I just finished my last bike race of 2011 and did pretty well. Not perfect, though, and hence the importance of post-race analysis. I look at everything: my nutrition, my taper, my warmup, my power, my pacing, and my race tactics.
What’s that have to do with trading? Everything. In fact, if you’re not looking at all your trades — good and bad — you’re not learning anything. And if you don’t learn anything, my experience is you’re headed towards a very bad stretch.
Trust me, I can speak from experience: back in early ’00 — remember that fabulous period? — I was killing it. But, I didn’t have a clue that my strategy ONLY worked in severe bull markets. (of course, I wasn’t alone in that thinking.) It was only later, in that awful decline, I woke up and realized I wasn’t all that good a trader.
My point is that post-race analysis should occur when you’re doing badly, and also when you’re going great. And the key question I always ask is this: is what I’m doing well going to work in ALL types of markets? (and if I’m doing poorly, the question becomes: would this strategy be expected to do poorly in this type of market?)
If the answer to either is “yes” then keep going about your business. If it’s “no” then STOP and reevaluate.