There are two typical ways to choose varieties. One is to cover all varieties, that is, to give up actively choosing varieties and passively accept the trend or big fluctuation of any one variety; The other is to choose varieties, that is, actively choose varieties, actively predict that a certain variety or a few varieties will have a trend market or a big fluctuation market, and then try to seize the market.
If the practice of covering all varieties is extreme, theoretically all varieties with good turnover should participate. For example, varieties with a daily turnover of more than 50,000 lots must participate. As far as 40 domestic varieties are concerned, about 30 varieties have a daily turnover of more than 50,000 lots. In addition, it can be stipulated that any originally inactive variety can participate as long as the average daily turnover of 10 trading day is above 50,000 lots. The advantage of this full-variety coverage is that you can catch any variety when there is a market. After diversified hedging, the withdrawal of the whole account will be less and the ability to resist risks will be improved. The disadvantage is that there are not many positions held by star varieties, and the profit of a single star variety is less, and the yield of the whole account will not be too high, unless most varieties have a trend market or a big fluctuation market.
If the practice of selecting varieties is extreme, only one or two varieties are selected, and then switch to other varieties after the phased market of these two varieties is completed. The advantage of only doing one or two varieties is that the rate of return is high when catching up with a wave of market conditions, and the disadvantage is that the risk of centralized positions is relatively large. In addition, more time and energy are needed to analyze and study the selected varieties (macro analysis or fundamental analysis, or technical analysis). If the level of analysis and prediction is too poor, the wrong choice and judgment may lead to huge losses.
There is also a simplified version of full variety coverage, which covers the whole system instead of the whole variety, that is, there are only 1-2 varieties in a system (or similar), but each system must have varieties. Precious metals, for example, chose silver and gave up gold. For example, the black series is rebar and coke, and you can give up iron ore, coking coal and thermal coal. The advantage of the simplified version is that it is easy to operate and small funds are involved.
There is also an expanded version of the selected varieties, that is, to make about 5 varieties, the position of a single variety will drop, and as much overall participation as possible will form a hedge in a certain sense and reduce the risk of the whole account. But also reduce the cost of making mistakes. For example, if you choose two varieties and misjudge one, you may not make any money in a year, and the process is difficult to manage. If you choose five varieties, even if you misjudge one or two, because the other varieties are all right, the process management will be more calm and it will be easier to achieve positive results.
From a practical point of view, the whole variety coverage is more suitable for systematic trading and procedural trading, while the selected varieties are more suitable for subjective trading. Of course, programmed trading can also choose varieties, such as strategic programming, selecting varieties, setting trading ideas, and matching a set or a set of specific strategies to complete the trading process, or if a strategy is better applied to a few varieties, just do these varieties. In addition, subjective trading can theoretically cover all varieties, as long as traders can manage it, ordinary people or ordinary investment institutions can't. Whether it is analysis and research, pre-judgment and tracking, or watching feedback, there may be insufficient energy and ability.