Diversification 101
I’m Meta Matt, Director of Education and welcome to PB University LITE! This is a 50 Class Trading 101 Series geared towards both new and veteran traders alike! We go over everything from Trading Psychology, Technical Analysis, and Options Trading to Commodity Trading, Forex, and more!! This 50 Class series is not designed be taken in order, it is instead designed for traders to browse and pick which classes interest them. I will include the list of classes at the bottom of this page.
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Now I know what you’re thinking, “can't I just put all my money into that hot new tech stock, meme coin, or NFT and watch my money grow?" Well, you can, but what happens if that one trade doesn’t work out, and you don’t have an exit strategy?
Diversification is the practice of spreading investments across a variety of different stocks, sectors, and asset classes. The idea behind this is to minimize risk. By diversifying your portfolio, you reduce the likelihood that if one sector, stock, or asset takes a huge hit, your portfolio won’t be destroyed in the process. If you were to invest all of your money into just one stock, and that stock performed poorly, that means your portfolio performs poorly. If you spread your portfolio between multiple stocks somewhat evenly, and one stock does poorly, your portfolio will still be okay, as long as the majority of the other stocks are doing ok. It’s why they say don’t go all in on black, or don’t put all your eggs in one basket.
In the same sense, let’s say you are all in on Crypto and the Crypto Market Crashes. Your portfolio won’t be looking too good. Same with Stocks or NFTs, if your trading portfolio is all in on one asset class, you are risking big losses if that Market Crashes, which is risky especially with volatile markets such as crypto, and unregulated ones like NFTs. Keep in mind the risk factor of your investments when diversifying.
If you want to limit risks, it’s recommended to invest more of your portfolio into Blue Chip Stocks, safer crypto like Bitcoin or Ethereum, or trusted NFTs such as Pudgy Penguins. If you are looking for higher rewards, and more risk, you can try going heavier in Penny stocks, Meme Coins, and Degen NFTs. I personally do a little bit of both, but I diversify my portfolio according to the Market and My Risk Levels.
In summary, diversification is a key element of risk management in investing. By spreading your investments across different stocks, sectors, and asset classes, you can minimize risk and achieve more stable returns. Create a Trading Plan that works for you!!
PB University LITE Class List
1) Trading Terminology
2) Stock Market Indices
3) Common, Preferred, and Penny Stocks
4) Diversification of Assets
5) Fundamental Analysis Made Easy
6) Technical Analysis Made Easy
7) Risk Management In The Market
8) Portfolio Management
9) How To Follow Market News
10) Trading Psychology
11) Options Explained
12) The Greeks In Options Trading
13) How To Short Sell Options
14) Covered CALLS
15) Spread Trading
16) Online Brokers for Options Trading
17) Implied Volatility Calculators & Tools
18) Protective PUTS
19) Iron Condors
20) Straddles
21) Reading Level 2
22) Taxes
23) Trading Psychology Techniques
24) The Art Of Trading
25) Becoming A Jedi In The Stock Market
26) Futures Trading Explained
27) Commodity Trading 101
28) Regulatory Environments
29) How To Become A Millionaire
30) $100K In 100 Days
31) Wash Sale Rule
32) Behavioral Finance Part 1
33) Behavioral Finance Part 2
34) 5 Charting Indicators
35) Fair Value Gap
36) Insider Trading and Market Manipulation
37) Stock Chart Types
38) Moving Averages 101
39) Base vs Precious Metals
40) Electricity Trading 101
41) Trading Brokers 101
42) 5 Trading Strategies
43) 85% Trading Rule
44) Are Win Rates A Scam?
45) Futures Trading 101
46) ATR Indicator Strategy With The Greeks
47) MACD Indicator 101
48) Bollinger Bands Indicator 101
49) Wedges, Triangles, Flags and Pennants
50) RSI Divergence 101
