Original Question: Portfolio Management(rather than individual trades): How would you increase exposure coming from cash and managing a large portfolio? ie, how to decide how many initial stocks, kept for how long before investing more, how much open risk, etc?

Answer: I try to act on early opportunistic signals to get quickly involved in a reaction rally or ensuing uptrend. I only engage with one or maybe two names to counter any FOMO. I am careful not to increase open heat (read: Open risk) too much. Then I continue to act on proper setups until I am 100% invested. I then go on an use margin mostly to add to my positions when they flash proper entry signals in the weeks/months ahead. I sometimes double my regular position size intraday with the idea to catch the take-off and then scale back before the close. I only do this in quality names and when I am able to watch the position like a hawk.

When we enter a correction I try to trim my fresh positions and thus decrease open heat even more to make sure that I don’t feel any pressure to sell my longer term multi month holdings.

Here are some rough guidelines:

For a small <200k Portfolio 3-4 stocks to be 100% invested

For a 500k Portfolio you can increase this to 5-6 stocks to be 100% invested

For a >1M Portfolio one can increase this to 8 stocks. With 8 stocks you are properly shielded against single stock black swan events already. Handling 8 stocks is a major challenge.

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Disclaimer: This article is my opinion which stems from my own experience gathered trading real money in the stock market. It represents my style and it fits my personality and risk allowance. More power to you if you are a net profitable trader despite violating everything that’s written above!


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