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This guide covers building a paper portfolio from scratch, going from a strategy to an actual set of positions. Whether you are testing a new approach or modeling a real allocation, Driven can help you translate a strategy into sized, diversified holdings. The concept behind this is Portfolio and Paper Trading, and it works best when your Playbook holds your sizing rules.

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When to use this

  • Starting a paper portfolio to test a strategy
  • Modeling an allocation before committing real capital
  • Building a diversified set of positions around a thesis

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Step 1: Define the strategy and constraints

Before buying anything, state what the portfolio is for and the rules it follows: 
I want to build a paper portfolio of US large-cap quality companies. Maximum 10% per position, at least 8 names, diversified across sectors. Suggest a starting portfolio with the rationale for each holding.
If your Playbook already holds your sizing and risk rules, the Agent will apply them automatically.

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Step 2: Review the proposed construction

Look at the whole before placing trades: 
Before I build this, show me the proposed sector allocation and concentration, and flag any risks in the construction.

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Step 3: Build it

Once you are happy with the plan: 
Build this portfolio in my paper account using the weights we discussed.
The Agent places the trades and the positions appear in the portfolio.

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Step 4: Document the thesis

Capture why you built it this way, so you can judge it later: 
Summarize the thesis for this portfolio and the one metric to watch for each holding. Save it as a file.

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Step 5: Set up monitoring

A portfolio you do not watch drifts. Schedule a review: 
Each week, review this portfolio's performance and flag any holding that has moved away from its thesis.
See Portfolio health check and scheduled tasks.

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Common mistakes

  • Building without rules. A portfolio with no sizing or diversification rules tends to become concentrated by accident. Set the constraints first.
  • Ignoring sector overlap. Eight names in the same sector is not diversified. Check the sector allocation.
  • No thesis on record. If you do not write down why you bought, you cannot tell later whether the thesis broke or just the price moved.