First of all, I believe that no one can predict with certainty where the price of a stock is going. We can only speculate. Therefore, to put a TP on a stock is like predicting that the stock cannot go up much further. In fact, even fundamental analysis can only assign a valuation to a stock but can't predict it with certainty. It is the crowd sentiment that is moving the stock prices, which is highly driven by emotion, which we all know are intangible and can't be measured.
Let your winners run. I like to keep trending stocks running until they ran out of steam. As a position trader, I'm not really looking for quick gains but I'm looking for stock that I can milk. I won't easily sell a 50% gain if I know the possibility of it reaching 100% is probable. I trade not for quick and small gains, I'm after for bigger moves that will significantly affect my portfolio's percentage gain.
To minimize risk using this no TP method, I always put a stop loss (SL) on all my trades. Before I buy a stock, I already have a stop loss. This is even more important to me because my stop loss will determine my position size. (More on this on my later posts). As the price goes up, I move my stop to what I think is the next best support. I trail my stops. I only sell when my stop is hit.
Having no TP but using a SL strictly might not help you sell at the top, but it will always keep you from selling too soon. The trailing stop will help you keep your profits safe. My main goal is to let my winners run, trail my stop as they run up to secure some profits, and sell before the trend reverses. It is simple for me, No TP only SL.
Portfolio update:
Sold my $WPI at P1.22 as I think it is quite lagging and moved my funds to $MAC.
Bought P15.30
Stop: P14
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| chart by www.bigcharts.marketwatch.com |
Current portfolio:
$PGOLD (+8%)
$WLCON (+64%)
$PRMX (+12%)
$MAC (new)
$MEG (+11%)
PS: Let's connect at Twitter.
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