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Selling is the great secret of stock market

Selling is the great secret of stock market

 

All the market “experts” are telling you that the bull market is back and to get your buying clothes on. Open your wallet and get in before it is too late. Mr. Schwab says it is dangerous to be out of the market. There are great values out there. These stocks are so low they can’t go any lower. And there is a Santa Claus and an Easter Bunny.

However,selling is the great secret of stock market,no buy

Selling is the great secret

You must learn to sell – for two reasons.

First to protect your equity after your initial purchase

Second to keep from giving back profits you have made as the equity advances.

The great Wall Street secret is an exit strategy: knowing when to sell. Unless you learn to sell you will not be successful in the market. Brokerage companies do not want you to sell and rarely issue sell signals. You must decide how much you are willing to risk before you buy.

The simplest way is with a percentage stop loss order of 5%, 7%, 10%, 12%, whatever you can live with. Instruct your broker to place a trialing stop or you can change it yourself every week. Do not lower a stop.

Don’t trading too often.

Beginner traders often buy/sell their securities too much. They hear a hot tip on TV or a friend and feel they need to sell their current holdings and buy that stock instead. Generally, the only person who gets rich off of this is the investor’s broker, who rakes in trading fees. Trading frequently is also tax inefficient, since these investors often end up paying short-term capital gains tax instead of the lower long-term capital gains tax.

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