I recently bought into a company with $1000 and made about 42% on my investment in a matter of 2 months. Problem is i put a stop order in this morning and it went through and then shot up again. I got mad and bought back in. I haven't really lost any profits yet but i am afraid i am. The company looks solid and will probably continue to grow. I should have, but didn't establish set limits before i bought the stock so i dont know when i should get out. I feel like my greed and high hopes are keeping me from permenantly seperating myself from this company. Should i get out while i have profits. I can afford the lose the entire investment but of course i would not want to. When do i get out?
2007-05-02 15:43:38 · 10 answers · asked by who? 3 in Business & Finance ➔ Investing
I use two principles.
(1) If I think the stock is overpriced and could drop significantly I will sell my entire holdings and look for another opportunity.
(2) I decide how much I an willing to risk on the company, usually somewhat more than my initial purchase price. If the stock goes up so that my investment becomes more than I am willing to risk, I sell part of my position to reduce my holdings to the amount I am willing to risk.
The amount I am willing to risk on a company is not fixed. If the company is doing well I will increase the amount I am willing to risk. If a new risk factor comes up, I reduce the amount I am willing to risk, even if that means selling for a loss. I firmly believe that decisions about closing all or part a position should not be based on your current profit or loss in the position. Instead they should be based on your view of the current prospects for the company.
2007-05-02 19:56:35 · answer #1 · answered by zman492 7 · 0⤊ 0⤋
Sell 1/2 of your holding.. This allows you to keep some gains.. Let the rest ride.. Don't use a physical stop.. keep a mental stop, as often the market will blow through those stops and then the stocks continues to move up (as you have noticed).
Take the 1/2 that you sell, and place into SPY which is the S&P500 ETF. Allows you to stay in the market, and still benefit from the market moves.. Then depending on the company you purchased.. Exit from the stock when it makes a lower low, this will protect you from exiting out too quickly, although it is possible that it could be range bound for a time as people come in to accumulate the stock.
Either way..
Good Luck..
If you use Technical Analysis to make your decision, watch for support and resistance, and create your plan from that of course :).
2007-05-02 22:54:53 · answer #2 · answered by rfrstormer 2 · 0⤊ 0⤋
This is the classic trader dilema. You should consider buying a book on the psycology of trading and how to deal with the risk/greed balance or using a firm like Tradingpostfinancial.com to teach you how to trade and they will coach you through the mental battles.
As they say, "making money is simple but not easy."
As someone said before, set your limits before you get into any trade and then you'll know when you are happy. If your limit throws you out then you can enter back in on what must be an entirely different trade emotionally and a different set of criteria and expectations.
2007-05-02 23:28:56 · answer #3 · answered by Anonymous · 0⤊ 0⤋
If this is a trading question, I don't know, no one does. If it's an investing question, stay with it for as long as you think it's solid and will continue to grow. You need to figure out whether you are a trader or an investor.
By the way, the wash sale rule someone else referred to don't apply when you have a gain. You'll be reporting a short-term gain on your tax return next year.
2007-05-03 09:04:44 · answer #4 · answered by Thomas O 2 · 1⤊ 0⤋
Do you remember ENRON. Do you remember ENRON and Martha Stewart. All good things must come to an end--sometime. Congrats on your savy.Depend on your stock broker to tell you when to hold em and when to fold em. Good luck. It's a volatile time, so who knows when the next crisis will come and the bottom falls out of the stock market. I think I would keep a portion and sell the rest and call it a day.
2007-05-02 22:55:22 · answer #5 · answered by Darby 7 · 0⤊ 0⤋
An old boss of mine used to love to play blackjack, & would take $5,000 with him. He was fully prepared to lose that money and wouldn`t be devastated by the loss. If he won $5,000, it would go into his pocket and he would play on the casinos money. He frequently came back with 20 to25 thousand in profit. I suggest you do the same. If you make $1,000, put it back in the bank & play with their money.
2007-05-02 22:53:56 · answer #6 · answered by ropar 5 · 0⤊ 0⤋
sounds to me like you set too low of a stop loss spread all you really lost was the broker fess i like to set the stop loss at 5-8% range but curious as to the company.
2007-05-02 23:33:07 · answer #7 · answered by Anonymous · 0⤊ 0⤋
You should stop trading until you read about 4 more books on the subject. More knowledge never hurts right?
Jeff
http://www.best-stock-trading-systems.com/trading_for_beginners_review.html
2007-05-03 01:07:45 · answer #8 · answered by Anonymous · 0⤊ 0⤋
its clear you should set limits BEFORE you push the go button.
know your limits, or be prepared to lose over and over
2007-05-02 22:57:23 · answer #9 · answered by Anonymous · 0⤊ 0⤋
Look up the tax consequences of a "wash sale" which is what you just did.
2007-05-03 01:35:43 · answer #10 · answered by Katherine W 7 · 1⤊ 1⤋