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The benefit of an Automated Trading System Portfolio

Updated: Sep 5, 2018

An automated trading system portfolio is a set of different automated trading systems attached to your trading account or accounts. The benefit of this is Diversification.

You would have no doubt heard of diversification when it comes to stock trading. It's best not to have all your eggs in one basket. It's the same with trading systems... there are so many different ways to make money trading the financial markets and by having a collection of trading systems working in different ways across different instruments will ensure that in the event of any scenario, you won't lose all your funds.


Diversification is a risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio constructed of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. From Investopedia

There are all types of trading systems available in the algo trading system marketplace.. some are very simple, some very sophisticated, others work in trending markets and some in ranging markets. The point is, the markets across different instruments change all the type... it's like they have personalities, they may not move much for a few weeks, then they have have massive moves. They may be caught between small ranges or large ranges. There are no trading systems which work across all market conditions which is why you need to diversify.


Personally, my automated trading system portfolio consists of around 80% funds in stable, low drawdown growth systems across a variety of different forex pairs. The 20% remaining I split further into a variety of super aggressive scalping systems. These systems can return a phenomenal return but there is a huge probability every week that you may lose everything in the account. However, if you have a money management strategy, you can still make money from this. I'll post something in a future article about some money management techniques.


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