Trading isn't about individual trades — it's about managing your entire portfolio. Most traders focus on individual positions and ignore how they interact. This guide covers how to manage multiple positions, calculate total exposure, and build a balanced portfolio.

Good portfolio management means you understand your total risk across all positions, account for correlation, and maintain proper diversification. Bad portfolio management means you think you're taking 5 separate 1% risks when you're actually taking one 5% risk.

What is portfolio management?

Portfolio management is the process of managing multiple positions as a unified whole. It's about understanding how your positions interact, calculating total exposure, and maintaining proper risk distribution.

Key concepts:

• Total exposure: The sum of all your position sizes
• Capital at risk: How much you can lose across all positions
• Correlation: How positions move together
• Diversification: Spreading risk across different assets

Calculating total exposure

Your total exposure is the sum of all your position sizes, accounting for leverage. If you have 3 positions of $5,000 each, your total exposure is $15,000 — even if you only used $3,000 in margin.

Understanding correlation

Correlation measures how assets move together. High correlation (0.7-1.0) means they move together. Low correlation (0-0.3) means they move independently.

Why this matters: If you have 5 positions that are all highly correlated, you're not taking 5 separate 1% risks — you're taking one 5% risk. They'll all move together.

Diversification vs. concentration

Diversification

Diversification means spreading risk across different assets that don't move together. This reduces your overall risk.

Good diversification:

• Different asset classes (crypto, stocks, commodities)
• Low correlation (assets that move independently)
• Different timeframes or strategies

Concentration

Concentration means putting too much capital into similar positions. This increases your risk.

Common mistakes:

• All positions in crypto (high correlation)
• All positions in the same direction (all longs or all shorts)
• All positions using the same strategy

Position sizing across portfolio

When managing multiple positions, you need to consider:

• Individual position risk: Each position should risk 1-2%
• Total portfolio risk: Total risk across all positions should be manageable
• Correlation adjustment: Reduce position sizes when holding correlated assets

Example: If you have $10,000 and want to hold 5 positions:

• If uncorrelated: Each position can risk 1% (5% total)
• If highly correlated: Each position should risk 0.5-0.7% (2.5-3.5% total)

Managing multiple grids

If you're running multiple grid strategies, you need to calculate total exposure across all grids. Each grid can accumulate significant positions, and if they're all on the same asset or correlated assets, your total exposure can be much higher than expected.

Example: You run 3 grids:

• Grid 1 on BTC: $5,000 potential exposure
• Grid 2 on ETH: $3,000 potential exposure
• Grid 3 on BTC: $4,000 potential exposure

Your total exposure is $12,000, but Grids 1 and 3 are both on BTC, so your BTC exposure is $9,000. If BTC drops significantly, both grids will be affected.

Use our Multi-Sequence Exposure Planner to calculate total exposure across multiple grids.

Portfolio risk limits

Set limits on your total portfolio risk:

• Maximum total exposure: Don't exceed a certain multiple of your account (e.g., 2-3x)
• Maximum capital at risk: Total risk across all positions (e.g., 5-10% of account)
• Maximum positions: Don't hold too many positions at once (harder to manage)
• Maximum correlation: Limit exposure to highly correlated assets

Best practices

Key takeaways

Frequently asked questions

How many positions should I hold at once?

There's no universal answer, but most traders can effectively manage 3-10 positions. Too many positions make it hard to monitor and manage risk. Too few positions mean you're not diversified.

Should I reduce position sizes when holding multiple positions?

Yes, especially if they're correlated. If you normally risk 1% per trade and you have 5 highly correlated positions, consider reducing each to 0.7-0.8% to account for correlation.

How do I know if my positions are correlated?

Most crypto assets are highly correlated (0.7-0.9). BTC and ETH typically move together. Use historical price data or correlation calculators to see how your positions move together. Our Correlation Risk Calculator can help.

What's the difference between total exposure and capital at risk?

Total exposure is the sum of all position sizes. Capital at risk is how much you can actually lose (based on stop losses and risk percentages). If you have $20,000 in total exposure but each position only risks 1%, your capital at risk is much lower.

Should I close all positions if one goes against me?

Not necessarily. Each position should be managed independently based on its own stop loss and risk parameters. However, if you're hitting your portfolio risk limits, you might need to reduce exposure overall.

Tools to help

Use our Capital at Risk Calculator to see total exposure across all positions. Our Correlation Risk Calculator shows how correlation affects your effective exposure, and our Multi-Sequence Exposure Planner helps you manage multiple grid strategies.