How TradeStops Makes Investing Easier with Envestnet | Yodlee API

This is a guest post by Dr. Richard M. Smith, founder of TradeStops and CEO of TradeSmith. It has been shown again and again that most individual investors badly underperform the broad market averages. Even most professional investors fail to beat the markets. Professionals just tend to do a little “less worse” than the average individual investor. Yet, the individual investor has multiple significant advantages over both professional and institutional investors. Individual investors are small and nimble. They’re not under pressure from boards of directors or clients. They can focus on longer time horizons. They can fly under the radar. So why do so many individual investors consistently fare so poorly in the financial markets, especially in this age of instant access to information? Investors certainly aren’t at a loss for good sources of investment ideas. The fundamental challenges of investing today are largely behavioral. Building wealth in the financial markets is as much about managing oneself as it is about finding the right stocks to buy. When done right, self-directed investing can be fun…and very profitable. TradeStops helps self-directed investors succeed with powerful but easy to use tools for managing a portfolio of stocks and options. TradeStops makes investing fun again by reducing stress and increasing profits. TradeStops takes the guesswork out of investing. Take, for example, the simple concept of the TradeStops Volatility Quotient. We call it the VQ for short. The VQ is a proprietary indicator that is available to every TradeStops subscriber. It tells you exactly how much “noise” or volatility an investor can expect on any stock. Here’s a list of current VQ’s on some popular stocks: Untitled Investors in Johnson & Johnson or Walmart can expect those stocks to fluctuate as much as 11.3%, up or down, just because of the “noise” in these stocks. These are low-volatility stocks. The market waves don’t toss them around too much. Netflix and Tesla, on the other hand, are nearly 4 times as volatile as JNJ and WMT. Netflix and Tesla are much “noisier” stocks. There is a lot more uncertainty about the true future potential of NFLX and TSLA than there is about the future potential of JNJ and WMT. Armed with this knowledge, self-directed investors can make much more informed and intelligent decisions about how to go about investing in such stocks. The VQ is a critical piece of information that can be used in setting intelligent stop loss orders as well as in deciding how much money to invest in each stock. TradeStops provides exactly such tools to our subscribers. We help our subscribers to:

  1. Decide if an investment is a good fit for their personal risk tolerance levels.
  2. Know exactly when to sell an investment to lock in profits or minimize losses.
  3. Know exactly how much money to invest in any investment in order to balance investments for risk.

Using such timeless principles of investing via our easy to use tools has proven to dramatically improve investor performance again and again. There are dozens of popular books and articles that help investors understand the behavioral pitfalls of investing and money management. Some such recent books include The Behavior Gap by Carl Richards, Misbehaving by Richard Thaler and What Investors Really Want by Meir Statman. These are all great books that investors can learn a lot from. TradeStops, however, is unique in actually providing investors with the tools and information to tackle these challenges head on and to start realizing their full potential in the financial markets. We've been using Envestnet | Yodlee  Aggregation API for almost two years now, to allow our customers to download data from their online brokers. Subscribers can go in and add a portfolio to their account. Then they choose between a synchronized portfolio versus a manual portfolio. If they choose the synchronized portfolio, we show them a list of our most popular brokerages. The users can make their own changes and trades on their favorite system from there. Screen Shot 2015-07-15 at 9.02.58 AM If you'd like to learn more about how Envestnet | Yodlee APIs power financial technology solutions like TradeStops, visit their developer portal.