Many new investors buy share without knowing when to take profit. These people are less likely to be profitable since they do not have an exit plan. Hence it is very important to define your selling price before you buy any shares.
The below is a typical example to show a new investor’s mind set when they just entered the market.A new investor invested in a stock and his stock price rose. He was very happy as he had some good paper profit after a few years. Without proper defining the selling price, he might think that the price will go up further. Due to his greed, he refused to sell even though the stock was overvalued. After sometime, the stock prices started to plunge, but he still hope that the price will rebound and go up higher. The rebound never appeared and his paper profit turned into a paper loss. In the end, he eventually gave it up at a big loss which he held for many years.
We must always buy with the selling price in mind. We must set our profit goal before buying any shares as that helps us trigger our action to take the profit when it hits our target price. Having a goal in mind helps to prevent greed from taken over our mind. If you have never set your profit goal before, I believe now is the time to do it.
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