Let's learn the essential features, and make money right away without diving too deep! You can click the links scattered throughout this page, and they'll take you to pages with in-depth explanations.
Let the genie do its magic behind the screen.
First you must understand that Portfolio Boss is a strategy designer based on the daily candles, hence what you'll be doing is called swing trading. We're currently developing day trading capability, but swing trading is the bread and butter of PB. The types of instrument are mainly stocks and ETFs (indexes, commodities, cryptocurrencies, bonds, etc.), and then there are some CEF, UIT, ETN, ADR, Equity Linked Securities, Stapled Securities, and others.
Second, this tutorial uses existing strategies bundled with Portfolio Boss. These are amazing strategies tested through time; but if you wish to create your own strategies, you can start here based on the knowledge you acquired from this quick start guide.
A strategy is a trading system that contains specific rules and portfolios of stocks to trade. It calculates and gives you the trading signals automatically; when to buy and when to sell. So essentially, the strategy manages most of your trading activity.
1. The very first time you opened Portfolio Boss, you'll be prompted to enter your log-in credentials. So please do so, and ignore the subsequent confirmation dialogs.
You're now taken to the Strategy Management page. You can get to this page by clicking the starred-folder icon from the sidebar (see the video above).
Note, if you clicked “Yes Please” on the “Interactive Brokers Integration” dialog, you'll be taken to the Settings Page so you can use your market data subscription from Interactive Brokers.
In a future update, this integration allows you to trade automatically with Interactive Brokers.
2. Choose one strategy from the various strategies listed here. You can read the strategy's description.
3. Or use the Search field (at the top right corner) to find the strategy you want.
4. Double click that strategy to open the “Backtest Strategy” page.
Or manually click the “Backtest Strategy” button at the sidebar (with the strategy selected).
The left side of this page contains the nuts & bolts of your strategy. We'll focus on this area for a moment (highlighted green in the screenshot below).
5. Notice the rule Monthly Switch on Open of. It is a day that most of your trading will occur (you enter orders to your broker).
It's not a calendar day, but a trading day of the month when the exchanges are open. So in the screenshot above, it says most trades happen on the 2nd trading-day of the month (or 2nd working day, whichever you prefer).
6. Look at the rule Total Positions to Hold. This is the number of different instruments (e.g. different company stocks) that you'll hold for any given time.
You'll know the amount of shares to trade (for each company) during the trading day.
7. From the Instruments Panel you can see the baskets of stocks that will be traded. These baskets are called Portfolios.
Each Portfolio may represent an industry sector, an index, a geopolitical region, or anything. If you wish to create your own Portfolio, take a look at this page.
8. You can see the criteria for picking the stocks (from the Portfolios) by looking at the Buy Filters and Ranking panels.
These panels contain the technical indicators to select potentially profitable stocks. They'll be entered as positions (bought) based on these technical analysis.
9. As for the criteria to exit the Positions (i.e. selling the stocks), look at the Sell Filters panel.
For example, if the stock's price starts falling a certain way, the strategy will exit that Position, before it eats away much of your past profit.
Backtest is a rigorous test for your strategy, to see how it performs in the decades of past market conditions, as well as its potential performance in the future. If there's anything worse than coin flipping, it's trading blind without testing a system.
10. Enter your account size in the Initial Amount property. This amount will be divided evenly for each Position (each company's stock).
If you have $100,000 put into a strategy that holds 5 Positions at any given time, then each Position will be given $20,000 to buy its shares.
During the course of holding these Positions, some may worth more than $20,000 (when the Positions are profitable), while others may contain less than $20,000 (when the Positions experience loss).
11. Now, to backtest the strategy, click the “Start” button at the top of this page:
A confirmation dialog appears, allowing you to add a memo for this backtest:
If you don't want this obtrusive dialog to appear each time you start a backtest, tick the checkbox “Don't show again”. Once done, click the button “Continue” to actually start the backtest. A memo is optional, as it's simply a description about a backtest run. Each run (and its memo) will be seen under the Manual Results Tab:
Now a progress dialog appears. Wait until it's finished, and you'll get the various statistical data, or metrics, from this backtest.
12. We'll depart the left area now, and look at the Metrics Tab. Here, the performance data are served. Pay attention to the important metrics: CAGR, Max Drawdown (%), and Total Amount.
