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Portfolio trading strategy implies trading in baskets of various assets. Тraders and investors prefer to trade a number of assets simultaneously in order to reduce the risk. At present the new GeWorko method has made it possible to carry out portfolio trading very simply and with wide possibilities. You can create portfolios in a few clicks, choose the asset combinations and trade following the theory of risk diversification.
Here You can find an applied example of constructing an effective portfolio regardless of market conditions and global economic factors. You can learn how to balance investments as well as optimize them based on absolute, relative values as well as quantitative performance including such indicators as Return, Standard Deviation and Sharpie Ratio.
It is challenging to compile an optimal structure of assets in a portfolio. On the one hand, much depends on the parameters of the assets, included in the portfolio and on the other hand, on investor’s individual preferences and restrictions. However, modern financial theory and new method of analysis and trading – GeWorko, substantially simplifies that process. Here is an example of a 6 stock portfolio optimization.
Current article carries on the portfolio optimization process focusing on increasing expected return of the portfolio. Consequently, the optimized portfolio is one of higher risk to yield higher returns. As a result there are several portfolios with varying risk and return ratio. Investors are free to choose based on the degree of risk tolerance.
In order to apply GeWorko method in practice we offer you to use a new generation trading-analytical platform NetTradeX. Through it you will be able to create personal composite instruments GeWorko in an easy and quick way, to get price chart instantly and to use a wide range of technical analysis tools for predicting the price of the created instruments.
Modern portfolio theory suggests significant benefits from diversification. Using GeWorko method toolset we would like to show how exactly an investor benefits from diversification. For this example we have chosen two well-known securities included in the index Dow Jones Industrial Average.