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 11% of the portfolio value, then your position #1 should be 11% 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 Complete 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.
This section below will review the "Real-Time Portfolio Allocation & Setup" calculator (above) and how it can be used with the downloadable trade tracking excel document to help you start a portfolio of any size.
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, however, the trade tracking excel document has a custom calculator for different allocations. Let's walk through that process.
Real-Time Portfolio Allocation & Setup
The image above (minus the red boxes) is what you would find on the “Tools” page in the member area. This image is of the Sector models, but the Country and Complete pages look similar and are customized to each model. The first green column shows what percentage each position is relative to the total portfolio, including any cash. The second green column uses the “Last Price” data to calculate how many shares to buy based on that percentage for a sample $5,000 portfolio.
For some custom-sized portfolios, like $10,000, it can be rather easy to just double the number of shares, but the calculation becomes a little more complicated if it isn't an easy multiple of $5,000. For these cases, we updated our trade tracking Excel document. The update went live last week and you should check the website to make sure you have the latest version.
The red boxes in the image above highlight important data that you will need to put into the spreadsheet for it to work correctly.
We can find the custom calculator on the “Initial Share Calculator” tab in the downloadable spreadsheet (shown above). There is a link to download this spreadsheet at the bottom of this page.
The tan area surrounded by a red box above is where you put in some key data from the website. The information corresponds with the information in the highlighted red boxes found in the first image of this article. Essentially, you need to put in the symbol name, current or last price for each symbol, and the percentage of the portfolio found in the first green column on the website.
Additionally, you need to specify the initial size of your trading portfolio. If you are going to trade a $10,000 portfolio (shown above), you would put 10000 into the area of the calculator circled in red.
Once all of the data has been entered into the spreadsheet, the blue area (with green box around it) will tell you how many shares to buy for each position based on your custom portfolio size. For larger or smaller portfolios, you can just change the total portfolio value as shown in the red circle. Since you cannot buy partial shares, the share values have been rounded to the nearest whole number.
Using any of these tools (website or excel document) can help you establish a portfolio that has essentially the same exposure as the models. The day-to-day fluctuations and moves of any portfolio based on these recommendations will track very closely to the results we publish on the website.
Small adjustments to your portfolio may not be cost effective depending on your costs of trading. Also, it should be noted that you are free to approach the trading models and portfolios however you like. This tool only makes it easier to replicate the published performance of the models, if that is your objective.
While the ETF models can be viewed as a collection of trades, the real strength of the models is in building wealth and value over time. This new tool will help you in constructing a portfolio that consistently tracks the models.
You can keep track of your trades with this simple trade tracking Excel spreadsheet.
The latest version of this spreadsheet was released on Oct. 11th 2016. The name of it is, "ETF Complete Portfolio Tracking 20161011.xlsx".
Use the download button below. If asked, elect "save", the file will be saved to your computers default download folder.
Once downloaded, right click on the the .zip file and select "uncompress" or "unzip" to have the .xlsx file put on your machine. Then you can double click the file (ETF Complete Portfolio Tracking 20161011.xlsx) and the excel workbook will open.