How Quant Signals Works
Automated stock selection and portfolio management, demystified
The Trading Pipeline
Market Data
Every morning, we download the latest stock prices, volumes, and economic data to build our analysis.
Risk Analysis
We assess the market's health using volatility (VIX), economic indicators, and trend strength to set risk levels.
Stock Selection
We rank S&P 500 stocks by quality, momentum, and value metrics to identify the strongest candidates.
Portfolio Management
We assemble 15 different portfolios with varying risk levels and rebalance daily to stay aligned with our signals.
Tracking & Reporting
You see daily updates on positions, trades, and performance — so you always know what's happening.
Two Trading Systems
Daily Stock Trading
What it does: Selects the best-performing stocks from the S&P 500 and manages 15 different portfolio strategies simultaneously.
How it works: Each morning, we rank all 500 stocks by quality, momentum, and value. Then we assign them to 15 separate portfolios, each with different risk levels. Think of it like having 15 different strategies playing at the same time.
The portfolios: Each one starts with $100,000 in paper money and trades daily. You see the results for all 15 in your Paper Trading Dashboard.
Paper trading: No real money is traded in the system yet — these are simulations. When you're ready, you can connect your Alpaca account to paper trade or go live.
TSP Switching
What it does: Optimizes your Thrift Savings Plan (TSP) by recommending when to switch between Lifecycle funds and the G Fund.
How it works: We use machine learning models trained on decades of TSP fund performance to predict when the G Fund will outperform Lifecycle funds. When the prediction says "switch," you get an alert.
Why it matters: TSP allows only 2 fund switches per month. In backtesting, timing those switches optimally has historically added 1-3% to annual returns compared to a static Lifecycle allocation.
Your action: You decide when to switch. The system signals when historical patterns suggest favorable timing.
What Are Variants?
Instead of running just one strategy, Quant Signals runs 15 different strategies at the same time across three account types. Each one has a slightly different approach to risk, holding period, or sector focus. This is called "diversifying your approaches."
It's like having 15 portfolio managers, each with their own style. Some are aggressive (take big risks for bigger gains), some are conservative (prioritize stability), and some are balanced in between. You can see how each one performs daily and choose which fit your goals.
Taxable Accounts
6 variants optimized for regular brokerage accounts where you pay taxes on gains:
- N1 - Growth Focused
- N2 - Growth with Protection
- N3 - ML Growth
- N4 - ML Risk-Adjusted
- N5 - Balanced Risk-Adjusted
- N6 - ML Balanced
Taxable-in-IRA
3 variants that run taxable strategies inside an IRA wrapper:
- N1i - Growth Focused (IRA)
- N6i - ML Balanced (IRA)
- N1ir - Growth Reoptimized (IRA)
IRA-Optimized
6 variants tailored for tax-sheltered retirement accounts:
- I1 - Conservative Risk-Adjusted
- I2 - Conservative Balanced
- I4 - Moderate Growth
- I5 - Growth Aggressive
- I6 - Balanced Risk-Adjusted
- I9 - CAGR Optimized
Note: Each variant runs independently with $100K in paper money. They're not a recommendation about which one to choose — they're all available for you to evaluate and monitor.
Risk Management
We use a 4-tier system to assess and manage risk. Think of it as checking the health of four different things every single day.
Portfolio Health
We monitor your holdings: Are you too concentrated in one sector? Is the portfolio becoming too volatile? This tier watches the fundamentals of your positions.
Market Conditions
Is the market trending up or down? How volatile is it (VIX)? Are more stocks going up or down? This tier tracks the overall market's health.
Economic Risks
Interest rates, credit spreads, unemployment — these are macro signals that can affect stocks broadly. This tier watches the big-picture economy.
Trading Costs
Every time we trade, there's a cost (commissions, spreads, slippage). This tier ensures we're not trading so much that costs eat into returns.
How it helps you: All 4 tiers combine into a single "Risk Score" you see in your dashboards. When the score is high, the system signals to reduce position sizes. When it's low, the signals lean toward larger positions. The goal is to signal caution during elevated risk and opportunity during calmer conditions.
Protective Overlays
Overlays sit on top of every variant and intervene when risk rises. Each one is a toggleable rule with a measurable cost (a small CAGR drag) and a measurable benefit (drawdown reduction). Profiles on the Risk Profiles page are presets that combine these.
Crash Protection
ML model predicts crash probability; gradient scales positions down to a floor when crash signal fires.
What it does
Runs a weekly-retrained ML model that predicts the probability of a 5%+ drawdown over the next 7 trading days. When the probability exceeds the Youden-J threshold (0.20), a gradient exposure scale reduces position sizes to as low as 30% (NET) or 50% (IRA).
The tradeoff
Reduces returns by 3-8% annualized during whipsaw periods when the model fires false positives. In exchange, max drawdowns are reduced by 30-50% during genuine crashes.
Risk Tier Entry Block
Blocks all new BUY orders when composite risk tier >= 3.
What it does
Monitors the composite risk score tier (1-5 scale). When the tier reaches 3 or higher, ALL new buy orders are blocked until risk subsides. Existing positions are held -- only new entries are prevented.
The tradeoff
Misses re-entry opportunities during recoveries if risk stays elevated. Reduces CAGR by 1-3% but prevents buying into deteriorating conditions.
Emergency Liquidation
Liquidates ALL positions to cash when composite risk score > 55 for 2+ consecutive trading days.
What it does
The nuclear option. When the composite risk score exceeds 55 for 2 consecutive trading days, ALL positions are liquidated to cash. This overrides every other overlay. Re-entry happens on the next normal trading day when risk subsides.
The tradeoff
Can trigger at bottoms and miss the snap-back. Only fires in extreme stress (e.g., Mar 30 2026 Bear (Early) hit 57.8). Low CAGR drag in normal markets but prevents catastrophic drawdowns >25%.
Macro Position Sizing
Scales position sizes by macro composite signal (breadth, credit, regime transition).
What it does
Reads a composite macro signal built from breadth indicators, credit spreads, and regime transitions. Maps the signal to a position sizing multiplier between 0.50x and 1.25x.
The tradeoff
Reduces volatility by 10-15% but shaves 1-2% off CAGR. The macro signal is slow-moving, so it rarely whipsaws. Best in prolonged risk-off environments.
Sector Concentration Caps
Caps per-sector allocation to prevent all-tech or all-energy portfolios.
What it does
Enforces a maximum percentage allocation to any single GICS sector. If a rebalance would over-concentrate in one sector, excess positions are trimmed and reallocated.
The tradeoff
Prevents outsized gains when one sector runs (e.g., tech in 2023). In exchange, provides diversification benefit during sector-specific drawdowns. Small CAGR drag of 0.5-2%.
Market Regimes
We classify the market into 5 states. Each tells you something about what to expect:
Market trending strongly up, VIX low. High confidence in stocks — this is when the system is most aggressive.
Uptrend but less aggressive. Market is positive but showing some caution — moderate risk posture.
No clear direction. Market is choppy — the system stays selective and careful with capital.
Downtrend. Market declining — the system reduces exposure and focuses on defensive stocks.
Bottom-finding phase. Market stabilizing after a decline — we begin rotating back into growth.
How to use it: Check the current regime on your Market Cycle & Risk dashboard. It helps explain why we might be trading aggressively (Bull Run) or defensively (Bear).
Ready to Explore?
Start with Paper Trading to see how the system works with real market data.
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