What Happens After You Click Subscribe to an Algorithm?

Clicking the subscribe button for an algorithmic trading strategy is not just a simple transaction, but the beginning of an intricate technological process. A payment is collected and access is granted, but the trading software does not automatically begin executing trades. There are numerous unseen components that must come together to create a functional automated trading system.

SquaredQ simplifies this process by bringing all these components into one unified environment. The platform begins by turning the user's portfolio selection into an instruction through its Portfolio Studio. Users can examine various strategies, historical data, and benchmark comparisons, and then customize allocations to their specific needs before subscribing. This means the platform is receiving a precise combination of strategies and instructions about how they are intended to interact, not a generic request.

The next step involves constructing a location for these strategies to operate. SquaredQ sends a provisioning request for a private cloud server. Once the server is available, the platform installs the execution environment and the customer's chosen strategies. This setup is crucial because an automated strategy requires continuous operation, and running it from a personal computer leaves it vulnerable to being disrupted if the machine is turned off or loses internet connectivity.

Once setup completes, the system continues running even when the browser window is closed. The customer's computer becomes a viewing tool rather than the location where the trading operation needs to remain active. This cloud computing model provides a stable and reliable environment for the strategies to operate, with the added benefit of being easily accessible to the user.

However, having the server live and the strategies installed is not enough to start trading. The system also needs a connection to a brokerage account where the money is held. SquaredQ separates this brokerage connection from custody, meaning the customer's capital remains in their own account at a supported US broker. The platform connects the strategies to this brokerage account, allowing the algorithms to execute trades without holding or managing the actual capital.

This separation of strategy execution from brokerage custody is necessary to ensure the system can operate effectively. Different brokers have different connection and reauthorization processes, and the broker must recognize and permit the system to act on the account. The customer is notified that the setup process involves multiple stages, with each stage needing to be completed before the system can begin trading.

While cloud infrastructure makes the operating chain more transparent and easier to monitor, it does not eliminate the risks associated with automated trading. The platform includes features like drawdown controls and a "Close All" function to manage risk, but market risk remains. The underlying strategies can still underperform, experience technical issues, or be affected by market volatility.

Thus, while the subscribing process is made more straightforward and visible, automated trading still carries inherent risks that must be carefully managed.