Building a Diverse Trading Portfolio
A look at the importance of risk mitigation through diversifying your portfolio.
When it comes to online trading, portfolio diversification is a powerful tool used by investors to mitigate risk. This strategy involves investors holding multiple assets across varying markets, industries and geographical jurisdictions in order to spread their exposure and decrease the risk of loss due to one industry collapsing.
The Benefits of a Diversified Portfolio:
- Spreading your eggs across more than one basket decreases your probability of an overall portfolio loss.
- Often when an investor is holding assets from multiple markets, the volatility on your portfolio is This can assist in not making impulsive or panicked decisions if there are major market swings.
- A diverse portfolio can include assets that react in different time-frames such as daily, weekly, monthly Thus, possibly increasing opportunity for profit and decreasing potential for big losses.
- Provides a sense of stability to the overall portfolio in times of volatile markets and decreased investor confidence on some assets.
A Look at a Diversified Portfolio:
The aim of a diverse portfolio is to gain exposure to a mix of assets. It is important that these assets are from different industries, themes, geographic areas or are negatively correlating assets. For example, Gold has been known to be a ‘safe haven’ for investors when other markets crash, and tends to behave in the opposite to falling stocks and securities.
Possible Asset Classes for a Diverse Portfolio:
· Stocks
Most portfolios will contain a number of stocks. A stock refers to a percentage of a company and that stock is valued based on the health and prospects of said company.
· Commodities
Commodities are a strong addition to any portfolio as they are often in demand regardless of market stability. They include assets such as Gold and Oil.
· Fiat Currencies
Forex trading involves pairs of currencies where one is bought while the other is sold. This can also act as a type of hedge against instability. For example, when the USD weakens, JPY has historically strengthened, thus potentially mitigating the risk of loss.
· Indices
A financial index is a group of selected companies or securities pooled together to provide a general sense of market health. This includes the SPX500 and the NAS100.
· Cryptocurrencies
Newer to the asset-class options, cryptocurrencies have made a sharp rise in the financial world in the last decade or so. Due to the decentralized nature of the market, they can occasionally act as a hedge against falling central markets.
Where to Build a Diversified Portfolio?
You can invest in over 150+ Forex pairs, Commodities, Cryptocurrencies, Indices, Stocks and Metals 24 hours a day, 5 days a week with CedarFX. They also offer round-the-clock Cryptocurrency trading so you may invest and manage your trades 24 hours a day, 7 days a week. Combined with the ease of device compatibility, you can conveniently trade from
anywhere with an internet connection.
What Leverage does CedarFX offer on All Asset Classes?
Looking to make the most out of the least? Well, CedarFX offers some of the most competitive leverage ratios on the market. These are their unbeatable options:
Crypto – 1:100
Energy – 1:100
Forex – 1:500
Indices – 1:200
Metals – 1:500
Stocks – 1:20
Why We Choose CedarFX – The World’s First Green Broker:
CedarFX is a robust and reliable broker with a conscience and a wide variety of assets to invest in. Currently they offer two excellent account options; An Eco Account and a 0% Commission Account.
0% Commission:
The first type of account is the Zero Commission Account. Traders are able to register and deposit capital without any commission charged before, during, or after trading. This means your full deposited funds are available to be traded in their entirety with no hidden fees associated anywhere. They offer same-day Bitcoin withdrawals for this account as well.
Eco Account:
The Eco Account from CedarFX is a commission-based account with an environmentally friendly feature, aimed at combatting global warming and reducing the carbon footprint of humans. The commission is charged on a pro-rata basis according to the physical trades you place. This is at a rate of $1.00 per lot traded.
For every $1 commission paid by clients, the amount is matched and used to plant trees. These funds are sent to the Eden Reforestation Project, who are responsible for planting millions of trees around the world in an attempt to neutralize human’s carbon footprint.
CedarFX Support:
This broker’s customer support is highly impressive and efficient. Contact them via Live chat, email or call-back request 24 hours a day, 7 days a week. Their specialty trading and finance departments can handle even the most technical queries and provide detailed feedback and
assistance.
