Trading comes with risk and every market is open to volatility and changeable market conditions. If you’re a professional trader, you’ll probably be used to the unpredictability and have tools in place to minimise risk.
Whether you’re trading stocks, forex, commodities or indices, if you want to advance your trading portfolio, you might want to consider diversification.
Investment portfolios
Having a selection of instruments that you’ve invested in is wise when it comes to trading. Sometimes referred to as a basket of assets, portfolios can include a range of different securities. Traders and investors usually develop these over time, expanding their portfolio as they make gains in the market.
Diversification
Every professional trader should look to minimise risk when it comes to investments. This includes diversifying your portfolio by trading across a range of market securities.
You can choose to trade a mix of asset classes including forex, stocks, cryptocurrencies, commodities or indices. You can also trade a variety of assets within each market.
Expanding your trading portfolio means that your money is not all tied up in just one security, so, if one asset suffers a major loss, you still have a chance to profit across your other investments. Markets fluctuate, sometimes more so than others, and it’s wise to have a broad range of options to make the most of those key opportunities.
Options to diversify your portfolio
There are a variety of ways to expand your trading portfolio. You can choose to invest in asset classes such as:
- Stocks: these provide traders with ownership of company shares and there are hundreds of options to choose from including small, mid and large cap businesses.
- Commodities: popular commodities include gold, which is often seen as a way to hedge against inflation, silver, oil, coffee and cocoa.
- Bonds: These are lower risk due to their fixed interest rates and are often invested in via funds along with a variety of other securities.
- Cryptocurrency: This is often seen as one of the more unpredictable investments due to its volatility and lower liquidity.
- Indices: These offer a way to diversify by trading a set of stocks in one single trade. Examples include the S&P 500, Dow Jones Industrial Average and Nasdaq Composite.
Using an advanced trading platform with opportunities across a range of assets will also help you trade more successfully in the long-term and diversify from one place.
Other factors to consider include trading strategies, such as fundamental analysis and technical analysis, and research into your desired assets.
All trading comes with risk, but if you execute a robust strategy across your trading portfolio, keep on top of relevant news and, perhaps most importantly, remain calm, there are opportunities to make decent gains from your investments.