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Tom,
I have combined some statements from you on the diversification
subject which suggest that you tend to trade up to your margin limit
all the time.
If you are serious about diversification then you should allocate any
of your 22 commodities a slice of your total capital 1/22 and that
should be your upper limit.
I am not surprised that your capital swings wildly.
The way how you use "diversification" doesn't give you any better
risk profile.
As a general rule tradesize should be a constant because you don't
know by definition which are your profitable trades. If you knew it
100 % you should bet the farm on those trades.
Gerrit Jacobsen
> I've personally found that diversifying into a large number of positions
> seemed to have no effect on risk over time.
> I trade 22 different commodities at this time.
> If, after going
> through the list and screening them all, I come up with 8 "strong" and
> different trades, I take them all......up to my margin limits.
> I look for trades to jump out at me....they really will sometimes, since
> your criteria will naturally all come together at certain times. When this
> happens, I will take on 2-3 times my normal contract size. Even if it means
> having only one very large position - I would much rather have all my eggs
> in one "stong" basket rather than all the eggs spread over luke-warm trades
> for the sake of "diversification" -
>
> Any other thoughts on this?
>
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