Creating a new portfolio

[Greg Campbell]

Before creating a new portfolio you should enter your standard brokerage rate and applicable GST. Under the Options menu of the IntellEdgence software choose <Brokerage>, enter your brokerage and GST and <Save>. This needs to be done because the brokerage is taken into account in the calculation of your position sizes.

Now from the IntellEdgence Menu List choose File and New Portfolio.

After you have keyed in a name, initial capital that you wish to commit to a portfolio and date of the capital injection you will be required to provide a Max % risk per trade. This MAX % relates to your total portfolio capital (e.g. if you have a $200,000 Portfolio Value and you have entered 1.7% into this field, it means that your risk profile is such that you accept a risk of 1.7% of the $200,000 portfolio value for every trade that you take.

This equates to 12 positions and $3400 risk for every trade which includes the brokerage costs for buying and selling. This is a very important field as it is the primary field for calculating position sizes and the application of the money management and risk management rules for the IntellEdgence methodology.

The table below is what you should use to determine your ideal max % risk for the amount of capital you have committed to a portfolio.

Capital  Max % Risk    Positions
25000    3.5               6
50000    2.98             7
75000    2.58             8
100000  2.06            10
125000  1.87            11
150000  1.7              12
175000  1.7              12
200000  1.7              12
225000  1.69            12
250000  1.56            13
275000  1.56            13
300000  1.56            13
325000  1.44            14
350000  1.44            14
375000  1.44            14
400000  1.34            15
425000  1.34            15
450000  1.34            15
475000  1.26            16
500000  1.26            16

Once the max % risk field is entered the program will calculate and display:

Avg no of open trades

Avg Position size  $

Average Position size %

Do not concern yourself if the Avg no of open trades is not an even number as it represents an average. In practice the actual number of positions in your portfolio will vary depending on a number of factors which are explained below.

Every IntellEdgence trade has a Trailing Stop Loss (exit protection point) which is calculated at the start of the trade and then updated at various stages (but not daily) as the trade progresses. At the start of the trade the difference between the Buy Price and the Trailing Stop Loss plus the brokerage and GST costs for buying and selling the shares, is the effective amount that is being put at risk. Because IntellEdgence is a MECHANICAL methodology it is possible to measure the actual difference between the buy price and the Trailing Stop Loss across all the IntellEdgence trades that make up the IntellEdgence edge.

Other factors that the IntellEdgence Portfolio Management software uses to calculate a position size include market risk, volatility risk and fundamental (eg. historical balance sheet soundness) factors. If you wish, choose <Options>, <Change Risk Profile> to view these factors.

[Bruce Jacobson]

 
 Greg
Re the new portfolio forum entry - I notice there is a constant of 21 (positions*risk%) based on portfolio size. I'm currently utilising 10 positions and 1.5% risk giving a constant of 15. Just wondering - is this strategy unusually cautious, bearing in mind the $350k portfolio mentioned in the weekly updates uses 1%risk?
Regards,
BJ

[Greg Campbell]

Hi Bruce

Yes this is conservative. The table lists the ideal max % and risk positions from our latest research.

You should consider changing according to the new findings.

Regards
Greg

[Bruce Jacobson]

 
  Greg
Thanks for the clarification.
As I'm just setting up a trial portfolio of $25k for now I'll stick to my 10 positions to avoid complications and increase risk to 2% in light of your research.
Thanks again,
BJ

[Pat Sheridan]

After setting up the new portfolio, inserting the risk factor and broker costs for each transaction I would like some information on how to actually populate the new portfolio.
Currently there are 3 buys and one accumulate in the Intelledgence alerts, is the idea to include all the buys in the startup portfolio and add more as they are added to the alerts or are the buys to be added at my discretion until I have populated my new portfolio with +/- 10 stocks within a $ 100,000 portfolio.

I want to make sure that I set up my portfolio the correct way to gain the benefits of the Intelledgence system, any advice would be appreciated.

Thanks

[Pat Sheridan]

After setting up the new portfolio, inserting the risk factor and broker costs for each transaction I would like some information on how to actually populate the new portfolio.
Currently there are 3 buys and one accumulate in the Intelledgence alerts, is the idea to include all the buys in the startup portfolio and add more as they are added to the alerts or are the buys to be added at my discretion until I have populated my new portfolio with +/- 10 stocks within a $ 100,000 portfolio.

I want to make sure that I set up my portfolio the correct way to gain the benefits of the Intelledgence system, any advice would be appreciated.

Thanks

[Pat Sheridan]

I am new to Intelledgence, I am setting up my first portfolio and have added the risk factor before setting up or purchasing stocks.
I am not sure how to purchase or add stock picks, do I immediately add the current buy or accumulate recommendations or is the idea to pick my choices out of these current buy / accumulate recommendations until I fill my portfolio with my preferred stock picks.

I would like to use the Intelledgence system to its full advantage so I would like to get started correctly.

I would appreciate any advice as I would like to get started.

Thanks

[Fiona]

I am relatively new to Intelledgence as well.  I understand that you can use both BUY and ACCUMULATE signals to begin a new portfolio.  If you use both, you will populate your portfolio faster than if you just use BUY signals.  But if you would like to enter more slowly you could just use BUY signals.  It's up to you.  Once your portfolio is invested, you'll use whatever signal occurs, and if your time frame is over many years, maybe it doesn't make much difference how you enter at this stage.