One of the toughest, but smartest things you can do
An old friend of mine recently got into the stock market after primarily being involved in real estate. We have spoken a number of times about the market and trading. I told him that one of the toughest things to do when trading stocks is to sell on the way up!
Stephen Covey wrote a book which was widely read called “The 7 Habits of Highly Effective People.”
The second habit he discusses is to Begin With The End In Mind. For trading, I
equate this habit with planning my exit. If I am to be an effective trader (make
a habit of profitable transactions), then it is necessary to know what elements
would cause me to exit the trade. Regardless of which reasons you may set for
exiting a given trade, once a profit target has been met, being disciplined
means taking that profit. Sometimes this means a profit target is met
exceptionally soon. It might also mean sustained strength in a position which
would cause you to only exit most of your shares upon your profit target being
met. The point is, you are selling into strength to scale out profitably (Click
here for more).