InvestorQ : How can I actually put a trading methodology in place?
Isha Tharwani made post

How can I actually put a trading methodology in place?

Neelam Naik answered.
3 years ago

To put a trading methodology treat the 3 phases separately; pre-trading, during-trading and post-trading. Pre trading methodology is a very wide term and broadly covers all the processes and the procedures that need to be put in place before you start trading for the day. The first step in pre trading methodology is to finalize the logic for shortlisting and screening stocks for trading. You cannot just select any stock to trade intraday. Ideally, these should be stocks with momentum in their favour and predictable reaction to news flows. Secondly, the trading strategy is to be documented. The trader can either adopt a buy on momentum strategy or a buy on dips strategy. The reverse can hold true if the trader plans to trade certain stocks on the short side. Thirdly, a very clear risk management strategy has to be put in place as part of the trading methodology. If you can manage your risk and protect your capital you can assume that half of your job as a It needs to cover at what level the trader will shut the position, at what level the trader will stop trading for the day and at what loss he will go back to the drawing board. When these three things are combined, you have the pre trading methodology in place.