Counting down to the end of 2009, I shared a host of articles and resources to help you better your stock trading in 2010…
- Leading Market Trends For 2010
- 6 Ways To Improve Your Trading In 2010
- 4 Reasons To Avoid The Stock Market In 2010
- 4 Stocks To Buy In 2010
…but what about me? Sometimes its easier to learn from other’s experiences than trying to adapt your own, so I thought I would share one of my personal stock trading resolutions I HOPE to use THROUGHOUT 2010.
Take Profits Quicker
Knowing when to take profits is probably one of the hardest parts of trading stocks. Wait too long and you could witness your stock come crashing back down. Act too quickly and you could end up missing out on a whole lot of money. At the end of the day, I believe the key to making the most returns in the quickest amount of time is to take profit (when you can) and move on to the next trade.
The general movement of stocks I track/buy is to pop and then consolidate (sideways movement). Normally I would wait out the sideways movement and see if perhaps the stock has another pop in it, but what if it doesn’t? Stocks can only jump so much at a time, and you can always get back in if the trend looks to pick back up.
Now I just wasted time and capital when I could have been catching a pop somewhere else. To make matters worse, I would probably end up holding even longer to see if there is still something left in the stock. Not anymore… Not in 2010.
Because I have normally waited to try and get the stock at the point at which I think it has lost all momentum, I am probably wasting time and inefficiently using that capital.
In 2010, I plan to take profits quicker than normal and not hold for so long. Once your stock seems to have stopped move higher at the same rate, consider exiting or at least scaling down your position. Does this mean I’ll trade more than normal? Who knows yet, but at least I will have more cash on hand when I come across another possible breakout situation instead of wasting it in some consolidation phase.