General Sell Rules

Oct 31, 2021 11:25 AM 0 Answers
Member Since Jul 2021
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Hi Marty,

I saw that you posted this in response to another member's question:

  1. The time horizon is mostly dependent on entry price and stock performance. I like to hold longer term, but often times my rules force me out for one reason or another.

Would you be able to provide, generally, some of your important rules that would cause you to exit a position?

I sell a stock when I am down 5% with no questions asked. The stock is telling me I am on the wrong side of the trade. It does not matter the reason, but typically I bought an extended stock (it happens) and that is how I get shaken out during a simple retracement. We cannot afford to absorb large losses and making up for them is too difficult. KEEP LOSSES SMALL! We will live to play the game much longer using that one simple rule.

I will also sell a stock when a stock I own slices through a moving average (typically the 50sma) than I sell that stock because I can always buy it back. Take ROKU for instance. I bought that stock around $405 back in July. It rallied pretty nicely and then reversed. I sold it (for a small loss) when it sliced its 50sma at $400. The stock is now at $300, and I can always buy it back if I want to make that decision. There are two reasons why I sell a stock when it slices its 50sma 1. we do not know how long it will trade below its 50sma 2. We do not know how low a stock will go (they usually go much lower than we think is possible). I am a bit surprised in the weakness in ROKU it is 38% off its high, and has been weak for four months

I dislike selling any stock for a few reasons. 1. I do not like being wrong😂 2. A company growing sales and earnings year after year should appreciate over time. I just bought at the wrong time. Time/timing is everything in the stock market.

What I have seen quite lately is stocks slicing below their 50sma and shaking people out. Then they rally back through that level and we must buy them back. CRWD is a perfect example as it has been doing that all year in 2021.  That stock is a choppy mess, and very difficult to trade/hold.

I hope this answers your question.



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