Lesson #5 – Exit Strategy & When to Sell
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Subscriber, Lesson #5 – Exit Strategy
Normal false EN-AU MicrosoftInternetExplorer4 Normal false EN-AU MicrosoftInternetExplorer4 Normal false EN-AU MicrosoftInternetExplorer4 /* Style Definitions */ /* Style Definitions */ /* Style Definitions */ Normal false EN-AU MicrosoftInternetExplorer4 Its often been said that an exit strategy is more important than an entry into an investment or trade.
In order to have a successful low risk
high/probability trade, you need a setup, an entry, a proper stop loss, an exit strategy, and a proper target. Without these, there can be no trade. So, before making a trade, map it out. You are less likely to make mistakes if you have examined the stock from all angles. Make a plan and then, execute! Having your trade mapped out eliminates the aspect of human emotion interfering with the trade. This is what I do before every trade: In a journal, write down your reason for entry, entry
price, stop level, initial target and the reward to risk ratio. If the ratio is less than 2:1, you must right down the reason you think it’s still a viable trade. The time you take to write it, once your done you might realize you have no trade at all. This will prevent you from making emotional and rash decisions. Knowing When to Sell
Entering a stock is rather
simple because most traders can draw the same trend-lines and breakout spots. Anybody can draw a trend-line and buy a stock, the successful traders and investors know how to maximize their profits and let those winners run. One popular strategy is to "scale out" of a stock piece by piece as the stock starts its initial thrust. Selling off a partial 1/3 or 1/2 position when you receive a profit reduces your initial risk as you’ll now be dealing from a position of strength. At this point, you place a stop at your buy price to lower my risk to 0 on the trade. This allows you to play on the "house" for the rest of my trade. Planning is everything folks, if you fail to plan, you plan to fail. /* Style Definitions */ ****************************************************************************** Join us
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