Letting Winners Ride

Letting your winners ride is a stock market strategy that we can all learn from. This simple way of thinking has proven its effectiveness time and time again in the stock market. Many trading strategies out there call for you setting a profit target to meet. Once it meets that target then it is time to exit out of the position. Many traders will try to find the true value of a stock or the point at which the stock will turn around and sell there. It is the whole theory of buy low sell high. The problem is that you do not know where the high point is going to be. You may want to get out before the stock starts to correct itself, but often times that desire of trying to get out on top limits your losses directly. There have been a number of times when I have seen a stock go up to a point where it just “had to” turn around. Yet it doesn’t the stock goes up another 50% in a short period of time. There is no denying it assuming a stock has topped out is one of the fastest ways to miss a profit. Aside from not missing profits there is another reason why letting your profits run can be a wise decision. You need to pay for your losses. Unless you plan on buying an Index waiting 20 years and selling it for break even or a little bit of profit you will have losses in the stock market. You need to make a lot more when you are right then you lose when you are wrong. This way you can pay for your losses and have enough left over to make trading worthwhile. Visit http://www.stocks-simplified.com for more information on stock trading and to watch stock market videos which can help you learn.