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Author Topic: Why diversification is important & where to trade a variety of instruments?  (Read 2477 times)

jonatrod

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Diversification of investment portfolios is an important factor in realizing long-term financial goals and is used as a way to minimize risk.  The aim is to improve the odds of total returns by entering into a variety of positions in different assets that will individually respond differently to the same event. As the saying goes, don’t place all your eggs in one basket.
 
This could be a number of assets within the same asset class, or a variety of assets from different asset classes.  Typically, a diversified portfolio will spread a trader’s capital across a range of different asset classes, incorporating a mix of high and low volatility instruments, i.e. high and low risk.  For instance, it might include cryptocurrencies and stock indices as the volatile instruments, as well as forex and commodities as the less volatile instruments.

Ideally, you would want to have access to all assets and open positions on the one trading platform, as is possible on PrimeXBT - a bitcoin-based margin trading platform which offers all of the most popular markets in FX, crypto, indices, and commodities. Here you can even go long and short on the same asset at the same time, aka hedging, as another means to reduce risk.

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