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The investopedia page on open position states that:

The recommendation for investors is to limit risk by only holding open positions that equate to 2% or less of their total portfolio value

I am new to financial markets and trying to learn how they work; what I don't understand about this statement is: if investors should only hold open positions of 2% of total portfolio value, and an open position includes a long position (i.e. holding stock) then where is the rest of the 98% of the value held?!

I realise I must be missing something so blatantly obvious/ intrinsic it's proving hard for me to google this question, hence the q. here.

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    The author should replace "open positions" with "each open position".
    – base64
    Mar 30 '20 at 7:47
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From your link:

For example, holding a 2% portfolio position in stocks spread out through multiple sectors—such as financials, information technology, health care, utilities, and consumer staples along with fixed-income assets such as government bonds—represents a diversified portfolio.

Suppose your portfolio is worth $100k. 2% of $100k is $2k. Therefore, no single existing position should be larger in value then $2k, regardless of the security type.

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    Do index funds count as a single open position, or many?
    – Omegastick
    Mar 30 '20 at 10:29
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    Any security that you own would be a single open position (stock, option, ETF, mutual fund, bond, futures, etc.). If adhering to such a rule, one would want to look for large overlap. Two identical but different ETFs on the same index would mean a 4% exposure in that sector. I wouldn't get all worked up over a 2% stock position in XYZ and a 2% position in an ETF that contains XYZ. And if one was concerned about this, one could reduce the 2% position in XYZ to account for the thinner slice of exposure to XYZ in the ETF. Mar 30 '20 at 10:38

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