Or...... sell the out-performers (who may be unlikely to keep up that burning pace) and keep the laggards (who likewise may be more likely to pick up the pace.....) "Dogs Of The Dow" anyone?? If the general thesis of the stock has not been violated (X, DE, JNJ, and GE if/when it breaches $12, would very much catch my eye....), I'm a seller of the stars, and a buyer of the doggies.
Why close a position at all that has got so far into profit that it is now risk-free? Take that one completely out of your balance judgement. In fact, if its still trending in your direction, add to it. We're here to make money after all. You can't make too much of it.
What ill What will that capital do tomorrow? That's all that matters. Not what it made, or lost[!!], yesterday.
I’ve been eyeing this book myself. Perhaps it might have some relevance. Portfolio management is something I lack in for sure. I keep my investments separate from trading but my investments are purely just indexing and keep thinking I can probably do a bit better with a bit of work and education on the topic. The author post here under globalartrader I think is the name.
Personally - I have re-balanced a commercial book (forward supply or demand hedges) but never a spec book with the exception of an imminent futures expiry. But by and large, positions either get stopped out or they hit their profit target. On rare occasion, I have gotten out of positions that simply were not doing anything much literally. In other words, for example I might be set up for a short and the position is just bouncing around in a confined trading range for several weeks - maybe months. In that rather unique circumstance I get out of it altogether as the original premise for taking the trade appears no longer valid.
@luisHK you may want to read these articles on rebalancing. It gives an overview of some of the research about this topic. And contains links to more material: https://alphaarchitect.com/2017/03/23/do-you-rebalance-your-portfolio-you-are-a-market-timer/ https://alphaarchitect.com/2017/05/31/destabilizing-rebalancing/ I myself only do rebalancing if a certain threshold has been crossed. For example: if the portfolio is more than 10% out of balance. Using a threshold helps to reduce the trading costs.
I agree with that. But what I'm referring to is the context of the OP - an automatic calendar-driven re-balancing of everything he has in his portfolio, let's say monthly, or let's say annually. What I say is any position which has become free of risk to account capital should be excluded from this exercise - out in a separate portfolio if you will. But of course each member of the "B-team" will have to justify their place - but on an on-going not calendar-driven basis.
There is no need for any re-balancing if you start out correctly in the first place and that is -That you have valid Fundamentals in place to secure the Emerging Markets as of Very Good Support & Resistance Levels and that these Fundamentals are supported by Very Good Foundations & Structure which exists - & only by knowing what the chart is conveying to you over periods of several years at performance history at the least. - By having a look back at present data. Will you be secured a good working relationship with any Derivative that you will decide to trade against.