Why should TPSs mathematical algorithm work in real-time trading?
TPSTM is a mathematical algorithm based on Modern Portfolio Theory (MPT). In 1990, the original authors received the Nobel Prize in Economic Science for their work. The theory offers credible arguments pertaining to portfolio management and finance in general, as it is based on the return-risk trade-offs of investments. Modern Portfolio Theory is one of the fundamental concepts that govern finance in academia and business today. TPSTM works in the real world, partly because its underlying theory is proven to be effective. In addition, all computations in the algorithm take into account all real world frictions such as the bid-ask spread and broker commissions. It also monitors the performance of the TPSTM portfolio on a real-time basis. When the portfolio’s return reaches the user’s target annual return, TPS will alert the investor to rebalance his or her portfolio. These processes have been automated in the system.
