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In the world of trading, especially when it comes to stocks, there is always a persistent and bugging question as to whether you should diversify your capital or just find the BEST of the BEST stock and go all in with your money. By going all in I literally mean using every dollar at your disposal to buy the stock you think has the best chance to win.
All-In one stock at a time:
Pros
Cons
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 to be applied.
Each method has its purposes and we even have a full article on the benefits of diversification that you can read here.
Here are a couple of threads on the Elite Traders forum about diversifying:
Do you diversify as a swing trader given commission fees etc?
How do you diversify your trades?
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
- Requires a lot of "testicular fortitude" to stand strong in positions when your account size grows to a "decent size"
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 to be applied.
Each method has its purposes and we even have a full article on the benefits of diversification that you can read here.
Here are a couple of threads on the Elite Traders forum about diversifying:
Do you diversify as a swing trader given commission fees etc?
How do you diversify your trades?