The details of the framework are to be worked out separately for individual methods/approach/style. This framework can be distilled further.
Put it simply, 3 main items: (1) Form a view (2) Align your actions in accordance to the view (3) Manage the risks.
You got to form a view of where the markets are heading, or which sector/country/counter is going to do well or not. How you developed that view is up to your individual preferences be they technical analyses, fundamental analyses, or a mix of both. (There are other ways too other than FA, TA but that’s for another day.)
It seems obvious that once you have a view, you ought to express it, but that is not so if you dare not pull the trigger. This is the step where you put your money where your mouth/views are. Simplistically, if you think market is going up, you can’t be shorting the market right? What is the instrument of choice to express your view is another decision point. How familiar are you with the asset classes to structure/tilt your own portfolio? Do you want leverage with it? What is your RDMILT and RRTTLLU?
What is your contingency plan? Views can be wrong, just form a new one, keep calm and carry on. Do you have a cut loss level? Things don’t always go according to plan. Reducing costs associated with exiting the investment should be thought about before inception right?
Repeating the framework in cyclic fashion is close to the work of portfolio management already. Inject the details of the framework to fit your unique self. If you would like a design driven style discussion with me, please do not hesitate to make an appointment.
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