Build professional multi-strategy portfolios

• IMPORTANT: The projections or other information generated by SetupAlpha Portfolio Architect regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.
• The results do not constitute investment advice or recommendation, are provided solely for informational purposes, and are not an offer to buy or sell any securities. All use is subject to terms of service and disclaimer.
• Model Limitations: Hypothetical returns do not reflect the impact that material economic and market factors might have had on the advisor's decision-making if the advisor were actually managing client money.
• Market Impact: The simulation assumes that trades could have been executed at the historical prices used, which may not be possible during periods of high volatility or low liquidity.

1. COMPREHENSIVE DATA & SIMULATION METHODOLOGY 3.1. Net-of-Fees Performance Calculation: To provide a more realistic estimation of potential performance, the underlying strategy data used in this simulation is calculated Net of Estimated Fees. This methodology differs from standard "gross" backtests and specifically accounts for:

• Commissions: Transaction costs are modeled based on the Interactive Brokers (IBKR) "Pro" tiered commission structure for US Equities and ETFs (e.g., typically $0.0035 per share with minimums).
• Slippage & Market Impact: A proprietary slippage model is applied to every theoretical trade. This model deducts a penalty from the entry price and adds a penalty to the exit price to simulate the "Bid-Ask Spread" and the cost of crossing the spread.
• Limit Order Buffers: For strategies utilizing limit orders, an execution buffer is applied to ensure that the simulation only credits a "fill" if price penetrated the limit level by a statistically significant margin, reducing "phantom fills."
• Exclusions: The simulation does NOT account for: capital gains taxes (short-term or long-term), platform data feed fees, exchange subscription fees, margin interest (unless explicitly shorting with leverage), or external advisory management fees.

1.2. Rebalancing Protocol (The "Synthetic Portfolio" Approach): The Portfolio Architect utilizes Rebalancing engine.

• Mechanism: At the close of every trading session, the simulation mathematically calculates the total Net Asset Value (NAV) of the portfolio and redistributes capital to match the user-defined percentage allocations exactly.
• Implications: This creates a "Synthetic Constant-Mix" portfolio. In a real-world live account, rebalancing daily would incur significant turnover and transaction costs. Most investors rebalance monthly or quarterly. Therefore, this simulation may overstate the "smoothness" of the equity curve compared to a live portfolio that allows allocations to drift. It assumes perfect friction-less reallocation of capital between strategies.
• In-Market Status: The engine does not track whether Strategy A is "in cash" or "in a trade" on Day X. It simply allocates Y% of the total capital to Strategy A's equity curve. This captures the performance exposure but not the precise cash management of a unified brokerage account.

1.3. Capital Injections & Cash Flow Logic:

• Initial Balance: The simulation normalizes all strategy data to start at the user-defined Initial Balance (e.g., $100,000) at the common start date.
• Recurring Contributions: If the user enables "Cash Inflow" (Monthly, Quarterly, Semi-Annual, or Annual), the model simulates an external cash injection.Timing Assumption: Cash is assumed to be deposited on the first trading day of the period.Allocation: New cash is immediately deployed across all strategies according to target weights. The model does not simulate "dollar-cost averaging" lag; it assumes 100% deployment efficiency.

2. RISK & PERFORMANCE METRIC DEFINITIONS (QUANTITATIVE GLOSSARY) The following metrics are calculated using daily resolution data and annualized where appropriate:

• Compound Annual Growth Rate (CAGR): The geometric mean annual growth rate. Formula: (Ending Value / Beginning Value)^(1 / Years) - 1. This represents the steady-state growth rate required to reach the final balance.
• Sharpe Ratio (Risk-Adjusted Return): A standard industry metric calculated as Annualized Excess Return / Annualized Volatility. For specific clarity: This simulation assumes a Risk-Free Rate (Rf) of 0%. Therefore, it is a measure of pure return per unit of total risk. A Sharpe Ratio > 1.0 is generally considered "Good," and > 2.0 is considered "Excellent."
• Sortino Ratio (Downside Efficiency): A variation of the Sharpe Ratio that differentiates "bad" volatility (losses) from "good" volatility (profits). It uses Downside Deviation determines the denominator. This metric is often more relevant for systematic strategies, as it does not penalize upside parabolic moves.
• Maximum Drawdown (MaxDD): The deepest "peak-to-valley" percentage decline in the portfolio's equity. This measures the worst historical pain point. A 20% MaxDD means that at some point, the portfolio lost 20% of its value from a previous high before recovering.
• Calmar Ratio: A measure of return relative to drawdown risk. Calculated as Annualized Return / Absolute Max Drawdown. A high Calmar Ratio indicates that the strategy's return is high relative to the risk of loss it has historically incurred.
• Correlation Matrix (Pearson Coefficient): A statistical measure ranging from -1.0 to +1.0.1.0: Strategies move in perfect lockstep (No diversification).0.0: Strategies are uncorrelated (Maximum random diversification).-1.0: Strategies are inversely correlated (Perfect hedging).Usage: Use this matrix to ensure you are not simply stacking multiple strategies that all buy/sell the same risk factors at the same time.
• Stress Period Analysis: This module filters the dataset to specific date ranges corresponding to historical market crises (e.g., the 2008 GFC, 2020 COVID Crash, 2022 Inflation Bear Market). This allows you to inspect "Tail Risk"—how the portfolio behaves during 3-sigma or 6-sigma market events.

3. USER-GENERATED CONTENT & UPLOADS 5.1. User Uploads: The "Upload Strategy" feature allows users to valid .CSV files containing their own proprietary data. 5.2. No Validation: SetupAlpha does not audit, verify, or validate the accuracy, integrity, or ownership of user-uploaded files. 5.3. Liability Release: By using the upload feature, you agree that SetupAlpha is not liable for any errors, corruptions, or misleading simulation results derived from user-uploaded data. You warrant that you have the right to use any data you upload.

4. TECHNOLOGY & PLATFORM LIMITATIONS 6.1. Browser-Based Calculation: All simulations are performed client-side within your web browser. Performance may vary based on your device's processing power. Extremely large datasets or complex combinations of 10+ strategies may cause browser latency. 6.2. Visualizations:

• Logarithmic Scale: Charts may default to Logarithmic scale to visualize percentage growth over long periods. This can visually minimize recent volatility. Users can toggle to Linear scale for an absolute price view.
• Interpolation: Charts with limited data points may use linear interpolation to connect dates, which may smooth out intra-day or intra-month volatility in the visual representation.