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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (30481)	2/21/2002 11:45:15 AM
From: Todd Reichardt	Respond to of 52237

Hi Chris, I think it makes a lot of sense to “diversify” your trading strategies and suspect this may be an area where the common knowledge (i.e. get really good at one strategy) may be perfect for the commoner. If you can rise above that level, the diversification has a lot to offer. Thinking of strategies from a modern portfolio theory angle, if you can add strategies that are negatively correlated with your current strategies, you can both improve returns and lower risk. The lower the correlation the new strategy has with what you already have, the better the potential. Determining the correlation isn’t easy, but I think your thoughts on diversifying over different timeframes should tend to lower correlation of the strategies. Take a look at this article: thehfa.org It talks about hedge funds and the advantage of fund of funds. It kind of hits both sides of the specialize in one strategy vs. diversify over several, as the hedge fund managers tend to be specialists, while the fund of funds takes advantage of the diversification. Todd