Double provides a number of trading optimizer settings to the user. You can find these within your app on the Double settings page. Please read more about how Double's Portfolio Optimization engine works as the mode your portfolio is in at any given time is important to fully understand the settings we enable to users. Furthermore, the concept of competing objectives and how the optimizer deals with them is important to understand in order to make an informed decision about changing your portfolio's defaults.
Tax Weight - Default: Normal
Options: Low, Normal, High
How much should our optimizer care about taxes? We default this to a normal amount, but if you'd like you can change the setting to either low (we don't care very much about taxes) or high (we care more than normal about taxes). A user who has a lot of realized capital gains in a given year may care more about taxes. A user who has very little non investment income may care very little about taxes.
Tracking Weight - Default: Normal
Options: Low, Normal, High
How close to your targets would you like to be? If for some reason a user would like to prioritize or deprioritize their tracking error compared to the index, they can change this setting. For example lowering your tracking weight should result in our optimizer taking more TLH opportunities compared to when at the high level.
Holding Cost Weight - Default: Off
Options: Off, Low, Normal, High
How much should we penalize ETFs with holding costs? You can think of the expense ratio of an ETF in a similar way to the transaction costs associated with trading. By holding a more expensive ETF vs a less expensive one, you are paying more in fees. By default we have turned off this penalization in our optimization, but if a user would like they enable it and factor in the costs associated with ETFs. This will prioritize individual stocks compared to ETFs since stocks do not have an associated expense ratio.
Transaction Cost Weight - Default: Normal
Options: Low, Normal, High
How much should our optimizer care about trading costs? We factor in estimated trading costs into the optimizer. Learn more about how Double calculates estimated trading costs. A user may change this to care overemphasize or underemphasize trading costs.
Transaction costs can impact investment returns. Carefully consider the potential impact of trading fees before making adjustments to this setting.
Wash Sale Prevention Enabled - Default True
Options: True, False
Should our optimizer prevent all wash sales? By default our optimizer prevents any trades that will result in a wash sales within your Double accounts. Preventing wash sales does have some tradeoffs and a user may want to allow wash sales to occur, which they can do with this setting. For example if a user is migrating between strategies, they may wish to allow wash sales to move between strategies quicker.
Note that Double is only able to prevent wash sales for securities it knows about - aka stocks that are held and managed by Double. If you have another account that trades stocks you may have wash sales despite this flag being enabled.
Also note that this setting can be override if you have setup a Portfolio Change to allow wash sales as described here.
A user may disable this setting by setting the value to False. Read more about wash sales here.
Important Disclosures:
Past performance is not indicative of future results.
This content should not be construed as a recommendation to buy or sell any security or to engage in any particular investment strategy.
Always conduct your own research and due diligence before making investment decisions.