Essentials of Borrowing
When You Must Exit In Stocks
There are a lot of articles that talk about how to get in to the stock market. Which is great. A lot of people want to get in to the stock market but don’t know where to start. However once all of these people get in to the market, they need to know how to get out. After all the money you make on the stock is not made when you get in to the market. The money you make on the stock market is made when you get out of the market that is when you sell your stocks.
Hopefully you will sell your stocks for a profit and that leaves you with a profit. So how to get out, while staying on top? Well you need to work with your own stops and limits. What the heck? · You need work with stops and limits, which means that you have a set of stop points and limits. So before you start you need to know where and when you are going to stop. · It’s best to set your stops and limits early on, because once your emotions get involved.
So for instance if you own a thousand shares in a company that is currently at $2.5 per share. You get excited because the price is steadily rising by a few cents every day. Something tells you to sell when they get to $3. Once it gets to $2.9 you decide to wait it out. Sure enough the stock rises to $3.50 over the next while and you decide to keep waiting it out. This is where it gets tricky, because as we all know what goes up must go down. So waiting it out can end up costing 50 cents a share when it drops and imagine the profit you would have made on your original buy price! · Never expect to make a bundle in a week.
You will have good weeks and of course you will have bad weeks. If you implement a range of stops and limits those bad weeks a little easier, or at least not completely wiped out. · Never partake in revenge trading. Revenge trading means that once you lose money you start investing to get your money back. But this rarely works because if the market has just taken a dip it’s not a great time to get a whole range of new stocks. Wait till things have calmed down a bit. · Most brokerage firms have an automated stop system that will immediately sell or put your stocks out there the minute they reach your stop point. This means that you won’t have the chance to renege on your stop point. · Always sell and buy when you feel comfortable, never put yourself under the pressure of too many tips and trade gossip. · You need to make sure that you never spend more in the stock market than you can live without.
If you do take a dive you will find it very hard to recover if you have nothing. · Periodically speak with an advisor and look over your portfolio. Don’t keep stocks that aren’t or do not look like they will growth and improve.
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