Deciding when to sell a stock is far more difficult than deciding where to buy. There are virtually endless scenarios that can play out after you buy a stock:
– The stock immediately drops in price
– The stock runs up quickly in price
– The stock goes up slowly in price, but then starts to decline
– The stock goes sideways for weeks or month
It is essential to have sell rules in place to deal with each of these scenarios! We have sell rules to handle each of these situations. Our sell rules help maximize gains and minimize losses (which are inevitable in trading). Our sell rules also help manage risk, although risks can never be completely eliminated from trading. We seek to take most profits at 20% and cut ALL losses at 7-8%. If market conditions are right and any of our stocks are showing strong leadership, then we may hold some stocks for longer term gains.