Ep 138: [Live Webinar] Stock Market Q+A & Profit Taking
★ SUMMARY ★
In this video, I’m going to answer some common questions about the stock market. Also, we’re going to talk about taking profits, why it’s important, when to do it and how to do it in order to be profitable in the market.
In the stock trading business, your goal is to take profits, just like in any other business. Periodic profit taking creates consistency and reduces risk.
Taking profits is more important than “When” to take them. A lot of people focus on when they should take profits, but most traders don’t even take profits. They get into a stock and then they get out of it right away, or let their money sit there and they don’t take profits out of the market.
If you want to be an active trader, compound, and make more money, you need to be constantly taking profits and reinvesting them.
“When to take your profits” will depend on your risk and money management system or style. Because everybody has a different risk tolerance, everybody has a different amount of capital and a different personality.
A lot of people try to look at another person’s system and copy what they do. But when it comes to financial decisions, you need to discover what works for you. Don’t look at somebody else and mimic exactly what they do. You can use ideas and concepts to get insights and adjust your system, but ultimately you need to find what works specifically for you.
Most beginner traders go all in and then they go all out right away, which is not a very good way to take profits. The smart way to take profits is all about scaling. You shouldn’t get in 5000 shares of Tesla in one single day. That’s not what professional traders do. Instead, they stack it. And they get in and out of positions little by little, in quarters or halves. And this way, they reduce their risk.
Beginners usually think “I could’ve made more if I had held into the stock or if I had gone all in from the beginning” Yes, you could’ve, but that way you’re not managing your risk, and if things go against you, you’ll lose a lot of money.
What’s your goal?
Your goal in the stock market is to be profitable at the end of each month, at the end of each week, each quarter or at the end of each year, depending on how you trade.
You need to look at your income and your expenses to figure out if you’re profitable or not. It doesn’t matter when you take your profits, what matters is that you are profitable at the end of the day. And consistency is key. You don’t want to be profitable for one or two months only, you want to continue being profitable for the long run.
Posted at: http://tradersfly.com/2017/06/ep-138-live-webinar/
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