Overview
Paper Portfolios now behave like a model-guided backtest. Conviction sets the target risk budget, holdings drift naturally with price, and the paper book rebalances back to the model midpoint at month-start or when your conviction changes.
Position Entry
Positions are opened based on the average of your ST and LT ratings:
| Average Score | Position |
|---|
| > 3 | LONG |
| < 3 | SHORT |
| = 3 | No position (or closes existing) |
Example: ST=4, LT=5 → avg=4.5 → LONG
Position Exit
Positions are closed when any of these occur:
- Neutral Rating — You submit an average = 3
- Direction Flip — You flip from LONG to SHORT (or vice versa). The old position closes and a new one opens in the opposite direction.
- Timeout — No update within the holding period (see below)
- Fiscal Year End — All positions are closed at FY boundaries (Feb 28 for FY24, Dec 31 thereafter)
Holding Period (ST vs LT)
The maximum holding period depends on whether you have a directional LT view:
| LT Rating | Max Duration |
|---|
| LT ≠ 3 (directional view) | 6 months |
| LT = 3 (neutral), ST ≠ 3 | 2 months |
Example: ST=5, LT=4 → LT is directional → 6 month max
Example: ST=4, LT=3 → LT neutral, ST driving → 2 month max
Submitting a new rating on the same stock resets the clock and may change the holding period based on the new ratings.
Position Sizing
Positions are conviction-sized rather than equal-weighted. The sizing model recalculates daily from conviction, volatility, and liquidity. Between rebalances, exposure drifts with price like a real position.
Monthly rebalance: on the first trading day of each month, the paper book resets each active idea back to the latest model-guided midpoint.
Alpha Calculation
Daily alpha = Stock Return − (β × Index Return)
- UK stocks → FTSE 250
- EU stocks → STOXX 600
- US stocks → S&P 500
Beta is calculated using 100 weeks of historical data where available.
Chart Markers
On the Position & Alpha chart, markers show your blotter submissions:
- ▲ Triangle up = LONG rating change
- ▼ Triangle down = SHORT rating change
- ● Circle = NEUTRAL (closes position)
- ■ Square = monthly/model rebalance back to target midpoint
Tips
- Submit updates to extend holding periods — positions timeout if not refreshed
- Use ST rating for short-term catalysts (earnings, events)
- Use LT rating for fundamental/structural views
- A neutral (3) rating on either ST or LT alone won't close — the average must equal 3
