Introduction to Torobot
About
Torobot is a fully automated trading platform that executes trades on your behalf in your Alpaca Trading Platform broker account. Alpaca is one of the only premier brokers that allows fully automated trading through a standard Application Programming Interface (API). Alpaca provides a secure encryption Key and Secret that you register with Alpaca to allow us to trade on your behalf. Your trading Key, Secret and all other personal information are fully encrypted before being stored in the Torobot databse.
You do not need to download any code to your machine, Torobot is run completely from the cloud. Open your Alpaca trading account and transfer money directly to Alpaca, enter your Alpaca trading keys here on the Torobot site, configure how much to invest in each ticker and start the trading engine. Torobot will automatically place trades using your broker credentials the same way you would if you were making the trade in Alpaca yourself. Torobot does NOT have acceess to move money in and out of your account. It can ONLY place trade orders and query your account for things like cash balance, order status and other information required to properly place orders, track their status and deal with exceptions.
Torobot utilizes advanced algorithms and machine learning to analyze market trends, identify trading opportunities, and execute trades. It is designed to optimize performance and minimize risk, providing you with access to a fully automated trading platform that would normally be only available to Hedge Fund investors.
Torobot Trading Philosophy
Torobot's goal is to beat a buy-and-hold strategy over the long term by capitalizing on market trends. To minimize risk only highly liquid, stable assets are available for trading. We use tripple leveraged ETF's, SPXL for the S&P 500 and TQQQ for the NASDAQ QQQ. A tripple leveraged ETF is a specially managed ETF that mimics the underlying index (SPY or QQQ) but aims to return three times the underlying asset. This can be both positive or negative, if the underlying index moves up or down 1% in a day, the tripple leveraged ETF will move up or down 3% in that same day. This strategy allows for significant improvement in returns vs. buy-and-hold of the SPY or QQQ ETF with our advanced trading algorithm that times market moves to take advantage of the higher volatility of the tripple leveraged ETFs.
It is important to understand that in the short term Torobot may not out-perform the underlying asset. It is designed to perform well over the longer term of several months or years, and generally does better when there is increased volatility and the asset is moving in both directions. Any profits are reinvested over time leading to a compound growth that you don't get with a buy-and-hold strategy. It is not a get-rich-quick tool. It is designed for the long-term investor who wants to take advantage of modern technology to significantly improve their returns.
How To Get Started Trading
Alpaca is the currently supported broker. You will need to create an Alpaca trading account and register your API Key and Secret with Torobot. Sign up for an Alpaca Account here. Alpaca has two different account types, Paper Trading, and Live Trading. There is a separate set of Key/Secret pairs for each type of account, so you will need to create both on the Alpaca side and register them on the Torobot site. Paper Trading does not use any real money and can be used for observing risk-free how Torobot performs on your choice of assets. Live Trading is used once you are ready to trade using real money. All trades are placed through Alpaca, and all your assets are visible and available on the Alpaca site.
Once you have your Alpaca credentials you can come back here and enter them into the Torobot application and start trading! From the Trade Setup page you can set the initial investment amuont for each ticker symbol, enable or disable Torobot, and switch from Paper to Live trading. You can enable or disable Torobot at any time through this simple interface.
Backtest Results
Below are backtesting results for three of the assets that Torobot has been trained on. The training periods are typically two to three months of data somewhere in the two year period for which the backtest is being run. Torobot has not seen most of the data in the backtest period before the backtest run, only the relatively small portion of data that was used for training.
We have run the backtest engine side-by-side with a live trading engine to verify that the results are the same, and the live trading engine makes the same trading decisions as the backtest engine. This sounds like it should be easy, but due to things like slippage, latency, and the stability of the real-time ticker source data it requires a lot of work and skill to ensure that a forward looking live trading engine does the same thing as a backtest engine working off of historical trade data. This ensures that if the future behaviour of the asset is similar to the nearby past that Torobot will perform as the backtest predicts it should. You can see from the below plots that the testing does not always show that Torobot will make a profit. There are times when it will not, and will make trades that loose money. The goal is that by managing the timing of trades based on the market conditions that on average more trades will be profitable than not.
TQQQ backteset results from January 2022 thru December 2024: Torobot made 267 trades, and held the asset for an average of 1.25 days, and made an average of 0.876% per trade. The overall return for the three year period is nearly 700%! You can see the powerful effects of re-investing any profits over time. One of Torobot's strengths is preserving capital during downward market trends so that it can be re-invested when the market starts to turn back up.
SPXL backteset results from January 2022 thru December 2024: Torobot made 259 trades, held the asset for an average of 1.38 days. The average gain per trade was 0.769% Profit for the three year period is over 500%!.
A Note About "Pattern Day Trading"
The SEC requires brokers to flag your account as a "Pattern Day Trader" if you enter and exit a position on the same day, and do this four or more times over a period of five business days, using a margin account. If you have less than $25,000 balance in your margin account then your broker will disable your ability to trade. Torobot is not a day trading application as most of the time an asset is held for more than one business day, and in general will not trigger a Pattern Day Trading lockout of your account. In order to not have accounts being locked out, if Torobot detects that it's trading decisions will trigger a Pattern Day Trading lockout it will supress the trade decision until the lockout period is expired. It will only ever surpress a Buy trade decision. Since we can't guarantee that all accounts have a minimum of $25,000 balance at all times, this logic applies to all accounts.