SELLING RULES

RULE 1: SELL ALL POSITION IF STOCK FALLS BELOW STOP LOSS POINT

RULE 2: AS STOCK RISES, IDENTIFY NEW POINT OF SUPPORT, RAISE SELL STOP

 

 

 

 

 

RULE 3: TAKE PARTIAL PROFITS 

  • Take some of profit at a Price Target (25 - 50%) with Price Target = Top of a base + 2 x Range of the base i.e. if a base with a $100 top and a $90 bottom, that's a $10 base. Then Price Target = $100 + 2 x $10 = $120

  • Take some of profit on winning positions if they fell by 10% off a strong peak

RULE 4: SELL AT LEAST 50% OF POSITIONS PRIOR TO EARNINGS ANNOUNCEMENT

  • Holding a full position during an EA is too risky. If the news is bad, the stock can gap down even 30% or more

RULE 5: IF STOCK FALLS BELOW 50-DAY MOVING AVERAGE AND STAYS THERE FOR 1-2 WEEKS OR MORE, IT'S TIME TO SELL

  • Fund managers decided long ago that 50 DMA matterd. They made a habit of letting some stocks pullback to the 50 DMA before adding to their positions (create a "bouncing effect"). If a stock falls below the 50 DMA without any kind of bounce, then it's usually a sign the big institutional funds are losing interest in the stock

RULE 6: IF STOCK DECLINES ON VERY HIGH VOLUME, IT'S TIME TO SELL

  • High volume mean at least 25% above the 50-day average volume

RULE 7: IF STOCK NOT FOLLOWING THE UPTREND OF THE MARKET, IT'S TIME TO SELL

RULE 8: IF A STOCK BECOMES SLUGGISH AND YOU SEE A BETTER OPPORTUNITY, SELL STOCK A TO BUY STOCK B

  • A stock has become "sluggish" if it hadn't made new highs for the past 10 days

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