Can you make up your mind and stick to it? Do you know when to let go? In the field of shares, buying and selling at the right moment is what can transform a small profit into a huge win. Refusing to cut your losses or capitalize on a rising stock may cost you dear. With shares buying is merely half the picture. Learning to know when to sell is simply as important as knowing when to buy and there are various good and sensible reasons to recognize and prepare for.
Buying shares that escalate after purchase is a wonderful feeling, but when those same shares begin to slide a decision has to be made. If it is apparent that the whole investment has underperformed or has topped out you have to be ruthless. Evaluate the causes it is doing so badly. Is it a temporary blip or is the company in major trouble? Is there a profits warning coming?
The key with trading shares buying or selling is to set ground rules and adhere to them. When they hit a certain target above purchase then you will sell, even if they continue to rise. When they drop by a certain percentage for a number or months or quarters then you will sell, before they decline too far below your buying price. You have to stick to these to limits losses. This eliminates the fear and morbidity of hindsight.
This appears like a kind of mechanical investment but it will teach you discipline, good conditioning and is an effective strategy for the medium term investor. Without doubt there may come times when you no longer intend to hold certain shares at all. It maybe that your trust in the company waivers, or you discover that they carry out business which you do not support or against your morals. It is possible to stay in the stock market and have a conscience.
When you are investing in shares, buying is just part of the picture. The selling of those tradable assets is just as important. You need to be well prepared for the highs and lows and condition yourself not to get emotionally attached. It will help nobody if you hold onto that falling stock trying to convince yourself it will rise in just a few more days. You don't wish to be left with something worth only a fraction of what you bought it for.
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