Continuing our series "10 Things I Wish I'd Known Before Beginning Stock Market Investing":
7. Set a profit target and stick to it
Before you bought a stock, you decided on a price at which you would sell (and compared the potential gain with the potential loss of your stop loss to make sure the risk/reward ratio justified the trade). Now the price has climbed to your target. Don’t be greedy – take the profit and say thank you! If the price climbs further you may feel some remorse at ‘selling too early’, but it will be less painful than the possible regret of watching your profits disappear as you hang on for a better price.
8. A daily trading journal is your best teacher
There is no better teacher than experience. Keep a journal, and record every trade – your mood, your reasons for buying or selling, why you acted at that particular moment. If it formed part of your decision process, attach a chart. If, in hindsight, you made a mistake (and a mistake is not necessarily a losing trade – it’s a trade where you broke your rules) highlight it. Then, set aside time to regularly review your journal; learning from what you did right or wrong will help you grow as a trader.
7. Set a profit target and stick to it
Before you bought a stock, you decided on a price at which you would sell (and compared the potential gain with the potential loss of your stop loss to make sure the risk/reward ratio justified the trade). Now the price has climbed to your target. Don’t be greedy – take the profit and say thank you! If the price climbs further you may feel some remorse at ‘selling too early’, but it will be less painful than the possible regret of watching your profits disappear as you hang on for a better price.
8. A daily trading journal is your best teacher
There is no better teacher than experience. Keep a journal, and record every trade – your mood, your reasons for buying or selling, why you acted at that particular moment. If it formed part of your decision process, attach a chart. If, in hindsight, you made a mistake (and a mistake is not necessarily a losing trade – it’s a trade where you broke your rules) highlight it. Then, set aside time to regularly review your journal; learning from what you did right or wrong will help you grow as a trader.
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