Cut the LOSERS, and Allow the WINNERS to run – A Contrarian Thought!
Have you heard this before?
It is undoubtedly easy to say – but tough to execute, especially in volatile markets.
In my previous newsletter edition, I published a few trade ideas. Feel free to read them here: https://lnkd.in/gDEdvs8i
Contrary to the statement “Allowing Winners to Run,” traders sometimes have to book profits, especially when the markets are volatile.
Here are three simple and my favorite ways to do it.
1. Adjust the stop-loss (or trail stop-loss) and secure the profits – allow the winners to run.
2. Book profits by selling 50% of your stock positions and allow the remaining to run.
3. Book profits by completely exiting the stock position.
In the case of Mazagon Dock and Karur Vysya Bank, I exited the position to book total profits.
The KVB trade achieved the target of where 32% gain with a risk-to-reward ratio of 1:3
I can see that KVB might continue its upward journey; nevertheless, discipline is all about exiting a position when the target is achieved.
The Nudge: Do not allow greed to take over when trading stocks. Subscribe to our newsletter for more updates on Trading, Stock picks, and wealth creation.