Maximize Stock Profits: Hold The Winners And Cut Laggards And Losers
Most investors are torn as to whether they should cash out some of their stocks or not when the market reaches record highs as it has lately. It's common knowledge that the good investor will sell loser stocks and keep winners. When you want to maximize stock profits, that's exactly the case. Holding onto loser stocks, or even buying more, can really decrease your potential profits.
Some stocks will buck the trends of their sector or the general market. If there are no buyers for a stock it is probably a good idea to get out of that stock and put your money somewhere else. This means that you need to keep winners, and cut laggards and losing stocks.
The most difficult part of successful investing is knowing when to buy and sell. Timing is everything, so they say, and for small investors hoping to maximize stock profits this is certainly true. Many different systems and strategies exist which are connected to market timing, but there are some small things that go a long way in helping you inform your decisions.
Investors seek every clue and advantage to know when it is best to buy or sell, and many canny stock traders watch volume. Volume is a simple matter of the total shares traded during a single market day. Modern technology tracks trading volume minute by minute in real time and some use this routinely. An investor can seize an opportunity by using signals like volume because they telegraph changes, and increasing volume is linked to price volatility and the greater the volume, the more likely the prices will also be extremely increased or decreased.
If you want to maximize stock profits, try scaling in and out of positions. So instead of purchasing or sell a whole position simultaneously, buy a partial position as the stock's value increases and begin to sell parts of it again as the stock's value falls. This is a safer way of investing. You know that you will make money on the way up, and you won't get caught in a really extreme turn of bad luck by holding on to a particular stock for too long.
The current bull market gives of a multitude of well-performing stocks to pick. Buying at the correct moment can make a big difference in terms of how much you profit from the purchase. Carefully watch volume signals and daily trading activity to make the best profit possible.
The decision to cash out some of a stock portfolio is difficult for many investors. It is common sense that a wise investor will keep stocks that are performing well and cut lose who are not. The decision to cut laggards is tough. The investor needs to watch volume and overall performance to decide if the time to sell has approached. Large changes in volume can signal a stock approaching a high point. Timing is everything in the stock market. A few days difference can result in a opportunity to maximize stock profits or take significant stock losses.
Published October 17th, 2007
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