This is one of the biggest lessons I have been learning the hard way for the past few years. Even though I can talk a lot about this strategy, it is really very hard to grab profits from the market if our portfolio is positive. I don't know about others but my mind always says that I should wait for some more time to grab a bigger profit.
But most of the time what happens is that I end up losing even the positive value that I would have seen. I have had instances where my portfolio reaches a positive value and I wait for some more time and the value drops back again. But this time when it drops it goes below my bought price making me a long term holder waiting for another opportunity.
Not all long term holders intend to be one
Most of the time stockholders become a long term holder because they end up becoming one because their portfolio value drops below the bought price. This has happened to me as well. For the past 3 years, I have been waiting for my stocks to at least show some little positive sign or at least reach somewhere near the bought price so that I can sell them and look forward to investing in something better.
It is a huge mistake that I made by not having a proper stop loss plan. Now I have reached a threshold where there is no point in selling my stocks. For some of the stocks, I have left them to decay there. If some miracle happens in the course of another two years, I would be happy to sell my stocks at least for the bought price.
Grabbing the profit is a skill
When we see some good profit, greed is the first thing that covers our eyes. Most of us would wait for the value to go even higher. It just creates a FOMO where what if we miss a big opportunity by grabbing a very little profit. This ideology has actually made many people lose their money.
I got great advice from a friend's mother. She is one of the most successful traders that I have seen. Her strategy would be to invest in a particular stock and wait for the stock to give a minimum of 5% profit and if that happens sell that stock. She will never care even if the price of the stock goes beyond 50% or 100%. She always says that we shouldn't have so much greed while booking the profit.
Especially when we do a day trading, if we see a good number as a profit, we have to book that profit. Anything can happen in day trading. Sometimes greed makes us wait till the end of the day and make us lose even the little profit that we would have seen during the middle of the day. Grabbing the profit is definitely a skill. It requires proper planning and observing the market frequently.
If you find this article interesting, please vote, share and follow. Also please share your thoughts in the comments section.
