A retail investor would've made $2.8M+ using Helios' trading signals
Helios AI climate risk signals are extremely predictive of major agricultural commodity prices and have been proven very profitable over a 10 year backtest
Last week we launched our CommodiTrack™ platform, which gives customers access to the best price forecasting engine in the world for agricultural commodities. We had an extraordinary response, not just from press (here, here, and here), but most importantly from our current and prospective customers. One of the most common questions we’ve gotten was, “How much money would we have made trading its signals over the last few years?”.
The answer is: a lot. More specifically, you would’ve made over $2.8M over the past four years trading as an individual (many multiples of that if you’re a hedge fund)!
How did we calculate this? First, we’ve found that Helios’ AI climate risk platform can be used extremely effectively and profitably to inform an event-driven strategy that trades all major soft commodities. The accuracy and total number of trades varies by strategy (e.g., entering/exiting at absolute risk thresholds vs. entering/exiting based on relative change in climate risk) and commodity.
Second, we made a number of key assumptions:
Helios’ risk signals are leading indicators for price - the higher the risk, the more likely it is that prices will rise
Every trade was for a single contract using standard commodity contract leverage (10:1) - we did not increase or decrease the size of our bets based on the strength of the risk signal
We initially looked at long-only strategies, where we would enter a trade after the weighted risk signal surpassed a certain level and then exited when it passed back below another level
Third, we assumed that a trader would have chosen to maximize the total number of trades for strategies above a 65% accuracy rate (defined as what % of times this trade makes money).
They would have done the following:
How to read the above table
This figure represents the sum of all of these trades (each one single contract) over the four- year period. For example, the $16,525 was calculated by adding the profit/loss of each individual trade over the four years. If climate risk increased by 500%, we would have purchased a contract at its full price. Let’s assume it was $1,000. When the risk signal dropped 3% from its peak, we would have exited this position. Let’s assume the price then was $1,010. The “profit” from this trade would have been our exit price ($1,010) minus our entry price ($1,000), so $10. We then added all of the profit/loss outcomes for this particular trade strategy over the last four years, to come up with the $16,525 figure. Note this is absent any implied leverage (i.e., we assume in this strategy that we paid the full amount for a single contract).
