advanced · TRADING LEARNING GUIDE
Portfolio exposure
What is this concept?
Gross exposure sums absolute positions; net exposure considers direction. Shared factors can make different tickers move together. Equal notional hedges need not match beta.
Step by step
Separate gross, net, factor and currency exposure. Stress adverse correlations and gaps. Include hedge funding, basis and counterparty conditions.
From observation to decision
Record the instrument, venue, session and timeframe. Classify the observation using the definition, then write at least one alternative interpretation. Decide what evidence would invalidate your idea before entry. Mark missing information explicitly. Examples are hypothetical. Collect paper observations, including failures. Include fees, spread, slippage and timestamp alignment when measuring outcomes. Recognizing a chart shape and establishing a profitable trading rule are separate tasks.
Worked example
Two long positions of ₹50,000 each share a factor. A simultaneous −5% move loses ₹5,000 before costs. An equal-notional short does not automatically provide a perfect beta hedge.
Common mistakes and limits
Avoid calling every hedge risk-free, ignoring gross leverage or assuming correlations remain fixed.
Practice
Write scenarios for market −5%, doubled spreads and failed hedge correlation. Calculate combined exposure and losses.
Resources and further reading
These sources explain definitions and underlying mechanics. Worked examples are original illustrations; a source does not establish the profitability of a custom pattern.
Further reading / foundational context. Worked examples on this page are original illustrations, not source performance claims.