Don't put all your eggs in one basket. It was originally proposed by Nobel Laureate James Tobin in economics. Its original intention is to invest in different fields and use diversification to reduce the risk of investment. In trading, many people also refer to the principle of this sentence to distribute their positions, and distribute their funds among multiple trading varieties to spread their risks, but in fact many traders fail to achieve their goals. In theory, distributing positions is a good risk sharing strategy, but many traders do not have a correct understanding of this sentence. If this problem is solved, it is believed that the actual operation of traders will be significantly improved.
"Don't put all your eggs in one basket, but having too many baskets is not a good thing"
Many inexperienced traders have little understanding of the meaning of distributed positions. In order to avoid the risks brought by centralized trading as much as possible, some traders will buy multiple varieties. It seems that the more varieties they buy, the greater the risk of trading. Low. But after all, this is not fishing. If you cast a wide net and catch more fish, you can choose the best ones. Trading requires sufficient understanding of the logic and factors of species fluctuations. Human attention is limited. Too many points often lead to the phenomenon of losing sight of one another; moreover, holding too many varieties of positions is likely to make the flexibility of the position worse. When the opportunity arises, I grab a lot of varieties and do it in a hurry. Therefore, under normal circumstances, it is enough for me to recommend three or four varieties.
Homogeneous positions look like multiple baskets but are actually one basket
For example, if you buy NZD/USD and AUD/NZD at the same time, it seems that you have spread your positions between the two varieties, but if the commodity market as a whole is suppressed, the risk of these two varieties is the same. Even non-U.S. direct-market currencies are the same. When the U.S. dollar index rises strongly, non-U.S. currencies tend to fall generally. Therefore, in theory, direct-market currencies directly linked to the U.S. dollar are sometimes considered the same basket , it seems that you have traded multiple varieties, but when the risk comes, they cannot be well distributed. Therefore, when choosing a basket, it is best to make a reasonable distinction. For example, when you hold long positions in Australia and the United States, there is no need to buy New Zealand and the United States. But when you are optimistic about the overall strength of the US dollar index, you should sell the euro while , Unless driven by special factors, there is no need to make too many repeated bets on other direct currencies, and you can look for opportunities in other cross currencies with low correlation.
Learn to find the focus in different baskets and focus on the balance of positions
In addition to avoiding homogeneity among varieties, the method of distributing positions should also pay attention to the reasonable allocation between trading cycles. We have suggested to you before that you should try to avoid single short-term trading or trend trading methods. Even if you are good at short-term operations, you should try to allocate some medium- and long-term trend positions. Short-term trading should be resisted. A good position allocation should be to use the advantages of one's own trading style to find the key point between high volatility risk (short-term position) and low volatility risk (medium and long-term position), and to achieve a reasonable position balance.
Finally, in fact, the above-mentioned methods of distributing positions tend to be aggressive. This method aims to provide some easy-to-operate ideas for beginners, but after growing up, learning to use hedging methods will be able to further reduce The purpose of position risk, we will discuss in the future.
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