In these instances investors are often swept along with the momentum of a rising market, and their risk position is suddenly well in excess of their starting point and, importantly, their intended position.

This can then be closely followed by a loss aversion bias when prices are falling and investors do everything to avoid “taking a loss” and will hold on to assets no matter what the fundamentals.

How can you navigate the sudden and regular price appreciations and falls when taking on risk investments without getting emotional or trying to implement strategies with low probabilities of success?

One of the best ways to manage a portfolio with risk assets is obviously to diversify in order to optimise your risk/return outcomes. This can…