Monday, June 28, 2010

Portfolio Mgmt

Here are some of the rough guidelines that I'm working off of right now. No more than 50% maintenance margin. This gives me plenty of room to manage around volatile moves in my positions and plenty of additional buying power. So obviously the goal is to make a decent return off the whole portfolio but only normally using 50% of the buying power. I don't exactly have a monthly or yearly percentage return target right now. I'm kind of just trying to focus on individual good trade set ups. For the time being I'm sticking with a risk limit of 1% of trading capital per position on defined risk trades. On undefined trades like naked calls I will have to have stated exit points that should correlate to a maximum loss of 1% of capital as well. I have set a total risk threshold of 5% loss of capital in any one month, and no more than 10 positions at a time. This means that should I have 10 positions that they can't all be the same direction as that would possibly allow for a 10% loss. A worse case scenario should be that all five of any one direction move so quickly that I can't exit, repair, roll, etc. And even this worse case scenario of a total 5% loss in 5 different names shouldn't happen as if this were to occur, the opposing directional plays should make some profit. Below are the quantity of my current directional positions. This is roughly the type of construction I'm going to seek out each month as I continue to learn overall portfolio mgmt skills and see what kind of adjustments I need to make. To be honest, right now with so many defined risk trades and the undefined ones having stated exit points, I'm not too concerned with greek mgmt.

Bearish (4)
Bullish (3)
Neutral (2)

1 comment: