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Portfolio Diversification with Stephen Vettorel

Stephen Vettorel was thrown into managing a portfolio when his father passed away while he was in college. Throughout the learning process, he noticed that “buy and hold” and “be diversified” wasn’t how portfolio managers were running their personal accounts. Stephen thought he needed to learn technical analysis and individual trading. So he spent a lot of time trading in the 2000s and built out his own system. He wanted a deeper knowledge of trading.

Over the next years, he was mentored in modern portfolio theory, auction market theory, and technical analysis. He learned how to chart, aggregate, and manage order flow. In 2012, Stephen started coaching at a small coaching company, FXES trader, mentoring other traders in futures. He attracted the attention of Investopedia and was put in the running for the ‘Top 100 Financial Advisors’ award in 2017—and he won.

Stephen is now the Chief Market Strategist at Auvoria Prime, which is about to launch 5 pieces of software with verified track records to help automate trading. In this episode of How To Trade It, Stephen shares his expertise from his years working at many big-name firms. Don’t miss it!

How important is portfolio diversification for a trader? @FXESTrader shares his thoughts in this episode of the How To Trade It podcast! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks #Forex #Futures #Equities Click To Tweet

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You’ll want to hear this episode if you are interested in…

  • [0:57] Stephen’s background in portfolio management
  • [8:52] Take advantage of FREE resources
  • [14:00] Semi-automated systems and algorithms
  • [17:41] What does a good portfolio allocation look like?
  • [20:47] What Stephen is working on right now

Take advantage of FREE resources

Stephen has immersed himself in the financial industry and has had many amazing mentors throughout his career. Most people don’t have that kind of access to professional advice. But Stephen points out that there are people of billionaire status who put great information out into the marketplace on Twitter alone.

If you follow Stephen on Twitter and see who he follows, you’ll see about 110 people who are experts in what they do that bring a wealth of information to the table. At the very least, there is a full degree in trading just on blogs. You have to get out there and dive into the blogs, videos, and Twitter feeds.

Consider semi-automated systems and algorithms

Stephen would rather have a semi-automated system and algorithm running a large part of his portfolio if it’s proven its performance. One year ago he probably spent 20% of his week manually trading equities, futures, or forex. But he can get 15% and 11% drawdowns with some of the software coming out.

He points out that many traders and investors just don’t have the time to learn this stuff. Stephen alone has spent 10,000+ hours on trading education. So it’s great that retail traders have access to software that can do some of the trading actions for you.

The key problem is that most traders only learn to do one thing well, but Stephen emphasizes that diversification is important. He believes you should have a futures account, a forex account, an interactive brokers account—have diversification. Hold equities long-term, hold some for swing-trading. Look at the overall risk of your portfolios. Have a full package of real estate, equity, futures, etc. Diversification will improve overall return and reduce risk.

Why should a trader consider semi-automated systems and algorithms? @FXESTrader shares his take in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks #Forex #Futures Click To Tweet


Diversification and portfolio allocation

Stephen notes that it’s critical that you put a budget together relative to your income. Don’t spend more than your budget allows. You don’t want to overstretch yourself. You need at least $2,000 to set up a Robinhood type of brokerage account or futures account. Forex attracts a lot of investors because you only need $500 to open it, but Stephen would recommend starting with $1,000—and let software trade it for you. It’s a great way to start. If your account does well you can diversify into other areas.

He wouldn’t split the account that’s doing well, but instead, save up and open other accounts to diversify your portfolio. He recommends funding your 401K/403B and always pay yourself first. Then begin to build an equity account and forex account. Start a futures account down the road when you can afford it. Ideally, you want a 401k, a Roth, an equity account, and a Forex account to start. If you’re budgeting and saving you can build up to that.

Trading success takes dedication: do you have it?

For a deeper dive into trading futures, check out the FXES website. They offer a 20-day class on how to trade the futures market. It uses technical analysis, low-risk calculated stops, time and volume-based profiling, micro-level order flow, and more. Stephen shares that the key to success is understanding how all of those factors come together.

But Stephen points out that people need to understand what they’re getting into. You need dedication and willingness to put in the time. You must understand the reality that no matter what system or training you get, it will be hard work. With that being said, Stephen will gladly answer any of your questions about the course—feel free to reach out and check out the amazing resources that they offer.

Trading success takes dedication. What else does it take? Learn more from @FXESTrader in this episode of How To Trade It! #stocks #stock #trading #StockMarket #Investing #DayTrading #StockPicks Click To Tweet


Resources & People Mentioned

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Disclaimer: Trading carries a high level of risk, and may not be suitable for all investors. Before deciding to invest you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment. Therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.