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QuantSchool: Mixing aggressive and conservative signals

Balanced Approach to Market Opportunities

Combining high-conviction aggressive signals with stable conservative positions creates portfolios that participate in growth while limiting downside risk.

Strategic Allocation Framework

1. Signal Classification Matrix

Signal Type	Probability	Risk/Reward	Suggested Allocation
Conservative	75%+	1:3+	60-70%
Moderate	60-74%	1:2	20-30%
Aggressive	50-59%	1:1	10-15%

Implementation Strategy

1. The Core-Satellite Approach

• Core (60%): High-probability conservative signals
• Satellite (30%): Medium-probability balanced plays
• Opportunistic (10%): High-risk/high-reward aggressive signals

2. Dynamic Position Sizing

• Conservative: Full position size (2% risk)
• Moderate: Reduced size (1% risk)
• Aggressive: Minimum size (0.5% risk)

QuantWave Mixing Tools

1. Signal Blender

• Calculates optimal mix based on market conditions
• Auto-adjusts for volatility changes
• Maintains target risk exposure

2. Risk Parity Calculator

• Equalizes risk contribution across signals
• Identifies hidden concentrations
• Suggests balancing trades

Risk Management Protocol

1. The 5 Safeguards

1. Never exceed total portfolio risk limit
2. Aggressive positions require 2+ confirmations
3. Daily review of signal strength
4. Automatic stop-losses on all positions
5. Monthly rebalancing to targets

Common Mistakes

• Overweighting aggressive signals
• Mismatching time horizons
• Ignoring correlation effects
• Failing to rebalance winners

Performance Tracking

• Return contribution by signal type
• Drawdown analysis
• Risk-adjusted performance
• Correlation effectiveness

QuantWave's signal mixing methodology provides a disciplined approach to balancing opportunity and risk. By systematically combining different signal types with appropriate sizing and constant monitoring, investors can participate in growth while maintaining portfolio stability.