Managing Multiple Positions

In This Lesson

Handling multiple trades simultaneously.

Duration: 20 min

Overview

Handling multiple trades simultaneously. This lesson will provide you with practical knowledge and actionable insights you can apply to your trading immediately.

By the end of this lesson, you'll have a clear understanding of the concepts and be able to apply them in real trading scenarios. Let's dive into the details.

Key Concepts

Portfolio Heat

Total risk across all positions. Should never exceed 6-8% even if all stops hit.

Correlation Matrix

Measure how similarly positions move. High correlation = hidden concentration risk.

Position Priority System

Rank positions by conviction and performance. Cut weakest when adding new trades.

Sector Rotation

Money flows between sectors predictably. Managing exposure captures these rotations.

Practical Application

Now let's put this knowledge into practice. Follow these steps to apply what you've learned:

1. Create position tracker spreadsheet with entry, stop, target, and risk for each
2. Calculate total portfolio heat - sum of all position risks
3. Check correlation between positions using free tools like Portfolio Visualizer
4. Set maximum positions rule (e.g., 6 max) and stick to it
5. Review all positions daily - cut losers, add to winners
6. Rebalance when one position becomes too large (>20% of portfolio)

Common Mistakes to Avoid

Overexposure to One Sector

Having 5 tech positions that all crash together during tech selloff multiplies losses.

Too Many Positions

Managing 20+ positions leads to poor decision-making and missed exit signals.

Ignoring Correlation

Thinking you're diversified with SPY, QQQ, and DIA when they're 90% correlated.

Key Takeaways

Portfolio management is as important as individual trade selection
Correlation creates hidden risk - diversification requires uncorrelated assets
Fewer high-conviction positions beat many mediocre ones
Total portfolio heat should never risk more than one month's gains
Regular rebalancing prevents single position from dominating results

Your Next Steps

Ready to continue your learning journey? Here's what to do next:

• Review this lesson's key concepts
• Complete the practical exercises
• Take notes on what you've learned
• Practice with a demo account
• Move on to the next lesson when ready