Portfolio Allocation & P/L Charting Program/Website

[Mikael 31]

I went over some of the basics and it seems SO never have more than 6 trades open. Essentially 40% of the portfolio is pretty much free. 

 

Can i allocate the 40% to ETFs instead of having it as cash? Will that affect my margin or purchasing power? I'm with IB right now. Are you guys keeping it as cash or do you hold some other investments?

 

Also, is there any program or website that would chart out the P/L of a trade and show some basic stats like probability of touching etc.? 

 

Thanks!

Edited April 13, 2013 by Mikael

[Kim 8,042]

I would still keep at least 20% in cash. Sometimes we might have more than 6 positions for a short period of time, sometimes we need to make an adjustment.

 

Your broker should provide some charting tools.

[indiana*josh 59]

Thinkorswim has some good P/L charting tools.  I created a paper-trading account with them so I could use their software - it's free.  I do my actual trading at IB.

[Mikael 31]

Good to know. I stil haven't figured out IBs trader station yet haha. I was just using the super simple web based platform with ITrade before haha.

[cwelsh 1,576]

There are times we have higher portfolio allocation, but I try to stay around the 50% level for when opportunities present themselves.  During the earnings periods, there are times I've been close to 100% in.

 

Just looking over the last earnings cycle (not the one we're entering now), the most invested i was was actually 118% (e.g. margin), here's how the breakdown went:

 

1.  Earnings straddles (70% -- and they ranged from needing to be closed in 1 day to 6 days);

2.  ATM RICs to hold through earnings (20%% -- dont trade this if you don't understand the risk);

3.  GLD/GVZ trade (10% -- despite this being profitable 3/3 times for me, I'm done with it -- see my GVZ post from today);

4.  VXX puts (18% -- I increased this as my earnings straddles grew).

 

Of course, seven days later, I was down to only one trade -- a 10% VXX put position.

[Mikael 31]

okay good to know. i thought it didn't make much sense to have constantly 30-40% of the portfolio sitting as cash. but i guess it would be wise to have a bit more liquidity around earning seasons.