Super broad question, my favorite kind.

After the recent influx of new members to the Discord server and new subscribers to the newsletter (3300 members of the Community Server and 359 subscribers respectively) some new trends are beginning to emerge in the questions we see every day.

A lot of the questions focus around what you can and can’t do with Composer currently. So, I thought I’d take a look through Composers branding and see what I can clarify.

So the broadest question is the title;

What is Composer?

Lets start with their blurbs from Product Hunt, and a link to their home page to get a sense of how Composer think about themselves, before I offer my take.

Algorithmic Trading

Composer bills itself as an algorithmic trading platform, and they’re technically correct. However, I see confusion stemming from this daily. For the extra-new to the stock market, lets detail the difference between trading and investing.

Simple enough, it’s a timeframe thing. Composer allows daily strategies, so it falls under most definitions of “Trading.” From a strategy building perspective however, I believe they’d be much better served calling themselves an Algorithmic Investment platform.

I think Composer is a closer comparison to M1 Finance than it is to TrendSpider, for example. Once you understand that you’re shifting a portfolio’s allocation based on market conditions rather than entering and exiting positions everything makes a lot more sense.

On Composer you cannot;

Set “Buy” and “Sell” targets

Run intraday strategies.

Export the signals Composer generates to other brokers.

You can however;

Build out portfolios to cover many, many different market regimes.

Dynamically balance your holdings.

Free up time you’d normally spend reallocating your long-term portfolio.

Final Point:

Composer batches and executes trades once a day, between 3:50 and 3:59 PM EST. You do not get to change it, currently. That simply is when trades happen. Automatically not a trading platform, in my humble opinion.

Hopefully that helps clear up exactly what to expect from Composer with regards to the topic of “Trading.” I love Composer for what it is, but if you’re expecting 100% control, manage your expectations accordingly.

No-Code Platform

Despite vocal insistence that the branch-based interface is itself a form of code by some community members, Composer does not require you to know anything resembling programming. No Python, no C++, nothing like that. In the field of “no code” platforms that I’ve tried (no, I won’t be naming names) Composer’s interface is smoother and more intuitive than the rest by far. There is a reason simple folk like me are able to use it!

On one hand, the community has 100+ coders who all see enough value in Composers offering to stick around. Their interface and backtester allows for much faster iteration and testing of theories than manually coding something up in Python. On top of that, the community is apparently loaded with actual Data Scientists who want to try their hands in the market.

On the other hand, there are a couple tools that the most tech-capable among you may end up missing because of the focus on ease-of-use. There isn’t a public API, for instance. Data can be very difficult if not impossible to efficiently get off of the Composer platform. There is no way to hook other data sources or execution platforms in to Composer’s services. What you see is what you get is very much the name of the game at this time.

Backtesting

I saved the most rant worthy topic for last. Buckle up lads and ladies.

Composer should not show backtest data.

My hot take of the past year is that I think that the average user of Composer would be better served if the backtester was not a prominent feature of the strategy building process. Seriously. Every day someone asks if a strategy is good because they saw a backtest with a parabolic line promising 1000% annualized returns.

Did we find the holy grail of the trading world? Possibly.
Can it be proven with the tools Composer offers to us? Not really.
Is it extremely dangerous to trust a strategy that isn’t built on some kind of evidence? Absolutely.
Is someone brand new to the world of Algorithmic Finance going to understand that? Extremely unlikely, unless they’ve already read my educational newsletters on the topic of backtesting. Go read them so I don’t have to restate everything.

In Composers defense, they do have a very well written article in their “Learn” Section about the concept of backtesting, the dangers, and how to test for overfitting. A comprehensive lesson, it is not, but it is certainly an easily digestible introduction.

In my opinion it would be maximally beneficial for their userbase, but very bad for their marketing, to gate the backtest system behind some kind of evaluation or test.

Long time readers, I’m sorry this article was probably very boring to you.

But you, prospective new member, this one is for you. Hopefully you found it informative, and hopefully you have a better idea what to expect!

This seems like a good point to remind everyone that despite how much I talk about them, I don’t personally have any official relationship with Composer. They don’t pay me, I don’t work for them. I just run a community (almost) exclusively focused around their product. The things I say are my honest opinion as a long-standing member of the community who interacts with their platform almost every day. Sometimes the opinion is positive, but sometimes it’s not. It’s a firm belief of mine that if you truly want the best for someone, sometimes they need to hear the unfiltered, potentially hard truths.

Next week will be the second most common question we hear;

What is a good strategy?

I’ve dragged this on long enough, and I can easily do another thousand words on the topic, so I’m going to do exactly that. Until then, come join me over on Discord! I’ve been hanging out on voice chat while I write these, so if you want to watch the magic happen and pick the brain of whoever is hanging out, join us!