I am a firm believer in the fact that howsoever sound a technical strategy and money management system may be, a truly diversified portfolio is a must to decrease the risk and to earn profits in all types of markets. However, true diversification requires that the assets must be negatively correlated to each other. In practice, it is not very easy find a group of such negatively correlated assets. Nevertheless, a compromise can be made by selecting items which are not related to each other. For example, such a portfolio may consist of Stock index, Bonds, agri commodities, forex, metals etc. Considering the limitations, I have been trading the below mentioned portfolio for more than 5 years now:
Nifty
Bank Nifty
Chana
Mustard seed
Soyabean
Copper
Crude
Silver
With this approach I have been able to generate about 50% returns per annum with a draw down of not more than 10%.
Since I hate to see good intentioned and hard working traders loosing their money, I intend to publish my trading diary for one (out of many) such portfolio under my management.
Capital 40 lacs (20 lacs as margin, 20 lacs as back up. Back up money will earn 9% per annum unless withdrawn to meet losses)
Risk per trade :1-2 % of capital (40-80,000 per trade)
All 8 items mentioned above shall be traded on a consistent basis. However, there may be occasions when there may not be any position in a particular item.
A screen shot of the ODIN will be taken at the end of trading day (at midnight when MCX closes) and will be published day by day on the following morning.
The purpose of the thread is to highlight the importance of proper diversification. Hope I succeed in this mission.
I also need to emphasize that so long a trader keeps the trend in mind and prudently manages a diversified portfolio, he should be comfortable in trading.
This new portfolio has been started on 18/11/2013 and the first day's screen shot will be attached now.
Nifty
Bank Nifty
Chana
Mustard seed
Soyabean
Copper
Crude
Silver
With this approach I have been able to generate about 50% returns per annum with a draw down of not more than 10%.
Since I hate to see good intentioned and hard working traders loosing their money, I intend to publish my trading diary for one (out of many) such portfolio under my management.
Capital 40 lacs (20 lacs as margin, 20 lacs as back up. Back up money will earn 9% per annum unless withdrawn to meet losses)
Risk per trade :1-2 % of capital (40-80,000 per trade)
All 8 items mentioned above shall be traded on a consistent basis. However, there may be occasions when there may not be any position in a particular item.
A screen shot of the ODIN will be taken at the end of trading day (at midnight when MCX closes) and will be published day by day on the following morning.
The purpose of the thread is to highlight the importance of proper diversification. Hope I succeed in this mission.
I also need to emphasize that so long a trader keeps the trend in mind and prudently manages a diversified portfolio, he should be comfortable in trading.
This new portfolio has been started on 18/11/2013 and the first day's screen shot will be attached now.