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Growing requirements for modern trading technologies and complex interrelations between financial assets drive the development of new approaches to analysis and trading. Such a new approach has been developed and is offered by trading technologies development company NetTradeX with the support of financial company IFC Markets. The joint product is called "Composite portfolio trading method GeWorko."
The essence of GeWorko Method is quite simple but yet very promising as it can be applied in multiple spheres, depending on what the goals are. It is a tool allowing to combine financial instruments, build portfolios and give desired weights to assets, included in the portfolio. It allows to include not only long but also short positions in the same portfolio, and what is more important, create a new financial unit - a product of comparing two groups of assets. The prices of all assets are recalculated in USD on NetTradeX platform; this makes it easier to make a decision and compare portfolios.
The concept of portfolio trading method GeWorko is very similar to the concept of trading a currency pair, when the value of the base currency is expressed in units of the quoted currency. Thus, the value of the EUR/USD currency pair equals to the value of EUR expressed in USD. The difference is that in GeWorko method there are base and quoted portfolios that stand for the base and the quoted currencies.
The sum of the values of all assets adjusted for their corresponding weights in a portfolio gives an absolute dollar-denominated value for each portfolio. The system automatically shows the value of each portfolio in USD as well as shows the percentage ratio of assets in a portfolio on a price chart. When comparing absolute values of two portfolios (base and quoted respectively), the method calculates a ratio, which is considered to be the “price” of the new composite structure - PCI: Personal Composite Instrument and can be interpreted as the value of the base portfolio, expressed in units of the quoted portfolio.
Unlike many of its competitors, providing trading services with a “standard” group of financial instruments, these two companies succeeded in moving one step forward, by not only implementing portfolio approach principles in a trading system for each customer, but also providing traders with an opportunity to create a unique personal financial instrument.
The main benefit of Composite Portfolio Trading Method is that a trader avoids limitations in the number of available financial assets. Traders are free to create their own product - a trading idea, expressed quantitatively in the trading analytical platform by creating composite portfolios. These portfolios have their own price history and are available for large-scale analysis through wide range of offered analytical tools.
The value of this method is, first of all, its flexibility, that opens new horizons for analysis and trading. Application of GeWorko method helps transferring any idea into trading analytical system, evaluate its efficiency in the past and apply variety of tools of technical analysis for forecasting. In addition, GeWorko method makes it possible to diversify your investment risks through creation of a balanced portfolio, where one asset loss is compensated by the growth of the other asset and if all portfolio assets grow, the profit is multiplied.
Therefore, creativity and inventiveness of the trader become key factors to success. GeWorko method quickly converts two baskets of assets into an independent trading instrument, and as there are an infinite number of such baskets - infinite number of trading instruments and opportunities becomes available to the trader. The Method makes it possible to implement the most creative trading ideas and at the same diversify the risks and trade it safe.