What do you achieve by diversifying?
Answer to the question: nothing, when you exceed 5 or 6 assets.
Clarifying: it depends on what you want to achieve, but here we are talking about making money with trading.
If you want to diversify, you are not a trader, you are an investor.
If you want to diversify, it is better to buy shares in an equity fund that replicates the Index. The result will be the same or better, and you will save on commissions.
But if you are a trader and really want to make money, once you have confirmed that you put a stop-loss on each of your trades without skipping it, then diversification makes no sense for you.
The problem with traders who do not yet make consistent money lies in the fact that, favored by the platform they have at home, they can enter at any moment with a click, with a finger (if you had to call by phone to place the order, you would think about it more).
So, if you are watching the markets every minute, every candle, every support, etc., it will mean an opportunity for him to enter, and there he goes, clicking away, until he finds himself with several open trades in different assets that only cancel each other out. This is not speculation; this practice does not generate money. To do this, you might as well open a deposit with no risk.
But where is the money? In the risk, of course. What is certain does not generate large profits.
If you choose the trades, you will choose enough to end up in the red, so you must be patient enough to wait for the ideal trade, and this can take hours or even days, although later the profits and satisfaction will more than compensate for it.
When I say that it is not worth diversifying, if you know how to use stops and have the patience (patience = money) not to enter at every moment, it is because there is a curious peculiarity in the markets...
The market can only focus on one event at a time. It is relatively easy to distinguish, from the headlines that come out in the news, which market or asset is currently in the spotlight. Anyone can check it. And when a market is on everyone's lips, the psychology of the masses does its job, and that is when the best trends are established.
So, if you have learned to distinguish which market is in question, why do you want to diversify? Just enter with the amount you have assigned for each operation adjusted to the risk and keep adding more as we make money. This is called averaging in your favor.
Instead of doing it in losses (here's the difference and frequent practice of losing traders), we do it on profits.
Diversification in trading, for me, makes no sense.