Determine the overall risk level and expected return of your portfolio based on your own goals and risk appetite.

(a) When choosing a stock or options trade, first consider your total capital. Regardless of whether the amount of money is large or small, investment portfolios require different strategies.

(b) Intraday options trading is conducted in both small and large amounts and carries a high level of risk. When you have 1L, an average investor can trade options with a small capital (<Rs30k) and only use 30% of the total capital for trading.

Investment Diversification

Diversification is an important strategy for reducing risk.

By investing your money in different asset classes (such as stocks, bonds, real estate, etc.) and in different industries, you can reduce the impact of the risk of a specific asset or industry on your overall portfolio.

Some people like to buy a stock, but only hold one stock at a certain stage. They think it will be very exciting when it rises and the returns will be high, but if it falls, the retracement will be huge. Therefore, if the holdings are too concentrated, the risk is very high.

It is also not advisable if the portfolio you hold is too diversified (e.g. you have 20 portfolios). While the risk is spread, sometimes it’s easy to miss opportunities when tracking because of the larger numbers.

This results in low capital utilization. We advocate moderate diversification of investment portfolios.

One of our commonly used portfolio structures is the “3331” structure.

 If your funds are less than 10L, it is recommended to hold three investment portfolios, each holding 30% of the funds. Then leave 10% of the cash, which can be used for T-shaped transactions.

If the operation is skillful, this 10% of the funds can be used 9 times a day, which is equivalent to leveraging 900,000 of funds with 100,000. The capital utilization rate is very high.

Asset allocation: Determine the proportion of different asset classes in the investment portfolio based on your own goals and risk tolerance. Generally speaking, stock assets have higher risks and returns, while bond assets are relatively stable. Depending on personal circumstances and market environment, the weights of different asset classes can be appropriately adjusted.

Continuous learning and monitoring: An investment portfolio is a dynamic process that requires continuous learning and monitoring of market conditions and the performance of investment products. Regularly evaluate your portfolio performance and make adjustments based on market changes and personal needs.

I hope you will check your investment portfolios. When your capital is less than 10L, I hope your portfolio will not exceed 5. When your portfolio exceeds 5, you don’t have the time and energy to observe the trend of each stock, and you don’t know when to invest, take profit and stop loss.