Are you investing money but sometimes feeling troubled with when to cash out? Well, it's actually a common occurrence in the trading world. Because of this, it is important to have a plan set for taking profit. The first thing to remember is that there is no need to always hit home runs to be successful in investing.; it’s better to focus on base hits. One can grow their portfolio with ease if they choose to take profit when they reach the 20%-25% return range.
I know this may feel contrary to your nature but the best time to sell a stock is on the way up, it's like hopping off an elevator before it starts to head back downstairs. Tracking your holdings and knowing that at 20% profit or so it is smart to take profit. Selling like this helps you avoid being pounded by corrections that could easily erase your profits. Avoiding painful downturns can only be done if you set a reasonable price target to take profit. Depending on the asset and its specific factors you may want to plan to take profit at lower or higher percentage levels.
In most instances you can expect growth stocks to rise 20% to 25% over a set period depending on the asset. Normally after they break out of from support they often decline 15%or more from peaks to establish new support. If you’re in it to earn an income then you're better off taking profit so your profits don’t disappear in the correction. Holding on to secure maximum profit is the biggest mistake you can make, because the market is often volatile, so we must be prepared to take profit before losing out to greed.
The key to this strategy is discipline, because you need to control your emotions and let go of those assets when you’ve reached a profit point or risk losing it all. Having a plan makes it easier to make informed decisions and to avoid taking uneccessary risks. Before making your next trades take some time to write down a plan with prices and target growth percentages so you can organize you investing activities. Having an organized mentality and trading habits will help you consistently earn on your trades in the future.