Syndicate
Being Aware of When to Sell a Position
There are times when an investor follows along with his technique and method faithfully and the price hardly moves. If the investor has been patient and followed the rules, what should he do next? It is pretty simple. He should go back and go over his analysis of the company he chose. He will need to take a fresh look and try to find if anything has changed. If there has been a change, does the new analysis change the original reason for going into this investment in first place? If the rationale for the investment has changed, does his analysis call for him to pass up the stock at this price? If all these things have been looked into and the loss is considerable, then it is probably a good idea to sell it right away. On the other hand, if the investor’s analysis indicates that this stock goes along with all his criteria to own and the entry point is very close, then it makes sense to continue to hold it. In many cases the price of a stock will go close to his target. Being patient has worked out well for many investors. Now comes the time when he needs to close out his position. He can either continue to be patient; waiting till the price reaches his target or his trailing stop. On the other hand he could also adjust his stop looking to capture further profits.
In a nutshell, a great deal of investing is psychological. Although we have repeated it over and over, patience is without a doubt a virtue for investors. Showing patience when going into an investment and having persistence while an investment develops are integral parts to trading and investing effectively. On the other hand, letting patience turn into stubbornness is something you must always be careful against. Without fail exiting an investment according to predefined criteria is one of the best techniques and methods of improving an investors success in this business.