are no guarantee of future results and you should be fully aware that you may lose part or all of your invested capital.

You should also be aware that no algos are 100%, losses WILL occur and you need to be prepared for that. To make a reasonable evaluation, you need to give it at least six months

Does it really work?

Historical profits are no guarantee of future profits, we nor anyone else can guarantee that you will make money. But our algos are properly tested and statistically have a high probability of working. We run our algos ourselves on real money accounts and would never sell an algo we wouldn't use live ourselves.

Remember that nothing you see on our site or our social media should be considered financial advice or recommendation, always do your own research.

Do I have to start with real money?

No, we offer a 14 days free trial, it gives you the opportunity to test different settings and see how the algo performs. Send us an email with the product you wish to test.

Why are you selling your algos?

Among other things, it is a good opportunity to help others, but it also gives us a second income and an opportunity to build a business. We have nothing to lose from others using the same algos as us, so in our opinion it's a win win.

Do you update your algos?

Yes, we continuously go through all the algos and see if there are improvements we can make and if we can make adjustments to better match the prevailing market. If we update a version of an algo, you as a customer will always receive the updated version for free.

What is the minimum amount I can start with?

The minimum amount varies slightly depending on which security you are going to trade, but it is approximately 6,500 kr (€560) with IG.

However, you should bear in mind that if you start with a very small capital, the risk per trade will be greater and your possibility of being long-term will decrease.

How long does it take to make money?

It's impossible to say, however it's important to understand that this is not a "get rich fast" product and we believe that you should give it time to really evaluate our products. This is also why the shortest license period is 6 months.

Right of withdrawal for digital products

When purchasing digital products from us delivered via email, the right of withdrawal under the Distance Selling Act does not apply. By completing your purchase, you agree that delivery will begin immediately, and you thereby waive your right of withdrawal. This is in accordance with Chapter 2, Section 11 of the Distance Selling Act.

Some numbers presented are astronomical, what's the catch?

No catch, but it is also important to highlight that statistics always can be twisted and turned to appear better or worse. For example, if you have a small account where you take trades with a very high risk, you can get a huge percentage development. But it also means that if things don't go as well as you hoped, you can lose all your money very quickly.

Adjusting risk to your own preferences is very important and the numbers we present on the site are based on the risk we ourselves are willing to take with real money, but that doesn't necessarily mean it's right for you. Remember that nothing you see here should be seen as advice or recommendation, always use your own judgement.

Does the computer have to be on and is there an app?

No, the computer does not need to be on. After you have installed your algo, everything happens in the cloud and you can turn off the computer. You can also follow your algo via the IG app.

Se vad våra kunder säger

Se våra algos

  • Sevve Saberi

    Kör alla algos i 3-algo starter pack

  • Kim Persson

    Låter Nasdaq M3 & M5 jobba för honom

  • Anneli Johansson

    Har börjat sin algotrading med den stabila Nasdaq M3

  • Noel Svensson

    The Nasdaq duo är Noels val av bottar.

  • Fredrik

    Jobbar också med våra Nasdaq bottar, smart val att utvärdera det över ett år!

  • Håkan

    Håkan har fått en riktig smakstart med två algos!

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