An optimization algorithm analyzes fundamental and technical criteria. Five stocks are selected for an investment of at least one month*. If they drop out of the top positions and achieve a certain threshold, the stock is sold or exchanged. All stocks are therefore in constant competition. The basis of the optimization algorithm, is the momentum theory, which is scientifically proven as the so-called smart beta factor. This is the reason for the success of the strategy, because even in phases in which the general market is falling, there will always be stocks that buck this trend, fall less sharply or recover faster than others.
*Based on the algorithm and live monitoring of the price development, selected stocks can be sold or exchanged before the end of the month.
A truism says: "the trend is your friend". Stocks that have performed better in the past tend to continue to do so in the future until the trend reverses. Conversely, this also applies to falling prices. Trend following takes this simple correlation into account and filters out stocks that are running to benefit.
A backtest is a historical recalculation that shows what investment results would have been achieved in the past by implementing an investment strategy under realistic conditions - ideally a systematic, rule-based strategy. The basis for this is historical price data of the stock universe to be examined. However, an attractive investment result in the context of a historical calculation is no guarantee for future investment success.
Investing in the stock market always involves risk. The fluctuations (volatility) are greater than with a market-wide ETF investment - resulting from the focus on 5 stocks. The maximum loss (maximum drawdown) turned out to be slightly larger than with an ETF investment. Larger losses can sometimes occur on a monthly basis, resulting in poorer performance compared to an ETF investment at a given time. Historical data shows that the worst case scenario has been a little over a year of relative underperformance versus the benchmark index. You can read more in our knowledge database.
The investment algorithm
The subscription system
During the Insider Preview, the service is completely free. There is also no legal obligation to subscribe to this service beyond the this phase.
After the Insider Preview we are aiming for a price per product of around 60 €. Early adopters will benefit for additional discount.
You can easily cancel your membership in your member area. The membership can always be canceled monthly without giving any reason. However, the full price of the current month will be charged.
Membership can always be canceled monthly without giving a reason. However, the full price of the current month will be charged.
Anytime. So you don't have to decide in advance. However, we advise you once you have decided for a portfolio, to stick with it and follow additional ones in parallel.
Implementing Penta Trading in my depot
No. The Penta Portfolios are intended to increase the performance, i.e. as a supplement to a stable basic portfolio. We recommend investing at least 50% of the total portfolio in stable, low-fluctuation stocks/ETFs. You will find various suggestions in the knowledge section about how to set up a basic portfolio with ETFs or stocks. You can either save on other stocks or ETFs via a savings plan or divert and reallocate profits from the Penta depots.
Based on the share price for some stocks, it is recommended a minimum volume of 5 000€ for the Penta portfolios.
The additional basic portfolios can be followed with just a few euros per month, depending on the broker. For individual purchases and depending on the broker, investments from 500€ also make sense, since there are sometimes no transaction costs.
Once you have subscribed, you will be given immediate access to the portfolio composition. The portfolios shown there can be implemented at any time and immediately.
The portfolio composition is valid for the respective month and are up-to-date at all times, unless we inform you about a change in the composition during the course of a month. This will be notified per email and it will appear in the intramonth sale section.
No. The Penta portfolios have been designed to work as a composition of 5 stocks that are equally balanced at approximately 20% for each position. Excluding certain stocks or overweighting only increases the cluster risk, what can have negative consequences in the overall performance.
The readjustment of each Penta portfolio takes place at the close of the first trading day of the month. The updated composition will be available in the following day.
It is always a good practice to have a saving plan using securities with low risk, such as the ones presented in the basic portfolios (both using stocks and ETFs). In our basic stock portfolios we have additionally set a maximum price for the stock based. This should help to indicate when is worth buying a stock from a technical and fundamental point of view. The analysis of the maximum price is performed monthly.