Steven Baker

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What is diversification across trading strategies?

Diversification is not just about assets but also about strategies. Traders may combine trend-following, mean reversion, and breakout systems to reduce correlation. If one strategy underperforms, others may compensate, stabilizing overall returns. Strategy diversification reduces drawdowns and increases consistency. Professional traders and hedge funds use multiple uncorrelated systems to balance risk and exploit different market conditions. For retail traders, combining strategies helps achieve smoother equity growth.