Professional Portfolio Management

Professional traders don't just take trades - they manage portfolios.

Portfolio Theory for Traders

Diversification

• Trade uncorrelated pairs/assets
• Don't concentrate risk in one direction
• Balance different strategies

Correlation Management

Rule: Never have more than 2-3 highly correlated positions.

Position Management

Maximum Exposure

• Total portfolio risk: 5-10% maximum
• Per-trade risk: 0.5-2%
• Per-direction risk: 3-5%

Scaling Techniques

• Enter partial position initially
• Add to winners at key levels
• Never add to losers

• Take partial profits at T1
• Move stop to breakeven
• Let remainder run

Risk-Adjusted Returns

Key Metrics

• Above 1.0 = good
• Above 2.0 = excellent

• Keep under 20%
• Recovery becomes harder as DD increases

• Above 1.5 = profitable
• Above 2.0 = excellent

Professional Practices

1. Daily risk assessment
2. Weekly performance review
3. Monthly strategy evaluation
4. Quarterly system optimization

Capital Allocation

The Pyramid Approach

• 60% to high-probability setups
• 30% to standard setups
• 10% to experimental trades