Selling is largely the most difficult part of the overall investment/ trading
equation, and if a market player does not have a firm handle on a few sell
guidelines which aid in making proper sell decisions, profits will be hard to
keep, if they are ever come by at all. Below, we have listed a few guidelines
that will help limit the number of errors which can too easily occur in this
most delicate of all trading areas.
Consider selling any short term stock recommendation that
languishes for 10 consecutive trading days without ever achieving its
upside target or violating its downside stop loss. We are in the business
of moving in and out quickly (in most cases 2 to 5 trading days), and in
order to maintain a certain degree of liquidity, we must eliminate any stock
which attempts to tie up our much needed capital. We refer to this as a "time
stop," and it is an excellent tool to incorporate into any short-term oriented
trading program.
In most cases, if a good part of the expected move
has not occurred during the first 5 trading days, the chances are good that
the stock will be "timed out" or even stopped out. You will find that most of
our winning plays do produce a large part of their move in the beginning.
This is not to say that one should not go the full distance with each short-
term stock pick (max. 10 days). We just felt this point was worth being aware
of.
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