Diversification in trading refers to the practice of spreading investments across various financial instruments, asset classes, or markets to mitigate risk. By holding a mix of assets, traders can reduce the impact of any single investment's poor performance on their overall portfolio. This strategy is built on the premise that different assets often respond differently to market events, which can lead to more stable returns over time. Generally, a well-diversified portfolio can help cushion against market volatility and potential losses while providing exposure to different growth opportunities.
Risk Management