To get started you will enter the same positions the model portfolio is holding and make each position replicate the current percent holding of the portfolio. For instance, if the model portfolio position #1 is equal to 33% of the portfolio value, then your position #1 should be 33% of the capital you’ve allocated to this strategy. Below you will find two tools that will make this very easy to figure out.
When you set up your ETF Sector Portfolio this way it will follow the performance of the model portfolio. Note, there will be some discrepancies in your performance vs. the model’s dues to slippage and commissions.
Below you will find the real-time model portfolio allocation, and the exact number of shares (for a sample $5000 portfolio) you need to buy at any given time in order for your portfolio to replicate the day to day performance of the model.
If you are trading a portfolio that is larger or smaller than $5,000 we have created a calculator as part of your “Trade Tracking Tool” which will allow you to enter your desired portfolio size, and be given your exact position sizes. You’ll find instructions to download your Trade Tracking Tool on this page.
Alternatively, you can determine the number of shares to buy by multiplying the recommended number of shares by the multiple of your portfolio size relative to the $5,000. For instance, if you are trading a $10,000 portfolio, you would take the recommended number of shares and multiply by two ($10,000 = $5,000 x 2). For a $20,000 portfolio you would take the recommended number of shares and multiply by four ($20,000 = $5,000 x 4). For a smaller portfolio, like $2500, you would take the shares and divide them in half ($2,500 = $5,000 / 2).
Since the trades are already in progress, your entry price will be different from the model and your stops or targets could be closer or further away than the original model position, but what is important is that your real-time portfolio performance should very closely replicate the published results.
When you start a portfolio you DO NOT focus on the “% of Original Position” column which you may have seen in the model’s Open Positions table on another page. When you start a new portfolio the important relationship is each positions value as a percentage of the portfolio. This allows you to start a portfolio and follow the performance of the model regardless of where the trades are setup or what the recent market action has done.
At times, some of the portfolios might have a position in “cash” or have already reached multiple targets and have very little exposure to a position left. The real-time portfolio position sizing recommendations take these factors into consideration when showing the recommended share totals.
Once you have established your initial portfolio sizes and positions, you can continue to track the current positions and follow along with the stops, targets, and trade updates in the “Model Portfolio” section of the member area.
Below are the real-time calculations for starting a portfolio in any of the three models. Below this table you’ll find a more detailed explanation of how to use it.
Strategy and Money Management Considerations
The ETF models are dynamic, on-going models. While there are rules, like selling 1/3rd of a position at the first profit target, it can often be complicated to figure out the current real-time position allocation, particularly if many of the positions have moved significantly from our entry point or have reached multiple profit targets.
The “Real-Time Portfolio Allocation & Setup” calculator (above) looks at the real-time allocation of the portfolio and calculates a percentage of the total for each position as well as cash for the models that use profit targets or stops. You can then use this percentage to calculate the number of shares for each position for a portfolio of any size. The website provides a sample allocation based on $5,000 and you can easily calculate multiples of that amount for any custom-sized portfolio.