As a prudent trader and investor, it is not just enough to create a fresh position. It is a lot more important to monitor your positions. Your trading account typically provides you with an in-built portfolio tracker that can help you through this process and you can also set triggers. So what exactly do you monitor?
Monitoring from a Short Term Traders perspective:
· Has the stop loss been hit and should I trigger the stop loss
· Although the profit target is yet to be reached, can I book partial profits?
· Having achieved profit targets, should I exit or hold on with rolling stop loss?
· Is the market too volatile for overnight risk?
· Is it better to close out trading positions ahead of the credit policy / budget etc?
· What is the worst case loss that can happen if the Nifty falls by 5%?
· Do I have sufficient capital and capacity to take that kind of a loss?
Monitoring from a Long-Term Investor’s perspective:
· Am I overexposed to a particular sector?
· Am I overexposed to a particular business group?
· How are interest-rates likely to move and how will it impact my holdings?
· Is my portfolio too much tilted towards cyclicals?
· Should I exit, hold on or average my loss making positions?
· Should I keep liquidity available to capitalize on IPO opportunities?
Monitoring your positions is extremely critical irrespective of whether you are a short term trader or whether you are long term investor. You need to be fleet-footed to latch on to opportunities and also quick to think with your feet when things are not working in your favour.
As a prudent trader and investor, it is not just enough to create a fresh position. It is a lot more important to monitor your positions. Your trading account typically provides you with an in-built portfolio tracker that can help you through this process and you can also set triggers. So what exactly do you monitor?
Monitoring from a Short Term Traders perspective:
· Has the stop loss been hit and should I trigger the stop loss
· Although the profit target is yet to be reached, can I book partial profits?
· Having achieved profit targets, should I exit or hold on with rolling stop loss?
· Is the market too volatile for overnight risk?
· Is it better to close out trading positions ahead of the credit policy / budget etc?
· What is the worst case loss that can happen if the Nifty falls by 5%?
· Do I have sufficient capital and capacity to take that kind of a loss?
Monitoring from a Long-Term Investor’s perspective:
· Am I overexposed to a particular sector?
· Am I overexposed to a particular business group?
· How are interest-rates likely to move and how will it impact my holdings?
· Is my portfolio too much tilted towards cyclicals?
· Should I exit, hold on or average my loss making positions?
· Should I keep liquidity available to capitalize on IPO opportunities?
Monitoring your positions is extremely critical irrespective of whether you are a short term trader or whether you are long term investor. You need to be fleet-footed to latch on to opportunities and also quick to think with your feet when things are not working in your favour.