Adrian Reid explains how to align your trading systems with clear investment objectives. Write down your goals, then continuously adjust your system allocations to match them. If your objective limits you to 100 positions, estimate total positions from your system mix and monitor that number as you rebalance.
How do we make sure our capital allocation reflects our objectives? Write down your objectives. When you've got your objectives written down as you're stepping through the capital allocation, where you're saying, let's increase the percentage, let's decrease the percentage of this system, and then you do to the next one, then you do it to the next one. As you're going through that process of adjusting the allocation to each system, every time you make a change, you look at your objectives, you look at the system mix and you look at the outputs and you say, all right, is this all matching my objectives? And if your objective is to say, look, I really don't want to manage more than a hundred positions, because any more than that I'm just going to go bonkers with the admin, I just don't want to do it. You need to have a look at the systems you're allocating to and then figure out how many total positions you might be holding in your portfolio with that mix of systems. I'm not saying you should have a maximum number of positions you want to hold, but I'm just saying if that was one of your objectives, you just need to know what it is and then monitor those as you're going through the capital allocation process and everyone's will be different. So the only way you can really help yourself is to get clear on your objectives, write them down, really challenge them, and then monitor those objectives as you're going through the capital allocation process.
Sam.
