Monitor Positions -Your Time Is Valuable
This is an article where I’ll be breaking down the importance of monitoring a position and keeping a trade journal. If you’re going to effectively monitor positions then you need to embrace the idea of time management.
Most retail investors have a limited amount of time to allocate to their trades so proper planning is really a must. Some people can only carve out a chunk of their lunch hour to do research. Others have to catch up in the evening after work. If you fall behind in your research, getting caught up can be difficult so here are some easy things you can work into your routine, even if you only have 30 minutes a day to allocate to monitor positions.
Verify Momentum – 10 Minutes
I only work with growth stocks so momentum is a key component for me. To verify momentum on a stock, I use the IBD® stock checkup. I’m sure there are other tools or services out there that can be used but I prefer IBD because they track the Relative Strength Line which is a prime indicator of momentum in my opinion.
Confirm Market Conditions – 10 Minutes
From time to time I will take a position in Asian or European markets but I really only deal in US stocks for the most part. The quickest way to confirm US market conditions is by looking at charts for the $SPY. The most important thing for me to confirm is whether the market is in a distribution phase, or an accumulation phase.
If the market is in a distribution phase, I’m going to see that volume is up but stock prices are going down. That tells me that institutions are selling off positions so I’ll need to make sure my stop losses are in proper order in case that activity has an impact on me.
If the market is in an accumulation phase I’ll see that volume is still up, but prices will be going up too. In this instance I’m more likely to hit my profit target so I need to be prepared to harvest that profit and move it to the next opportunity which leads to…
Updating Your Watch List – 10 Minutes
No matter if the market is with me or against me, I need to have a rock solid watch list in my hands at all times. If I get stopped out, my capital is freed up and when conditions eventually turn to my favor, I need to act immediately.
If I hit my profit target, then my automation triggers a harvesting action. When the market is rising, there’s an increased chance that growth stocks are moving into their goldilocks buy point zone. If I’m doing things correctly then I’ve already identified those opportunities and started tracking them on my watch list!
Ideal trading conditions only hit a few times a year so being able to take full advantage when they come around requires this type of preparation. Keeping your watch list up to date ensures that you can remain agile as market conditions rotate in and out of your favour
Another Resource For You
How to Monitor Positions is really just one part of the recipe in my opinion. A few weeks ago I wrote a post about the 5 lessons every stock trader must learn. Make sure to check that out for some additional insights and always feel free to ping me directly if you need help setting up a trade plan.
Happy Trading and Monitor Positions Each Day!
Reference: Amin Hemani