What is an acceptable profit taking point for a stock trade?

Question

I have a Scotttrade account and was considering investing about $20-30K in one or two stocks at any one time. I might be able to stay out of daytrading status.

...But I was wondering if selling a stock on average every 3-4 days at a stock price increase of around 10%, if it is an acceptible profit?

All that would be lost is the $7 trade fee, and maybe 30-40% for taxes. That would leave about $1200 in profit for 3-4 days investing right? or is this way to simple in theory?

hmmm 10% is just a figure i threw out. What would be an acceptable rate?

Answer 1

On average, the S&P 500 index has been up 0.1788% over 4 trading days between 1993 and today. That means over the past 13 years, you'd have had an average increase of about $36 in the 4-day period on a $20,000 investment. Doesn't leave much after round-trip commissions.

You best 4-day return would have been 13.6% and your worst 4-day return would have been -12.3%.

So, unless your stock-picking abilities are remarkable, I'd say yes, the theory is far too simple.

Answer 2

If you have a profit and are afraid of losing it, place a stop / loss order to prevent any loss. This way you will not miss out on any additional gains. For instance, say you bought xyz stock for $15.00 per share. Its now trading at 20 bucks. That's a great short term profit but instead of selling, place a stop order to sell if the stock falls to $18.00. This way if the stock continues to go up, you will not miss out on any further gains. If you get stopped out you will still have a 20% gain. If the stock continues to go up, to say $25.00 adjust your stop order to around $23.00. ect. ect.ect. Let your winners ride and sell your losers quick. My own personal rule is to never lose over 10% on any particular investment.

Answer 3

If you can do this let me know what are buying. I would consider this fantastic.