Last week, I shared with you the importance of the postmortem trade analysis. I know it sounded a little strange to you, given that most people think a trade is over when you exit your position and book either a gain or a loss. However, that’s far from the case. Remember that investing is a process, and only by performing this autopsy-like analysis will you understand what went right and why. How can you hope to repeat good behavior and avoid past mistakes if you don’t recognize them?
That’s why this week I want to share with you another part of my in-depth analytical process that helps me watch for signposts along the investing road. These signposts act as confirmation points or warning flags, depending on how things are progressing in the industry, at the company, at one of its competitors or, sometimes, from an unexpected area.
What I’m talking about here is the pre-trade analysis. Compared to the postmortem analysis, the pre-trade analysis entails identifying those key factors that influence a company’s business, recognizing the current and longer-term trends in the those drivers and what potential disruptions lie ahead.
Read more about how pre-trade analysis reveals which key signposts to watch at Eagle Daily Investor.