Portfolio Trading Method GeWorko: How It Works
The concept of GeWorko method is based on two simple assumptions:
- The value of any asset may be expressed in U.S. dollars, so portfolio instruments can be easily compared with each other;
- If analysis methods are applied to individual assets, they can be also applied to more complex structures, such as personal composite instruments (PCI) GeWorko.
When the value of one portfolio is expressed relative to the value of another, the resulting ratio indicates the number of units of the second portfolio, which currently has the same value as the first portfolio. In other words, it is the price of the first portfolio, expressed in the second one. The value, or the ratio, changes along with the prices of assets included in each portfolio.
The concept of creating a composite instrument is very similar to the concept of exchange rate, when the value of the base currency (B - base) is expressed in the number of units of the quoted currency (Q - quoted). In case of composite instruments (PCI), the base and the quoted currencies are replaced by two portfolios (base and quoted, respectively), and instead of exchange rate we have a ratio (''price'' of the composite instrument).
By combining assets in the process of creating a composite instruments, portfolios B (base) and Q (quoted) arise:
Vi- volume, number of units of asset i in the portfolio B
K- quantity of assets in the portfolio B
Vj- volume, number of units of asset j in the portfolio Q
N- quantity of assets in the portfolio Q
A new financial unit, personal composite instrument (PCI) GeWorko, is derived by comparing values of the two portfolios, B and Q:
For convenient and efficient application of GeWorko method the company NetTradeX, with the support of IFC Markets Forex broker, has developed a special module in the analytical-trading platform NetTradeX PC. To use the new module, you will need to download and install the terminal and open an account.
The new module allows:
- To create personal composite instruments (PCI) by GeWorko method from hundreds of available assets
- To get price history of any PCI and track its changes in real time on various time frames
- To analyze price performance of any PCI with built-in technical analysis tools
- To get instructions on how to replicate any PCI by GeWorko method with trading instruments provided by IFC Markets
Find more information on how to get access to the platform NetTradeX and how to use GeWorko method on our website, in the section "How to apply GeWorko method"