![]() By: ShortMeTina This is as idiosyncratic to the individual as I suspect their trading style is. Knowing when to sell isn’t an easy task. I try my best to simplify my life and tend to lean towards “half and quarter moves”. This is entirely for profitable trades. What I do to manage an anticipated loss is discussed in “How I Manage Losses”. At any rate, let’s look at my recent Second Quarter Portfolio pick SWHC. Sometime in May this company was placed on my list of stocks I intended to long. With an initiation price between $20-$22. While I always argue, I NEVER know where a stock is going; I simply play odds; I guesstimated that if my thesis comes anywhere near to being correct; this stock should eventually work its way up to $30 and beyond. If you are a free subscriber; you’re well aware that we didn’t get from our initiation price ($21.87) to the stocks current level in a straight line. Look at the chart below. You will see some consolidating, followed by an uptrend, followed by a sharp decline, followed by more selling, a triple double, grand slam, touch down, field-goal, 3-pointer and every thing in-between. The point I am trying to convey is, do you hold the entirety of your position until your “target” is hit? For me, the answer in short is, no. I scale out of winning positions. I trade off of a point system; therefore my scaling generally deals in points as well. Sticking with the SWHC example; I entered the position looking for 8+ points. When the stock reached half way to my destination (+4 points or $26) I shaved off a percentage of my holdings and locked in some profits. When it came close to my target ($30); I locked in a majority of my holdings at $29.98. And considering I have absolutely no idea how far my winners will take me, I allow the rest of my shares to take me beyond my target. And will hold until my thesis has changed. Again, this isn’t a strict rule you have to follow (in fact, you don’t have to follow at all) but entry price/exit price is as crucial to successful trading as patience and discipline. Care to share your “When to Sell” story. Good, Bad or Ugly comment below. Want more out of ShortMeTina, subscribe below for free. Want even MORE out of ShortMeTina, sign-up for a premium package today. Our latest pick is already up 8% (close to 3 points) in about 2 weeks. Don’t forget to follow ShortMeTina on StockTwits, Twitter, Facebook and Instagram.
Email me at tina@shortmetina.com with any questions.
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