Page 1258 - How to Make Money in Stocks Trilogy

240 HOW TO MAKE MONEY IN STOCKS—GETTING STARTED

How to Do a Profitable Post-Analysis

“The only way you get a real education in the market is to invest cash,
track your trade, and study your mistakes.”
—JESSE LIVERMORE, LEGENDARY INVESTOR

Even the best investors make mistakes—but they learn from them. That’s
why after decades of investing, IBD founder Bill O’Neil and his portfolio
managers still regularly do a post-analysis of their trades. It’s simply the best
(perhaps, the only) way to become a successful investor over the long term.
So make sure you keep good records of your trades and review them at least
once a year.
We’ll get into 2 ways to help you do that:

• 5 questions to help you do a profitable post-analysis
• Improve your returns by improving your records
Finding and fixing just one or two common mistakes can have a huge
impact on the amount of profits you make. Maybe you’re buying stocks
when the overall market is weak or holding your stocks a little too long.
Whatever the issue, don’t get discouraged. Each time you address one of
yesterday’s pitfalls, you add that much more to tomorrow’s profits.

Start with—and Stick to—Basic Rules
You can easily avoid many common pitfalls from the start simply by following the
buying and selling checklists found in this book.

5 Questions to Help You Do a Profitable Post-Analysis
These basic questions will help you pinpoint any habits that need to be
addressed.
1. Was the market in an uptrend when you bought the stock?
Don’t fight the market! When the market is in a correction, it will take
most stocks down with it. So keep the odds in your favor: Only buy stocks
when the Market Pulse outlook says “Confirmed uptrend.”
See Big Rock #1 (Chapter 3).