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The following money management script calculates the weight of the industry given the current open positions and orders and rejects any new order if the new weight would be higher than a specific threshold.
If you specify an industry weight of 50% then your portfolio will always have an industry concentration below 50%.
If you have only one "Bank" (industry) stock in your portfolio and a new order to buy another "Bank" stock comes in, it will rejected because the "Bank" industry would have a weight of 100%.
If you have four positions in your portfolio (one in the "Bank" industry and the others in the "Oil" industry) then a new "Bank" order will not be rejected because the new "Bank" industry weight would be 40% (2 / 5).
The script could be modified so that the industry weight check is performed based on the number of maximum position in the portfolio instead of the current number of open positions.
Note that in order for this money management script to work, you need to have the industry field filled for all your stocks. You can do that manually, import your own list of stocks with industry data or use the auto-manage symbols feature of QuantShare.
You can find more info about this feature and how to use it in the following blog post:
http://www.quantshare.com/sa-583-let-quantshare-manage-your-list-of-securities
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
