Creating Portfolio for All Market Phases

In financial markets, the portfolio is a bundle of investments that includes every type of asset.  Each asset is weighed in terms of its presence in the market. 

A portfolio due to its diversification and asset allocation is subject to systematic risk. This means it affects the entire market. 

The concept of portfolio plays an essential role in determining many financial theories and models. One such model is the capital asset pricing model or CAPM. The CAPM shows what the expected return of an asset would be based on its systematic risk. 

With that said, let’s move to how you can create a portfolio for all market phases. 

But first, what are market phases?

In CFD and other financial markets, a market goes through. It rises, peaks, dips, and bottoms out. This is known as market phases or market cycles. When one phase is over, the next one starts. 

If you want maximum returns on your investments, you have to know these phases. 

How to create a portfolio for all market phases?

1. Asset Allocation

Asset allocation means selecting assets that favour your current financial situation and tolerating risks.  

Creating Portfolio for All Market Phases

Assessing your financial situation and how much time you will take to reach your investment goals is the fundamental step in creating a portfolio.

Factors like age and your invested capital are key in determining asset allocation. An unemployed 25-year old will have a different investment approach than a wealthy 60-year old. 

The next thing for asset allocation is risk tolerance and your personality. Generally, if your risk tolerance is higher, your portfolio will be aggressive. On the contrary, if your risk tolerance is less, then your portfolio will be conservative. 

In simple words, a conservative investor keeps a bird in hand while an aggressive investor looks for two in the bush.  

You need to understand that your risk tolerance depends on your personality. If you are a single person with a stable income, you can take higher risks. But if you are a person with a family and low income, you shouldn’t take many risks. 

2. Investment Options

Once you determined the asset allocation, the next step in creating a portfolio is investment options. Generally, this is not difficult. If you want to invest in Forex, stocks, or bonds, go ahead. It all depends on your choice. FP Markets is one of the most popular Regulated Forex Brokers in the world.

3. Analyzing Portfolio

Creating a portfolio doesn’t stop with asset allocation and investment options; you need to analyze your portfolio also. 

As we mentioned above, the market rises and falls. This can cause an alteration in your investments.  If one of your investments is not giving positive returns, you may want to change your investment options. 

For example, if you bought EUR/USD and it is in a downtrend. Your asset allocation shows that you need to sell it, then you need to adjust your portfolio accordingly. 


Creating a portfolio for all market phases isn’t complicated. You just have to remember about diversification. 

Don’t put all your eggs in one basket. Diversify your investments so that you can create a profitable portfolio. 

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