TradeSmith has unveiled an AI-powered trading tool that has identified over 200 signals across nearly 2,500 stocks, boasting a backtested return of 12 times over six years. Notably, during 2022, a challenging year for stocks, this tool generated an average gain of 16.6%, while the S&P 500 fell nearly 20%. The system operates by maintaining three simultaneous positions, each selected based on a proprietary Quality Score that evaluates past performance under similar market conditions.
The backtested performance for this model portfolio yielded a 54% compounded annual return compared to only 15% for the S&P 500, with a 73.4% win rate and a maximum drawdown of 18.1%, significantly lower than the S&P’s drawdown of 25.4%. This innovative approach harnesses machine learning to convert vast amounts of market data into actionable trading signals, aiming to democratize access to strategies previously utilized by hedge funds.