CAGR (Compound Annual Growth Rate) tells you the average yearly growth rate on your capital (compounded from the previous year's total gain and loss). This value is stated in percent of the capital, higher value is better.
Max Drawdown (%) tells of the deepest crash the strategy experienced during the backtest, which may indicate a similar occurrence in the future. It's stated in percent of the peak value before the crash.
Total Amount is the money your capital could've grown into, should you trade with this strategy for the same amount of time as the backtest period.
13. Look at the Performance Tab. Here, you see how much the strategy has gained (or lost), every month and every year. It's a compounded percentage from last month's (or last year's) total.
It's a rough guideline on what you may earn each month. Note the “Test” column shows the strategy's gains, whereas the “Benchmark” column shows the benchmark's (index) gains. Index is representative of the market, it's something you wanna beat through active trading. Hence the term “beating the market”.
14. Look at the Chart Tab, located on the right area. This chart shows the strategy's equity curve versus the benchmark's.
Equity curve is just the historic daily return plotted in a graph; green for the strategy, blue for the benchmark.
Thus, you have seen how the strategy performed in the past, which gives you an idea how it may serve you in the future.
15. Let's now receive trading signals (buy/sell signals) automatically from this strategy. At the Notifications property, choose the option “Daily email”.
The catch is, you can't customize the strategy (it's set to read-only mode) while you have “Daily email” notifications enabled. Later on you'll learn why & how to override the read-only mode.
16. By default, trading signals will be sent to the email you registered your license with. To change that, go to the “Settings” page, Automation tab.
You can also opt to receive text messages direct to your phone.
17. Make sure the Send email notification… is toggled ON.
Disabling that toggle also disables the notifications.
18. Now write the e-mail address on the E-Mail Address field, and press enter.
You can add more e-mail addresses by writing on the field below it. You can have 3 different e-mail addresses set here.
19. For sending trading signals to your phone, you can type an email-to-text address on any of the e-mail fields. Please refer to your carrier's email-to-text command.
For example, Verizon users can type something like this: firstname.lastname@example.org (change the number to your actual phone number). For AT&T users, you can enter something like this email@example.com. Press enter (or the plus button) once you're done.
20. To make sure Portfolio Boss can actually send to such addresses, press the Send a test email button. This will send a test notification to you. Check your inbox whether you have received the e-mail.
The notification e-mail is sent daily to you, and it contains trading signals (if there's any), the Positions currently held (and their gains/losses), along with the top-ranked instruments (indication of the instruments to be bought next):
If you didn't receive the email, you might want to check Portfolio Boss Status Page, and see if there are no hiccups on the Mailing Service:
That status page shows you the current state of the various Portfolio Boss services, including historical price data downloads, The Boss supercomputer service, and Smart Money data; it's refreshed every minute. Now, if you still have trouble receiving the email, ensure the addresses are typed correctly in the fields above. Or, you can contact our Support Team at firstname.lastname@example.org.
Now you're all set and ready to trade!
21. For your first trade, let's take a look at the Trade Signals Tab just to the left of the equity curve chart. If there are no trading signals, as shown below:
then head over to the Positions Tab and see what instruments are listed there:
As you see we have 5 different positions to enter. We'll calculate the number of shares to buy for each position, based on their “Weight” values. “Weight” is the percentage of your total capital assigned to a particular position.
For example the stock RNWK has a weight of 15%, if you have $100,000 to trade, then it gets $15,000 to buy the shares. Let's say RNWK traded at $1.86 today, that means 15,000 divided by 1.86 equals 8,064 shares. Continue the calculation for other stocks.
Once done, enter the orders to your broker. You can use the broker's mobile app, desktop platform, or the old school way of calling them via telephone. The orders are usually executed next time the market opens, within 30 minutes of the opening bell.
UPDATE: With the latest version of Portfolio Boss, it is now possible to calculate automatically the amount of shares to trade, with the Trade Plan Calculator, even if there are no trading signals as in the above scenario. Please read the following section, no. 22. Remember, you don't need trading signals to use this calculator now; just open it and it will calculate the correct amount of shares even if it's your first time using the strategy.
