When it comes to the stock market, looking back may seem like a frivolous task. Some may even look at post analysis as an emotional obstacle to trading success. Seasoned traders know that post analysis is absolutely critical to future progress. While the past is the past, professionals know that studying old trades, both wins and losses, provides invaluable feedback.

No one has a crystal ball into the future of stock prices. Fortunately, market participants can look to the past to guide themselves into the future. Trading legend Jesse Livermore took post analysis very seriously. In fact, on the last Friday of each year he had a ritual of being locked into the vault at Chase Manhattan bank so that he could do his post analysis in solitude. As Livermore’s bank manager asked Livermore what he was carrying in his leather brief case as he entered the vault, he responded, “It is my entire trading history for 1923. I will review every trade I made and refer to my notes. I keep good notes on all of my trades that explain why I bought and went short and why I closed my positions.”

While Livermore was one of the richest men in the world, and arguably the best trader of his time, he still found it to be of the utmost importance to conduct the somewhat tedious process of the post analysis. As humans, we will inevitably make mistakes, regardless of skill level. To study these mistakes and review successes, traders can find the way that best works for them. One can print out a chart the day they bought and sold, write in a trading journal, and maintain a trading spreadsheet. These tools will help to jog your memory and give you details you otherwise wouldn’t have of your thought process at the time of the trade.

There are several components embedded in MarketSmith to make post analysis painless. The change date feature, notes section, and markups tool are great resources that allow the user to record their trading data in detail. Make certain to do a post analysis a minimum of one time per year, you will be amazed at what you learn!

If you have any questions, you can reach us at (800) 424-9033 or at reachus@marketsmith.com. You can also follow us on Twitter and Facebook for the latest MarketSmith updates.

Best returns,

Andrew Rocco

The MarketSmith team