Monday, March 31st, 2008
20+ lessons from a trading review, part I
Having read and written about heaps of traders, there is one thing almost all the successful ones have done: performed a systematic review of their past trades.
A bear market, or correction, is a great time to do this.
I did it last week and I’d equate the value of the exercise to reading 20 top trading books, or sitting down with an awesome mentor.
It helps to have good records. I have every trade pasted up in a big art book, including fundamentals, state of the market and charts. If you’re not keeping these types of records you should start today.
I trade with an aggressive-growth strategy, which most of the lessons apply to.
Here are the first 10 lessons from my review (they are in no particular order):
1. The best time to buy aggressive growth stocks is at the start of a bull market when most people aren’t looking
2. The best time to buy during a bull market is just after a market correction. So use corrections to look for opportunities and don’t panic
3. The best stocks have surging current earnings
4. Don’t get too hung up on earnings for the past three to five years. As long as growth is accelerating now it’s fine
5. Turnaround/recovery growth stocks are as good as stocks that haven’t had a set back
6. Don’t buy stocks with a 50-day moving average that has been rising for a long time – it’s probably due for a correction that will shake you out
7. The best time to buy a stock is when the stock has traded sideways (based) and the 50-day moving average has flattened and is starting to rise
8. Tight price action (low volatility) in a base before moving to a new high is as important as any other technical criteria
9. Don’t be afraid to buy stocks with no earnings, but that has a hot new product and with a strongly performing share price
10. A correction to the 50-day moving average is not a high probability time to buy a stock; unless it is the first time after a breakout from a base
Word Count: 330. This entry was posted on Monday, March 31st, 2008 at 4:38 am and is filed under Aggressive Growth, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