22. It is much easier if your first trade happens when there are trading signals, as shown on the Trade Signals Tab:
As you see there are two signals: sell GPRE, and buy PTSHX. But it's your first time trading with this strategy, so you don't have anything to sell, and you got everything to buy. This is where it gets easy: open the Trade Plan Calculator.
This calculator tells you what instruments to trade, and how many shares, based on your account size and the positions weights. All you have to do is put your account size (in US dollar), press enter, and make sure to tick the checkbox “Check if this is the first time you're entering this strategy”.
Once done with the calculator, you can just close it. Remember, Portfolio Boss does not enter the orders automatically for you (although it's in the works). Note: some licenses don't have access to this Calculator. Please contact our Customer Support if you wish to upgrade your license.
23. Now do understand, trading signals (via e-mail) are sent one day prior to the execution day; usually the night before.
PB also sends you notifications on a daily basis, informing you of how your Positions perform.
But keep in mind, PB must run on your Computer so it can send the notifications. It doesn't have to run 24/7; just a few hours after the market (exchanges) close. For example, if you're trading on American stock exchanges (depending on the strategy's Portfolio), trading day usually closes at 4:00 PM Eastern Time. Just let Portfolio Boss run around that time, no need to backtest the strategy yourself. Those strategies with notification enabled are automatically backtested to send you the trading signals and performance reports (provided the End of Day data are already downloaded).
24. All you have to do now is relax, wait for the next trading signals. Once you're notified, open Portfolio Boss and click the Start button again on that strategy, so PB gets the latest performance reports, and you'll be able to use the Trade Plan Calculator.
This time is a little different, since it's not your first time using this strategy.
First you must enter your current account size, which has been affected by the ups and downs of the market. You can look for something called “Net Liquidation Value” on your broker's report. That's your investment marked to market value. In the example below, we entered $107,250, assuming our positions were mostly profitable:
At the bottom of the dialog box, make sure the checkbox “Check if this is the first time…” is not ticked. Then as usual, take note of the most important columns: Action (whether you'll be buying or selling), Symbol (the company ticker), and Suggested Quantity (number of shares you'll trade for each company).
Take note of the VLEEY symbol, divided into multiple orders. That's because the number of shares you'll trade for VLEEY exceeds the average volume per minute that VLEEY usually traded for. To pile all shares into a single order means you'll get bad fills (slippage). Besides, dividing such a big order into multiple, smaller orders (with different entry time) may help obfuscate your trading activity from the evil High Frequency Trading firms.
Note, even if it's not a switch day and you're merely selling and buying a few instruments (not replacing all of the old Positions), you must still enter your total account size in this calculator, so the weighting on the new Position(s) will be correct.
25. If you use TWS (Trader Workstation) software from Interactive Brokers, you may export this complicated information into a basket file which will be imported into TWS. It will then process the orders for you.
Simply click the button “Create IB Basket File” (at the bottom of this calculator), and choose where you want to save the basket file.
Please refer to the TWS user guide here on how to import (upload) the basket file.
26. It is important that you follow every trading signals given, as otherwise you'd be deviating from the strategy. PB can only assume that you're actually following it, so any deviation would break the consistency between your actual account and PB's calculation.
To see the performance of your positions, you can go back to the Positions Tab (you must backtest the strategy again if you closed Portfolio Boss). It shows you the Positions you're currently holding, and how much they're gaining (or losing) since you entered the Positions.
It's updated a few hours after the market close, but really, the more you look into your positions, the more stressed out you'll be, and the more likely you'll abandon the strategy (or any kind of investing for that matter).
27. You can click any of the symbols (highlighted blue) to open up the Price Chart for that symbol. Here appears the price history, as well as the Technical Indicators the strategy uses to analyze that instrument. You can also see the Buy and Sell actions the instrument experienced so far with this strategy.
When viewing the chart, you can:
28. As stated some time ago, most of your trading takes place during the switch day. This is when old positions are replaced (sold) with new positions that are potentially more profitable.
Outside the switch day, a few trading signals will be given, usually sell signals for those instruments that triggered the Sell Filters. A sell signal is usually accompanied by a buy signal, to replace the sold instrument.
Now you know how to let Portfolio Boss manage your trading activities. All you have to do is revel and enjoy those profits! Don't let emotions and cognitive biases ruin your hard earned money.
Some important notes now, if you please: