Can And Should You Diversify Your Positions
The first you need to ensure that you are following the 10% of your account max loss rule. This rule states that the max loss of one single trade should not exceed 10% of your account size. However, if you aren't comfortable with 10% then use less. I personally use 5% of my account per trade because I am not a fan of risk.
However, when it comes down to have much of your account should be in trades, that is a personal preference based on your risk tolerance level.
Here's what I personally do
- 20-40% of my account in correlated trades (assets that move together)
- 10-30% of my account in uncorrelated trades (assets that do the opposite)
- 40-70% of my account in cash (to have a cushion to reinvest if you lose)
You should diversify your positions or size down if are uncomfortable with the risk being taken.