Do you diversify your swing trades?

[Chang]

Just curious as to whether you guys diversify your trades or just go all in on one stock at a time?

I've tried both methods and I gotta say I prefer being in a few stocks at a time for swing trades.

[MikeJones]

I wouldn't advise anyone "go all in" when trading. Its just foolish trading.

I put on several positions with GREAT setups to give myself a better chance of success.

[Wall Street Forum]

There are pros and cons to each approach:


Diversify:

Pros

• Smaller drawdowns
• Peace of mind in trades
• Clear thinking

Cons

• Very difficult to gain traction i.e. grow your account at any significant pace
• Your full cash reserve is almost never in play at one time. If you decide to put 1/6th of your funds into any ONE trading idea you won't always have 6 trading ideas and you'll have "dead money" collecting dust.

All-In one stock at a time:

Pros

• Huge single trade gains
• Your full cash reserve can be used and isn't on the sidelines of the market collecting dust

Cons

• Can be mentally exhausting when a trade goes against you

Overall I am a fan of going ALL IN with my trading capital. It just helps you grow faster. The one caveat I will add is that with this strategy you definitely need tighter stops for swing trading. Don't trade this way if you plan on having stop-loss orders 5-10% away from your entry or further. Your account would get absolutely decimated in no time.

This method definitely requires the "cut losses short, let gains run adage"

[KDcain]

I go all in with a 2% stop loss. Diversifying doesn't help you when the market takes a dump anyway.

Cheers

[Stan1]

My rules are as follows

Max risk on any given trade is 2% of total account size. When compounding into winning trades I only go 4 times moving stops accordingly to make trades risk free as soon as possible.

On any given trade day, I can only enter new positions up to 10% of total account value.

Pretty simple and keeps me out of trouble. Also from over trading.

The guy who taught me this did over 300% (verified) in '17. He is pretty darn good.

Good luck.

[Wall Street Forum]

my rules are as follows

max risk on any given trade is 2% of total account size. When compounding into winning trades i only go 4 times moving stops accordingly to make trades risk free as soon as possible.

On any given trade day, i can only enter new positions up to 10% of total account value.

Pretty simple and keeps me out of trouble. Also from over trading.

The guy who taught me this did over 300% (verified) in '17. He is pretty darn good.

Good luck.

Nice!!!

thanks for sharing some of your insight. Any quality content is appreciated here at WSF

[Shucky]

I've always diversified even from day one. It eases your mind when you have a trade going against you and one going for you.

[MickFoley1981]

I diversify all trades/investments. The timeframe makes no difference to me. I'd never put all my eggs in one basket. One stock could have a tragic news story come out and tank the sucker.

[RIPunclePhil]

Depends on the mood i'm in or the overall market. For example, I held a fairly large position in ROKU on friday. I don't think it matters too much if you have a close stop.

[HitAndRun1770]

Yes indeedy. Feed the needy

Diversification is GREAT. calms the soul and clears your head

[Abromovich]

Don't really have enough money to "diversify" but I will sometimes split my money two ways into a couple good stocks with GREAT setups