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Systematic Trading: A unique new method for designing trading and investing systems by Robert Carver

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Chapter Eleven. Portfolios

Question: What do many traders and amateur investors who buy individual equities rather than invest in collective funds have in common? Answer: They both tend to have too few assets in their portfolios.

Research into individual investors finds many hold less than five shares, whilst traders often only prefer to deal with one or two markets where they feel most expert. So far I haven’t helped solve this problem, since in the last chapter I showed you how to put together a trading subsystem which holds positions in just a single instrument.

But diversification really is the only free lunch in investment. Allocating ...

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