Number of open positions - exposure, risk or margin?

What is the constraint for adding new positions to your portfolio?

  • 1. Naive risk

  • 2. Calculated Risk

  • 3. Notional exposure

  • 4. Margin/buying power


Results are only viewable after voting.

Panic!

Member
59 8
Thanks @0007. Exactly what I'm doing right now. This means that I"m leaving some money on the table by not utilising my full buying power, but I guess I can live with that.
 

0007

Senior member
2,157 518
Thanks @0007. Exactly what I'm doing right now. This means that I"m leaving some money on the table by not utilising my full buying power, but I guess I can live with that.
Just a further thought – the "spare money" left on the table i.e. the percentage of your account that you are not putting into your overall risk, doesn't necessarily have to be kept with the broker if it's not required for margin. It just needs to be readily available and if it's a sizeable sum you can probably utilise it more usefully than providing free investment funds for your broker's use!
 

NVP

Legendary member
36,279 1,787
Yes, what you describe is right. If a trade moves in my favour far enough that it would add 2% to my netliq, I would say the risk on that trade is now 4%. Being consistent, I would now have to act on this. In practice I don't do this as it doesn't seem feasible. Instead I ignore the unrealized gains when entering into new trades, so there is no compounding risk (or returns) on unrealized gains.

This might not be best practice. I'm really struggling with this, so I appreciate any feedback or criticism you can provide me.
i would incorporate trailing stops and targets where partial profits are taken into your strategy or you will always struggle with this .......i cannot see how a trade with b/e achieved using thèse methods would have any risk at all and can then be removed from the portfolios risk profile

but that’s just me.....we are all different !!

N