Posts

portfolio diversification strategies

Portfolio Diversification | Across Timeframes

Portfolio Diversification concepts are one of the most flexible tools you can use to improve your trading strategy. So far, we have looked at the benefits across multiple asset classes and within the same asset class.

There is also another way to implement Portfolio diversification concepts into your trading.

Is it possible to follow the same principles of Portfolio Diversification concepts across timeframes?

Let us see.

There are multiple ways to successfully introduce diversification into your portfolio.  It will not be appropriate to implement them all.

This is because we need to understand how each one affects the risk-return ratio of your portfolio.  We do this in order to increase the robustness of the trading strategy.

A simple and effective way to see if diversifying across timeframes would benefit you, is to use your existing strategy and change the timeframe.  It could be something that simple; Sounds too good to be true, doesn’t it?

For example, if your existing strategy trades the H4 timeframe, run some backtests on the 15m and see what effect it has.

The power of algorithmic trading is, once your strategy is automated, it’s easy to backtest across multiple timeframes and assets.

Keep in mind, the higher frequency your algo trades, the more costs you will pay.  For example; if calculations are based on trading x1 per day, if you add a strategy that increases frequency to x3 per day, it will increase costs x3 too.

Investors on the Darwinex platform can use platform metrics to see if the Darwin they’re interested in,  trades multiple timeframes. Keep watching until the end to see how.

Algorithmic trading allows you to efficiently test multiple ideas across multiple assets, asset classes and timeframes. Finding a way that does not work gets you one step closer to finding a way that does.

How do you use algorithmic trading to improve your time efficiency?

Tag us on Twitter (@Darwinexchange)

Brought to you by Darwinex: UK FCA Regulated Broker, Asset Manager & Trader Exchange where Traders can legally attract Investor Capital and charge Performance Fees.

Risk disclosure:
https://www.darwinex.com/legal/risk-disclaimer


Content Disclaimer: The contents of this video (and all other videos by the presenter) are for educational purposes only, and are not to be construed as financial and/or investment advice.