Diversification for Traders — Not Just for Investors
7/6/2026
risk-management
guide
Diversification for a trader = uncorrelated POSITIONS and setups, not owning 50 random stocks.
Level by level
Beginner
Three longs in three private banks is ONE trade wearing three costumes — sector correlation makes them fall together.
Intermediate
Cap total open risk (say 3-4 percent across all positions) and cap per-sector exposure; correlation spikes toward 1 exactly when markets crash.
Advanced
Real diversification comes from strategy types (trend + mean-reversion), timeframes and asset classes; return streams that don't rhyme smooth the equity curve more than more tickers do.
Common mistakes
- Counting 3 same-sector positions as diversified
- Adding positions without adding up total open risk
Practise & tools
_Educational content only — not financial advice. Historical behaviour never guarantees future results._
Keep learning — free tools