When.. Why... I should sell ?

Hello Readers.....

How was your weekend?

One question always I come across among traders is..... 

When do you sell ?

This seemingly simple question is NEVER simple in real life....

Again supposedly common sense will dictate that you should sell when the technical charts or whatever trading technique indicator you subscribe to tells you the highest point (price ) has been reached and you should take profits.

In practical real life situations it is indeed possible for most to make that decision and move on even though more often then not the selling price subsequently turns out not to be highest...the seller consoles himself by rationalising that one needs to be contented and accepting that the buyer of his shares "deserves " to also make some gains for taking over his shares at a higher price...

All is well and everyone goes home happy....AS LONG AS the share keeps going up ...

The nightmare begins when the bought shares start coming down.....

From my experience, most find the going gets tough when shares begin a downtrend especially when they have bought the share only minutes ago !...the minutes become days ..months ...years and decades ! The average investor trader has a built in psychology that one should only sell when there is profit. A logical thought that is taught to any child....but...since when did anyone said that this golden rule of business apply to the share market ?

The more appropriate rule may sound something like this...

- if  you are a mid to long term investor you will  have  done lots of homework to pick good quality stocks which provide  steady dividend yield plus capital growth in which case cost averaging may be the best way to bring down the effective cost of acquisition. Sell only when there is a change of asset quality due to whatever reason or on a personal level a need for cold hard cash!

- if you are speculating and merely a intraday /short term trader ,you should never lose that all important trading perspective ie; you bought in the hope of making quick gains ...chances are the share has poor fundamentals or the buying price is already been chased up prior to your purchase. Both these elements should be at the back of your mind all the time...a quick exit at minimal profit or loss is the order of the day....no two ways about it ....bite the bullet early than be sorry if the trade goes against you...selling at your purchase price or even a bid or two lower may save you the pain of holding massive paper losses which equate real losses...

Trading and investing are 2 distinct animals ( pretty sure you're fully aware of this)

By the way, I will be the speaker on the following topic PROFITABLE INTRADAY & SHORT TERM TRADING METHODOLOGY, at Jupiter Securities Sdn Bhd ..

Date : Dec 15 ,2012 ( Saturday ) Time : 9.30 am to 1 pm

Address : 

Unit 809 BLK A
Lift Lobby 3
Damansara Intan (Next to Tropicana City Mall)
NO 1, Jalan SS20/27
47400 Petaling Jaya

Fees :
RM 250 per pax.

Please contact Julie (012-2009389) for further inquiries.

Thank you

Chris Choo