What Is Portfolio Composition?

Portfolio composition shows how your trading portfolio's value is distributed across different assets. It provides a visual breakdown of what percentage each asset represents within your total portfolio, helping you understand diversification, risk exposure, and the overall allocation strategy of a trading bot.

Understanding Portfolio Composition

When a trading bot manages your portfolio, it allocates capital across various assets based on its trading strategy. The portfolio composition chart displays:

• Allocated positions - Assets currently held by the trading bot
• Unfilled amounts - Pending orders that haven't been executed yet
• Unallocated cash - Available capital not currently invested

Portfolio Breakdown

┌─────────────────────────────────────────────────────────────────┐
│                    PORTFOLIO COMPOSITION                         │
├─────────────────────────────────────────────────────────────────┤
│                                                                  │
│   FILLED POSITIONS           PENDING ORDERS                     │
│   ────────────────           ──────────────                     │
│   • Current holdings         • Unfilled buy orders              │
│   • Market value             • Unfilled sell orders             │
│   • Percentage of total      • Reserved capital                 │
│                                                                  │
│   UNALLOCATED CASH           TOTAL VALUE                        │
│   ────────────────           ───────────                        │
│   • Available balance        • Sum of all components            │
│   • Ready for trading        • Portfolio percentage: 100%       │
│                                                                  │
└─────────────────────────────────────────────────────────────────┘

Components of Portfolio Composition

1. Filled Positions

Filled positions represent assets you currently own:

• Market Value: Current price × quantity held
• Percentage: (Position value ÷ Total portfolio value) × 100
• Example: If you hold 0.5 BTC worth €20,000 in a €100,000 portfolio, BTC represents 20%

2. Unfilled Amounts

Unfilled amounts are pending orders waiting to be executed:

• Unfilled Buy Amount: Capital reserved for pending buy orders
• Unfilled Sell Amount: Assets reserved for pending sell orders
• Impact on Composition: These are included in the percentage calculation because they represent committed capital

This is important because:

• Unfilled orders tie up capital that cannot be used elsewhere
• They represent the trading bot's intended allocation
• Including them gives a more accurate picture of portfolio exposure

3. Unallocated Cash

The portion of your portfolio not currently invested:

• Displayed as a separate segment (often in grey)
• Available for the trading bot to use for new positions
• Higher unallocated percentage = more conservative allocation

Reading the Portfolio Composition Chart

The Donut Chart

The portfolio composition is typically displayed as a donut chart:

        ╭───────────────╮
      ╱    ████████      ╲
     │   ██        ██     │
     │  █  €50,000  █     │
     │   ██        ██     │
      ╲    ████████      ╱
        ╰───────────────╯

    █ BTC (40%)    █ ETH (25%)
    █ SOL (15%)    █ Cash (20%)

• Segments: Each colored segment represents an asset
• Center Value: Total portfolio value
• Legend: Shows each asset with its percentage

Percentage Calculation

The percentage for each asset is calculated as:

Position % = (Position Value + Unfilled Amount) ÷ Total Portfolio Value × 100

Where Total Portfolio Value includes:

• All filled position values
• All unfilled order amounts
• Unallocated cash balance

Why Portfolio Composition Matters

1. Diversification Assessment

A well-diversified portfolio spreads risk across multiple assets:

2. Strategy Alignment

Portfolio composition reveals the trading bot's strategy:

• Aggressive bots: Higher allocation to volatile assets
• Conservative bots: Larger cash reserves, blue-chip focus
• Balanced bots: Mixed allocation across asset classes

3. Risk Management

Understanding composition helps identify:

• Over-concentration in single assets
• Exposure to correlated assets
• Available capital for opportunities

Interpreting Portfolio Changes

Portfolio composition changes over time due to:

Market Movements

• Asset prices change, affecting relative percentages
• A rising asset increases its portfolio share
• A falling asset decreases its portfolio share

Trading Activity

• New buy orders increase an asset's allocation
• Sell orders decrease allocation and increase cash
• Unfilled orders show intended future allocation

Rebalancing

• Some bots automatically rebalance to maintain target allocations
• This keeps portfolio composition aligned with strategy

Example: Understanding a Portfolio

Consider this portfolio composition:

This tells us:

• BTC has the largest allocation including pending orders
• Significant cash reserve (27.5%) for opportunities
• €7,500 is committed to pending orders
• Portfolio is moderately diversified across 3 assets

Best Practices

Monitoring Your Composition

1. Regular Review: Check composition weekly to understand allocation changes
2. Compare to Strategy: Ensure composition matches the bot's stated strategy
3. Watch for Concentration: Be aware when single assets exceed 50% of portfolio

Understanding Unfilled Orders

• High unfilled amounts may indicate market conditions preventing execution
• Persistent unfilled orders could signal issues with order parameters
• Unfilled amounts are part of your committed capital

Summary

Portfolio composition is a crucial metric for understanding how your capital is allocated. By including both filled positions and unfilled amounts in the calculation, you get an accurate picture of:

• Where your money is invested
• What trades are pending
• How diversified your portfolio is
• The trading bot's allocation strategy

Regular monitoring of portfolio composition helps you stay informed about your investment exposure and ensures the trading bot's behavior aligns with your expectations.