Portfolio Distribution

2. Portfolio Risk Management

Total Exposure Limits

• Maximum total position size: 80% of portfolio
• Single position maximum: 25% of portfolio
• Correlated positions combined: <40% of portfolio
• Reserve minimum: 20% cash for opportunities

Diversification Rules

• Don't concentrate >40% in one sector
• Consider correlation between positions
• Balance long and short exposure when appropriate
• Maintain liquidity for rebalancing

3. Action Determination

Buy Actions

• Bull case won with high confidence
• Current position < target allocation
• Entry zone identified with favorable risk/reward
• Liquidity adequate for execution

Sell Actions

• Bear case won with high confidence
• Current position > target allocation
• Stop loss hit or target reached
• Risk/reward deteriorated

Hold Actions

• Unclear winner or low confidence
• Current allocation within target range
• Waiting for better entry/exit
• Preserving capital for better opportunities

4. Execution Planning

Priority Ordering

• Highest conviction trades first
• Most time-sensitive opportunities
• Rebalancing underweight positions
• Taking profits on overweight positions

Timing Recommendations

• Immediate: High confidence, favorable conditions
• Limit Order: Medium confidence, specific entry target
• Wait: Low confidence or better setup expected
• Scale In/Out: Uncertainty about timing, reduce entry/exit risk

5. Trade Structuring

Entry Strategy

• Single entry: High confidence, clear signal
• Scaled entry: Medium confidence, want better average
• Layered limit orders: Range-bound market
• Market order: Time-sensitive, high urgency

Exit Strategy

• Initial stop loss: Below key support (long) or above resistance (short)
• First target: 1.5-2R (risk units)
• Second target: Major resistance/support
• Final: Trailing stop to ride trend

Output Format

{
  "distribution": {
    "allocations": [
      {
        "symbol": "BTC/USDT",
        "action": "buy",
        "current_percentage": 10.0,
        "target_percentage": 18.0,
        "quantity_change": 0.15,
        "entry_range": {"min": 45000, "max": 46000},
        "stop_loss": 43000,
        "targets": [48000, 52000, 55000],
        "reason": "Strong bull case with 0.70 confidence, medium risk, favorable risk/reward"
      },
      {
        "symbol": "ETH/USDT",
        "action": "hold",
        "current_percentage": 15.0,
        "target_percentage": 15.0,
        "reason": "Unclear winner, low confidence, wait for better setup"
      }
    ],
    "total_risk_exposure": 0.65,
    "cash_reserve": 0.35
  },
  "execution_plan": {
    "priority_order": ["BTC/USDT", "ETH/USDT"],
    "timing_recommendation": "immediate",
    "notes": "BTC showing strong bullish momentum, enter on any pullback to 45k-46k range. Set stops below 43k. Scale out at targets."
  },
  "risk_summary": {
    "portfolio_risk": "medium",
    "max_drawdown_estimate": "12%",
    "correlation_warning": "BTC and ETH highly correlated, don't oversize both"
  }
}

Best Practices

1. Never overleverage - Respect maximum position sizes
2. Always define stops - Know your exit before entry
3. Scale positions by conviction - Higher confidence = larger size
4. Consider correlation - Don't concentrate risk
5. Maintain reserves - Keep cash for opportunities
6. Document decisions - Save to /memories/distributions/ for review
7. Review regularly - Rebalance as conditions change
8. Risk first, returns second - Preserve capital above all

Common Mistakes to Avoid

• Over-sizing on high confidence (still need risk limits)
• Ignoring correlation risk
• Taking on too many positions at once
• Forgetting to set stops
• Chasing after moves already made
• Panic selling on temporary drawdowns
• Revenge trading after losses