Is There a Correlation Between Interest Rates and Algorithm Trading Performance?

Have algorithms lost their performance in today’s market? This is a question that was brought up and addressed in a lengthy video, and this is part two of that video. If you haven’t watched it, hit that link right there. In this video, I want to show you something very interesting that I found, which I think will bring a lot of clarity regarding algorithm performance. Let’s dive right in.

Welcome! If you’re new to the channel, my name is Matt Jimenez. I’m an entrepreneur who has worked with the greatest minds in finance over the last several years, and I’m here to share everything they poured into me. I uncovered a very interesting point that I’d like to address here and go over exactly what I see. More importantly, I want to have an open discussion with you, so leave me a comment. I want to know exactly what you think about this finding that I just pulled up. Let me stop rambling and get straight to the charts.

Before I do, to give you some clarity, if you haven’t watched the first video, last week someone made a comment expressing interest in the bot’s performance and its longevity. They were concerned because the bot hasn’t been performing as optimally as in the past. Previously, it was doing 10% to 15% or higher, and now it’s only doing 5%, sometimes 10%, and sometimes 3%. I made a video addressing all of that, but in this one, I want to uncover exactly why we may be seeing a difference in performance due to the economic standing of our currencies and a basket of currencies known as the foreign exchange markets, of course.

Let’s look at the charts.

Here we have the Federal Funds Rate. One thing I want to talk about is the rates going haywire back in 2022, which is around the same time the FED bot by Nurp came out. One thing to note about the algorithm’s performance is that the more volatility in the market, the more performance you will actually see in the software. If the economy is going crazy and times are extremely volatile in the foreign exchange markets, it will almost always reflect as a net positive in the algorithm. Past performance doesn’t indicate future performance, but history shows that every time there’s been extreme volatility, yes, we may experience a drawdown, but if you can sustain the drawdown and keep your cool, the recovery will be just as good, if not better.

Let me show you exactly what I’m talking about. Back in October 2022, we had interest rates on the rise. In 2020, during the pandemic, we had basically zero interest rates, possibly heading into negative. They started increasing rates to bring things back to life in the economy, making spending harder and obtaining loans more difficult. That’s one of many reasons why they play with interest rates: the lower they are, the more they incentivize spending; the higher they are, the less they incentivize it. On the rise, we went from 0% to 3%, then to 4%, 4.3%, 4.5%, 5%, 4.6%, 4.8%, and finally to 5%. This is pretty high considering where we came from, and now, as of today, it’s all the way up to 5.33%. I want to know—do you think interest rates are going higher or lower?

Back to the video. The reason why I show you this is to illustrate that there was extreme volatility in the economy as a whole. Now, let’s look at the algorithm’s performance during the most volatile times we’ve experienced. This software, the FED bot, is not my account but Jeff’s, the CEO’s. Going back to 2020 during volatile times, in 2020 he had just started the bot. Let’s focus on 2023. During the crazy volatility of all the rate hikes, look at the performance:

  • January 2023: 27.84%
  • February 2023: 12.6%
  • March 2023: 26%
  • April 2023: 16.7%
  • May 2023: 8%
  • June 2023: 11%

These numbers are impressive. In fact, the lowest month he had was 4.34%. This period directly correlates with volatility in interest rates. During times of crazy interest rates, numerous major news releases impact currencies. As these news releases come out and interest rates are hiked, and there’s talk of rate cuts, uncertainty leads to significant volatility in currencies, clearly reflected in this algorithm.

This is another key point regarding the bot’s performance and longevity: volatility equals profitability in this case. Again, this is not investment advice, and past performance does not indicate future performance, but I find it quite interesting. Every time we experience volatile periods, even this year, we had a significant month back in April due to a major news release, resulting in a very high-performing month. If I look through all the users who publicly share their data, I’m pretty sure those running accounts during 2023 will show a strong correlation between interest rates and algorithm performance. I will likely make a spin-off video about interest rates and algo bots, track other accounts during this period, and bring the data for you to analyze.

I thought this was a fascinating finding and wanted to bring it to your attention. Something to ponder and discuss. Leave me a comment with your thoughts—I’m very curious. If you want to get an edge during volatile times, hit the link below to potentially get software that can help you. If you enjoyed this video, please leave a like, comment, and / or subscribe.

As always, my friends, peace.


Please visit Is There a Correlation Between Interest Rates and Algorithm Trading Performance? to watch the full video on YouTube!

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