The market is choppy. A number of my options / stock positions are currently in the red.
I blame myself for not having a more structured approach – e.g taking up option positions in illiquid underlying / speculative or penny stocks, too many open positions and there is a need for greater risk management mechanism towards trading.
Starting this weekend, I institutionalized the following extra step (in addition to a trading journal):
- Pre-trade Entry Sheet : after filtering trade ideas -> this is my next step of further cementing the logic of selecting a particular underlying (“playing the devil’s advocate”) – questioning is this the right trade to make? what’s pros and cons? what if things go wrong? target price and basis.
- Weekly review of positions: Quick review of current positions and what to do next week (when market reopens)
- Tighten on selection of underlying : choosing the right candidates and limiting the number of open positions (so that I can manage them in a more systematic manner)
Having the right approach (i.e more systematic framework) is critical for small account holders. Further, do have an agile mindset and prepare to make ad hoc changes to your portfolio in order to deal with ever changing circumstances in the capital markets.
Disclaimer: This is not an investment recommendation or advice. Please refer to general disclaimer of this blog. If in doubt – please consult with your licensed financial adviser / planner.