Thread by @divtrading, “Why diversify?”Don’t get me started...Thread A diversified financial strategy is used by [...]

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“Why diversify?”

Don’t get me started...

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A diversified financial strategy is used by successful people, businesses and even governments all over the world. Ensuring that you have a diverse portfolio is logical - allowing for multiple, smaller revenue streams protects you from any big losses.

Diversification can save your portfolio. Holding just the red ‘line’ in the picture below would have led to a large loss:

It is even more important for traders starting out as it often leads to a much faster learning curve! With smaller amounts of money in more sectors or markets, it is easier to notice different types of price movement patterns and how you can trade these to your advantage.

This can form the base of your trading strategy if you find an area you do particularly well in: remember to always trade to your strengths!

Although the term is most commonly used to describe spreading your money through multiple market sectors, diversification can also occur by spreading money across multiple platforms. This includes stocks, forex, crypto, betting platforms, real estate and even your bank!

Personally I’ve currently got money in index funds, crypto, betting and NFT platforms.

How do you diversify your portfolio?