This whole stock market investing really tests your patience and your greed tolerance. Take for example in this case study where the stock broke in mid 2016 after a long sideways grind between 2015 and 2016. Right off the bat, the stock zipped from 56 to about 63 within a few days. But then … get’s stuck in another sideways grind between August and November. Followed by another crazy burst all the way to 75. That’s a major move!tster
Now if you’re like me and you do this on the side, you may only have time to watch a handful of positions – getting out of a position to find another place to park the money may be difficult. So maybe instead of taking profits, you may be willing to stick in this trade to see how far this stock could go. Because at the end of the day you’re not doing all of this just to make a couple hundred bucks. You’re doing this with the idea that you’re making some sizeable side income.
But how would you know to stay in a trade, or exit? If you did your homework right and you know how to maintain a portfolio, then you can afford to take certain risks. Say for example, if you can move your stop above the price you bought the stock, then essentially this position becomes a riskless position. So you can take the chance of sticking in this move, because all your risking is the profits.
Because what’s worse than losing your profits is also losing some of your initial capital and if you don’t have any risk on this trade then why not, just see how it goes. The worse that can happen is that you can lose some of your profits.