Should I make a trading portfolio?

I am a newbie and I heard many traders say about making portfolio. By definition, I know what a portfolio is. But can anyone please help me by letting me know how to make portfolio in Forex?

It simply is a record of your trades.

It is not a record of your trade however the word portfolio is mainly used when long term investing, so as a short term forex trader you would not have much of a portfolio. Portfolio = All trades currently open and running

Creating a forex portfolio as a newbie is like building a collection of currencies you want to trade. Start by picking a few pairs you're comfortable with, mix them up, and make sure not to risk too much on each trade. As you gain experience, you can expand your portfolio.

You just open orders on various assets, thus making a trading portfolio.
But I never understood why this is important for traders.
Maybe for traders who want to expand their trading range but apart from that I didn’t come up with the utility of it.

Well, for an example - Perhaps you've sold EU, but that's stalled and could be going sideways or turning...but regardless, you're on the verge of closing the trade or waiting to see what happens. At the same time, G/Aus, or U/J seem to be making moves that look promising and thus you can put a small position on each.

This would be different from closing your EU position and then deciding to only put on a trade for either G/A or U/J.

Therefore, if you're not really holding trades, then the idea of a portfolio (collection of trades/positions) is fairly moot, but in my mind, having a collection of trades (or at least views on the direction of a variety of pairs) is far more beneficial than just following/trading a single pair.

Well if you consider your financial bets (made via CFD trading) as assets, you can consider your current number of opened trades as portfolio.

When it comes to traditional investing portfolio is a combination of assets purchased which aims to achieve best risk-adjusted expected return. This is all relies on the concept of correlation. When you add up expected returns on assets (let's take two assets A and B), since expected expected value is a linear operator you get f(A+B) = f(A) + f(B) where f is expected value function. However in case of risk, which is measured via variance of returns (i.e. magnitude of possibility of actual returns to deviate from expected ones, in either side), you get f (A+B) = f(A) + f(B) - Correlation (A,B), where f is function of variance.

In other words if you would invest in two assets with equal expected returns but negative correlation, portfolio's risk-adjusted return may be higher compared to putting all money into just one asset.

why not? you learn a lot about ur trades by comparing these performance index numbers in the explorer. go for it.

Compiling a portfolio is for those who are aiming at long-term goals, actually. You gather specific assets together, invest money in them, complying with proper risk management and then keep them.
Trading portfolio for me isn't a portfolio by definition. If you trade intraday, you don't hold assets in this portfolio for a very long time, you just open bullish positions and wait until the price hits TP, and, usually, it refers to short-term prospects, meaning that all positions should be closed by the end of the day.

You cannot build a forex portfolio because forex pairs are not assets. Forex is an exchange mechanism for calculating prices relative to the dollar. Look at it like this...

Live exchange rates at time of post:
EUR/USD 1.0819
EUR/GBP 1.1665
GBP/USD 1.2621

If you start with $1,000,000 USD and convert it to Euros you get 1,081,900.00 Euros.

If you convert the Euros to Pounds you get 1262036.35 GBP.

If you convert the GBP back to dollars you get 999949.57 USD.

The net is roughly $0 change in value because the mathematical relationship between the 3 pairs is fixed. So even if the legs of the trade change dramatically, you will see no change in your account balance. Adding ALL the forex pairs will get you the same result.

Now you could ignore the crosses and invest in the majors exclusively:
EUR/USD
GBP/USD
USD/JPY
AUD/USD

But notice that all 4 bets are essentially just bets on the relative value of USD. So, for example, USD strength will impact all 4 positions in roughly the same way. It’s basically a single bet on USD strength or weakness.

Now inevitably some clown will point out that all these pairs pay different rates of interest on the overnight swap, and in theory you could sorta construct a portfolio of pairs to take advantage of that, but if your looking for an income portfolio you would get materially better results just focusing on the bonds.

Correct, portfolio is built using assets which offer cashflow, currency trading is a speculation, also since currency pairs relate via arbitrage, they have high degree of correlation, means there is little opportunity for diversification.

Begin by selecting a handful of pairs that you're familiar with, and make sure you implement proper risk management strategies.

Good question. In forex portfolio is not something very complicated actually. It just means you don’t put all your trades in one pair or one idea. Many beginners think portfolio like stocks, but in forex it’s more about spreading your trades.
For example you can trade eur/usd, maybe gbp/jpy, and gold instead of only one pair. Some people also mix different styles, like some longer trades and some short ones. The main idea is just not risking everything in one place.
Also try not to open too many trades at same time. Keep risk small while you learning, that helps a lot in the beginning.