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Building a Portfolio of Trading Bots — Why Diversification Matters in Automation

11 July, 2025

One strategy may work well for a while, but even the best bot can underperform during certain market conditions. To smooth out drawdowns and improve long-term consistency, experienced traders create a portfolio of automated strategies — each designed for a different scenario.

In this article, we’ll explain why diversification is essential and how to build a balanced portfolio of trading bots.

Why Use Multiple Bots?

A single bot follows a single logic. If the market shifts away from its target conditions (e.g., ranging vs trending), its performance will decline. A bot portfolio helps to:

  1. Distribute risk across multiple strategies
  2. Reduce drawdowns during volatility
  3. Stabilize performance across timeframes and market phases

Related article: What Affects Trading Bot Profitability

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Which Strategies Should You Combine?

Strategy TypeBest Market ConditionsRisks/Limitations
ScalpingHigh-liquidity sessionsSensitive to spreads and latency
Trend-followingStrong directional movesDrawdowns during sideways markets
Grid tradingNarrow ranges (sideways)High risk during breakouts
News-basedScheduled releasesHigh slippage, execution delays
ArbitragePrice discrepanciesLow volume, technical complexity

For example, combining a trend bot with a range-trading bot may help offset losses during shifts in market structure.

How to Structure Your Bot Portfolio

  1. Test each bot individually
  2. Compare key metrics: profit factor, drawdown, win rate
  3. Use various instruments and timeframes
  4. Avoid overlapping logic or high correlation
  5. Monitor performance regularly and adjust allocation

Periodically review each strategy’s efficiency — and replace those that consistently underperform.

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FAQ

How many bots can I run at the same time?

Depends on your VPS or server capacity. Typically 3–5 bots can run in parallel without issue.

Is it okay to run similar strategies on different pairs?

Yes — as long as they’re applied to uncorrelated markets and don’t interfere with each other.

How do I know if a strategy is outdated?

If it consistently underperforms for several months, backtest it again and assess market fit.

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