What is a portfolio?
When we talk about investment, the first thing that comes to mind is equity. However, it exists a wide range of other assets such as currencies, bonds, derivatives, or crypto-asset. When a non-professional investor starts on a brokerage platform he buys individual stocks.
However since, 1952 it has been proven that, to mitigate the risk inherent to financial markets a good strategy consists of building portfolios instead of buying individual stocks. A portfolio is a combination of individual stocks that can absorb losses on an individual stock by the gain on other stocks.
At Alluvie we are trying to bring this idea to our users: diversification thanks to portfolio management instead of random investment into individual stocks.
There are many ways how to decide what stocks you could include in a portfolio. For example, you can choose stocks within your portfolio as follows:
- all companies in a particular market like London Stock Exchange (FTSE)
- All technological companies in the US like Microsoft (MSFT) or Apple (AAPL)
Preference on stock selection could be a personal choice or some rules based on the financials of the company. But it is important to note that larger portfolios tend to be less risky as they are less dependent on individual companies.
When you select the stocks you want in your portfolio it doesn't mean that you always have all these stocks in your portfolio it means that you can have these stocks within your portfolios. The question of when will depends on your strategy.
For example, imagine you build a portfolio with AAPL and TSLA and you choose strategy 1 for this portfolio: that means your portfolio can contain AAPL or TSLA, the BUY and SELL orders are generated from strategy 1.
The trading strategy defines when you hold the specific stocks and the portfolio defines the investment perimeter.
On our plarform, there are two main ways to create portfolios:
Last modified 11mo ago