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How to Balance Your Forex Investment Portfolio

From whom to copy more efficient transactions? From a trader with a high performance 2 months a year, but has a positive balance at the end of the year, or from a trader with a small but stable income throughout the year? Balancing an investment portfolio under the investor’s objectives allows the investor to reduce potential risks and increase potential earnings. Read on and you will know what balancing methods exist and what you should take into account when choosing a trader to copy Forex transactions.

Many times we have talked in previous articles about what is copying of transactions in the currency market. Today I’m going to try to talk to you about how and under what criteria choose traders to make their investment portfolio as balanced and optimized as possible in terms of risk and profitability.

Optimising Risk and Profitability

The greater the potential benefit, the greater the risk of loss. A strategy, involving the opening of 2 operations per week (conventionally) is riskier than the strategy with 10 operations per week with the same weekly profit. The first one saves time, though.

Before you start building your balanced investment portfolio, answer the following questions:

What’s more important to you, low risk or maximum benefit?

Do you prefer a strategy with a quick one-off profit, but with high risk or a stable income with low risk, but slower? What is more important to you, save time but risk or spend more time but with less risk of loss?

There are two approaches to optimising the investment portfolio:

“Don’t put all the eggs in a basket”. Create a balanced investment portfolio. Most of the assets here are financial assets with an average yield level and moderate volatility, their portfolio share can reach 60%-80%. Assets whose price is less dependent on Forex market fluctuations and key factors prevail. The rest comes from conservative and high-risk/high-yield instruments. For example, cryptocurrencies and refuge assets (gold/US treasury bonds).

“Put all the eggs in a basket, but take care of the basket itself”. Creating multiple portfolios: venture capital, with a high level of risk, for those who are willing to risk money painlessly, but dream of big quick wins. Or several conservative portfolios, for investors interested in lower risk and a stable long-term income. Similar approaches can be applied when creating an investment portfolio when copying transactions.

Criteria for Balancing

The basic criteria for balancing and optimizing the portfolio of traders are:

Level of profitability of the trader. Traders who show very high profitability in financial markets tend to use Martingale and other high-risk trading strategies. The following screen shows the radical difference in profitability levels in the last 4 months.

Type of strategy used. Traders are unwilling to disclose the strategy they applied, but it could be partially deciphered by the nature of equity. Learn more about it and evaluate the effectiveness of the strategy here.

The volume of the trader’s own assets. The higher the amount of the trader deposit, the more likely you will be to trade cautiously.

Frequency of Transactions

How to optimise the risks of an investment portfolio:

  1. Compare the requirements of the trading strategy of the trader with its capabilities.

This is the deposit amount used for leverage/volume of position, etc. If your deposit is USD 100, the trader deposit you copy is USD 1000. Thus, the trader can withstand a big downsizing, while their trades will close under stop out. The same applies to the volume of the position. If you use leverage, place a large volume of trades, your positions could close earlier under a stop out.

Council. If your deposit differs greatly from the deposit of your trader manager, change the type of copy trading, set the parameter “Proportionally to my funds” or “% of the volume of each transaction”. The second option is much more convenient if you are copying the transactions of multiple traders simultaneously. Consider the minimum amount of investment specified by the trader.

  1. Diversify traders’ strategies according to the following criteria:

Profitability and risk. These parameters are commonly inversely correlated, but not always. If you look at a return of 100%-200%-500% per month, keep in mind that it can only be once. (“Good luck”, otherwise, everyone would already be millionaires). But if the trader can get such a return again, you are lucky to find such a trader!

Stable earnings are important. The low performance of a trader does not mean low risks, it may indicate a lack of professionalism. And vice versa, a stable high income does not always mean high risk but speaks of a professional trader.

Amount and time of open transactions. Select traders and strategies so that you do not create a simultaneous deposit charge. In other words, operations according to different strategies must be opened at different times (for example, in different negotiation sessions) and not simultaneously.

Type of strategy. Add long-term and short-term strategies to your portfolio simultaneously.

Instruments. Add to your investment portfolio traders trading not only currency pairs but also other types of assets, such as stocks or commodities.

  1. Pay attention to the following parameters:

Trader Commission. The first trader with an average return of 100% per month charges a 50% commission. The second trader has a return of 70%, but a commission of 20%. What would be the risk? Undoubtedly, the second option is rather more profitable.

Account Life. In a perfect situation, the account of the trader you want to copy should have existed for at least one year. There must be no interruptions in trading on this account.

Maximum reduction over the lifetime of the account and reductions over individual periods. A prolonged reduction means that it does not work in a stable way.

Performance stability every month. The greater the difference between monthly performance, the less stable the strategy and the greater the risk.

The number of people who copy the signals from the trader. The more investors, the better. The total amount of money in the accounts of copying investors is also important. But we must always bear in mind that all investors do not have a sensible approach to selecting a trader. There can be a lot of copying investors because the trader’s commission is low and profitability is high (i.e., high risks).

Frequency of deposits that a trader makes. If the trader gradually increases trading volumes, it means that he has confidence and a serious spirit of success.

And finally, one more tip. No strategy can be profitable forever. If a trader changes strategy, approaches trading or even takes a break, it will have a direct impact on the structure of the investment portfolio. If you notice a further reduction in deposits, a sharp drop in profitability, or another sign of stability, rebalance your portfolio.


There is no perfect investment strategy on how to create an optimally balanced investment portfolio, but there are ways to optimize your portfolio according to your personality, objectives, and risk. It’s up to you!