Selling - Thu, 26 Aug 2004

To sell well, you have to first know why you bought. If you bought for a trade, don't let it turn into an 'investment' by holding on to losses for example.

Further, to illustrate about selling, and the emotions involved, what i would like to do is to give you one *real* example. I do occasionally help individual traders to improve what they are doing. (If you are interested in individual help, email me) This example comes from one recent buy and sell that was executed. Extremely useful example to help others.

We got a buy away in gbp. A textbook Gann buy point, and was extremely well spotted by the trader. Next few days up, now we just need the strength to hold. Sell on news. News comes out, and pushed the stock to a high on the day of 36. Here was my suggestion to the trader that day, the 6th:

"very good entry on gbp - make sure you complete it properly by trading at market, once you decide to sell always trade at market. With a bit of luck you could get a gap up if news coverage goes right for you if the news is okay, but i would say the weekend will give people time to review their position and sellers will be in force, but i could be wrong. Now you see why I can stand up in front of a class quite excited about how to trade, such quick moves up are worth it"

This trader decides the last half cent is wanted, the reply later: "I must admit to having learnt the lesson re. buying/selling at market the hard way. In spite of your wise counsel to sell GBP at market on open on Monday I couldn't bring myself to do so, and paid the price - it will never happen again."

Example used with the traders permission for which I thank the person concerned. We are allowed to make mistakes. Some persons have trouble buying, others have trouble selling - we are all different, but important to know that everyone of us has issues that the market forces us to deal with. But each is always surmountable, after all, you only have yourself to deal with, and how hard can that be ???

Anyway, made up for it with the next trade in cof.

On more long term thinking: you need to know how to read the announcements, and the effect this will have on the earnings, plus of course, always relate the news back to the chart - which is the most important thing to do. Know the pattern of the chart. GBP is a junior resource stock, they mostly spike.

Where stocks are trending well, note overbalancing to the downside on an up-trending stock, see gud obal.gif

Moving averages on a weekly chart can also help you stay with the trend.

Easy in hindsight, I know, but it is the only way to learn.

To a stock or two,
could be an overbalance in progress on nal, one to watch. Loads of small banking and finance firms making new highs this week, how on earth can anyone call the cycle finished ?? hme, hsc, igp, ccp - credit growth can only be expanding at present; more loans, more profit (on increased credit risks eventually, but not yet)


Print This Page
Home ----- Contact Us