To begin with you must define your return expectations. You start with the end and set realistic return expectations. This can either be absolute or relative. You can decide on the alpha you want to earn or purely by what spread you want to better the FD rate. This is the primary goal, which will pave the way for understanding your appetite.

Now is the most important aspect. What is your risk appetite. How much risk you are willing to take? You may have the appetite of a bungee jumper but that has to be circumscribed by your risk capacity. How much risk can you actually take. This is a critical component. It will be largely a function of your return expectations, but it will also be a function of your risk-taking capacity. Your age, your income and your net worth will determine your risk capacity.

How to sync my trading strategy and my investment strategy based on my goals. Equity can also become a part of your long term goals like retirement, future pension, child’s education. Ideally, equity fits better into distant goals. The quality of equity will have to be more portfolio-oriented in this case. For example, trading is risk so don’t trade and stake too much closer to your goal milestones. Setting goals is the very first step towards converting the invisible into the visible.