IndependentInvestor.co.uk Warns Against Trading An Unmanageable Portfolio

Online, July 25, 2012 (Newswire.com) - Online investment site IndependentInvestor.co.uk has urged traders to keen an eye on the size of their portfolio (http://www.independentinvestor.co.uk/share-dealing/manageable-portfolio.php), both in terms of the number of positions and the amount of capital exposed to the market at any one time, in order to prevent running up unmanageable portfolios which place excessive strain on trader and capital.

The more positions a trader takes, the more capital is theoretically ties up, and the more extensive the management burden of ensuring open trades perform to the best of their abilities. In order to keep a manageable portfolio, traders must be selective about the number and types of positions they trade in order to ensure they can manage the burden personally and finance their liability through available capital.

While the temptation to diversify through adding more, varied positions is strong, traders should take care to ensure they are building a sustainable portfolio they can manage for the longer term, according to IndependentInvestor.co.uk.

A spokesperson for IndependentInvestor.co.uk said that through managing position numbers and intensity more effectively, traders could expect better results from a more focused, more profit-centric share trading approach.

"Most new traders think that the more markets they trade and the more numerous positions they take, the more likely they are to turn a profit eventually. This is unhelpful, and we've found in our own experience that trading a more focused portfolio can produce more effective results. While diversification is important in sharing the risks of exposing capital to the markets, trading on a narrow position base allows more research an attention on a per position basis, which almost always leads to better results."

"The more positions you trade, the more unmanageable your portfolio can become, and at this kind of stage it's easy to make costly mistakes and misjudgements. We urge traders to narrow their horizons and trade a more focused portfolio of opportunities within manageable boundaries as far as both effort and capital are concerned for best effect."

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