Stock Trading Information Blog

If you recall my friend in the previous blog that borrowed money to invest, which, by the way, is a huge “no-no.” You also remember that he sent an email to me as the market was declining. All his beautiful profit was going out the window and he simply watched as it dropped.

Instead of watching, he could have taken proactive action. Using a stop loss order based on a percentage can protect your profits. If you aren’t a full time stock investor and have to work during the day, the order takes effect while you’re gone.

You can set several sell orders before you go to work. Each one a few percentage points below the previous.  Make certain to take into account the fluctuations of the market if you have a volatile stock.

While the stop loss order used in percentages isn’t necessarily the best way to use it. It certainly helps on those days when the market begins a rapid descent. You don’t have to sell all your stock. Selling a little at a time as it drops still insures you have some left if the price comes back and yet you lock in a profit on those shares.

Had my friend used this technique, he would have gleaned not only his original investment back but also a tidy profit. Hogs get slaughtered. Don’t be a market hog and hope the price rises again. If you have a stock that you really want to hold for the long run, by all means don’t sell, unless you change your mind about its future potential.

Selling some stock and gleaning a profit is always better than holding all the stock in hopes that it rises again.  If you follow this tip, you can protect some of your profits. Remember me when you do. I want you to succeed. Remember the more you know, the more you succeed. The more you succeed, the better I look.