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The Project

What is A2PB?

A2PB is a personal project to create a system that allows you to set up portfolios of securities for simulation or live trading. You control the system by setting up desired portfolio structures, and by providing high-level qualitative input on securities like ratings and desired target weights.

Typical high-level qualitative input, for example, would be an investment suggestions from a newsletter or an analyst rating, or your input to adjust a certain parameter, like your desired cash to investment ratio.

In particular, A2PB allows you to feed stock ratings into the system without the need to translate them into concrete buy or sell orders. You provide qualitative investment tips like a change of a rating of a stock or a new desired target exposure and the system does the rest by calculating and proposing corresponding trade order suggestions which can then be executed automatically.

A2PB is a system that continuously monitors your portfolios, graphically visualizes differences between actual and intended target exposure, identifies risks and opportunities and generates trade order suggestions to address them.

The default mode of operation is semi automatic. The system generates trade order suggestions for any detected deviation between an actual value and an intended target value (where specific values can be of various types, like actual value invested, or the relative weights of positions in a portfolio, or the ratio between short to long positions in a portfolio, etc.). Trade order suggestions generated by the systems can be reviewed, modified, accepted (submitted to the connected online broker) or rejected.

Optionally, A2PB can be run to a degree where it’s a complete algorithmic trading system. This is achieved by activating a so called PRW engine on an A2PB portfolio. Such an engine is responsible for picking suitable securities, rating them, weighting them (i.e. “PRW”) and then feeding this input to the core A2PB balancing algorithm. Trade order suggestions calculated by the system based on this input can be executed automatically. Interesting about A2PB’s approach to algorithmic trading is the fact that the trading engine does not calculate and trigger actual buy or sell orders but rather generate the qualitative input required by A2PB’s core balancing algorithm.

Motivation

Without A2PB

Managing a reasonably diverse stock portfolio is time consuming. Spending too much time on it often leads to a type of micro management that can be stressful and may have a negative impact on the long term performance of the portfolio. Not spending enough time on it can lead to missed opportunities and increased risk.

Without A2PB you are:

  • Often unsure or even stressed about your investment decisions
  • Unsure about the right point in time for buying/selling
  • Usually too greed-/fear driven
  • You have a tendency for all in/all out

With A2PB

With A2PB you have a tool to manage even complex structures of portfolios and investments with transparency and agility. A2PB acts as a level of abstraction between you and the stock market. The system helps you to maintain a more high-level view over your investment goals. A2PB offers powerful functions allowing you to fine-tune your goals and to react to changes in the market quickly and with little effort.

With A2PB you are:

  • More goal/sentiment driven
  • More agile – you can re-adjust your portfolio (or portfolios) to accommodate for changes in the market quickly and easily
  • More protected from hasty irrational buy or sell actions
  • Very flexible and agile in the way new strategies and markets can be tested by simulation

Business Model

A2PB is a project. It’s not a finished product — at least at this point in time. Initially (during the initial design phase in early 2021), the goal of A2PB was based on these three bullet points:

  • Sell packages consisting of the source code license plus personal implementation consulting to interested organizations (like private banks or professional fund managers) in order to help them build systems based on A2PB.
  • Continuously expand my know-how of trading systems and the Interactive Brokers’ trading API and sell quality consulting based on that knowledge to interested organizations (check out my personal CV).
  • Use A2PB for personal long-term portfolio management.

Various additional business development paths are obviously possible but haven’t been researched any further. They include:

  • Selling binary licenses of A2PB (A2PB in an installable and executable form) for people to run it locally and personally.
  • A variation of the above where clients don’t pay an up-front license but a commission on every live trade they execute with the system.
  • Deploy A2PB on a server or in the cloud and offer web-based (or mobile app) features for personal portfolio management to individuals.
  • The management of client portfolios.
  • …

A2PB also serves as a show-case for my skills as a software engineer and consultant. Everything about the A2PB project was designed and implemented by myself. This includes the design and content of this web site as well as the conception, design and implementation of the A2PB application.

Name and Logo

The original name was AAPB standing for Automatic Agile Portfolio Balancing. I thought that was too long and replaced the 2nd A with the digit 2, which represents the 2nd A and at the same time numbers the iteration of the project (calling the 2007 incarnation of the system A1PB in retrospect).

The name says what it is, appears at the top in folder lists and was free as a dot com domain. It’s also a bit cryptic, which I kind of like for this type of software system. The color is red, which seems a good choice for an endeavor that keeps me on the ball and takes a substantial personal and financial investment.

The symbol with the tiles represents a special type of chart used in the application called “exposure chart”. Across we have portfolio positions (three in this case). Vertically the tiles represent the position weights (exposure). A feature of the chart is the fact that current vs. target exposure are both visualized as part of the same chart.

The picture of the mountain range on the home page was taken by my wife during a trip to northern Norway in 2019.

Image

The image I want to convey with this project and web site is described by the three words

  • Transparent
  • Professional
  • Personal

That’s what I aim for as a software developer and consultant and that’s what the foundation of A2PB and this web site are meant to be.