STEP 3 – Close the Position

Simple enough! Based on all the analysis up to this point I close a winning position at its target, or a losing one because something happened that broke the analysis, or the analysis was just bad to begin with.

I should also mention, I will open and close portions of a position as things progress. Those trades don’t count towards opening and closing positions. A position is open on its initial trade and closed when all shares are sold out.

When a trade is closed, I will write a summary of it’s life cycle to reflect on. If it were a winning trade I will subcategorize it under Winners in the Stock’s I’ve Sold category. Conversely, I will subcategorize losing trades under Losers of that same category.

Like subcategorizing Good Calls and Bad Calls of Stocks I own, this is a good way to judge my winners and losers ratio. What’s even better, good and bad calls will show me the accuracy of my analysis on a day to day basis where winners and losers will show it over the longer term. Kind of like daily battles which are won and lost, but it’s the outcome of the whole war that really matters.

This will give me a good view of how I adjusted my analysis to turn a series of bad calls into better analysis that eventually turned the tide and won the war. Hopefully!