How do I choose which Algo to Invest in?

Algos make decisions and execute trades when certain criteria are met. They are completely automated and provide steady consistent returns by minimising risk.

On Mudrex, you can find a rich & diverse offering of Algos by the best traders. But how do you choose which one to invest in? Below are some pointers that can help you make your decision:

  • Score: It is a curated metric that Mudrex offers, which lets you easily filter through Algos. It varies between 0 to 10 and a higher number implies a better risk vs. reward ratio. 
  • Monthly Average Return: As the name suggests, it is the average monthly return (%) that the Algo offers. This is calculated based on data collected since the Algos has been live on Mudrex. Higher returns can be better, but with higher returns, higher risks are also to be kept in mind.
  • Sharpe Ratio: It is a measure of the risk-adjusted return. It is simply the ratio of the excess expected return (i.e., over the risk-free rate) per unit of volatility or standard deviation. A higher number signifies better returns can be expected.
  • Maximum Draw-Down: This can be used to understand the “worst case scenario” for an Algo during a certain period. It conveys the greatest distance (loss) that the Algo went from a peak in the past. A lower absolute value would signify more stability in the Algo. (This would answer your question “What’s the worst that could happen? :P”)

Although the above pointers would give you a good overview of an Algo, you can also see:

  • Running Time: This is the time since when the Algo has been live in the market. Although it is not indicative of an Algos performance, an Algo which has been live for a longer period of time would mean that you have more historic data to study and understand its performance. This also gives more data to the creators of these Algos, to improve their models.
  • Total Returns: This conveys the total returns (%) the Algos has accumulated in its lifetime. A higher number implies a greater return and may indicate a better performance, however, at the same time also do keep the higher risks in mind.

These pointers combined would give you sufficient information to choose an Algo for investing, however we do suggest to always conduct more research and in-depth study to make a more informed investment decision.

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