This archive report was first published on 6 October 2021.
Published on October 6, 2021, by Standard Media, this article highlights the importance of knowing when to buy and sell stocks in the stock market.
Many investors believe that their job is done once they buy a stock, but the truth is that the main work begins after purchase. Stock prices are affected by various factors, and it's essential to be aware of these factors to make informed decisions.
Two critical strategies used to guide your position to a profit or minimize loss are pyramiding and cutting losses. Pyramiding involves cashing out in stages by reducing your position as the price rises, while cutting losses means selling your stocks at a predetermined price, known as a stop-loss.
Preferably, the stop-loss should not go beyond a 10 per cent loss. The higher the loss you allow, the harder and more time it will take to get back to even. It's essential to know the price at which you will exit should the market go against you, and cutting losses is what has led many to financial ruin in the stock market.
Legendary American investor George Soros says, 'It is not whether you are right or wrong that is important, but how much you make when you are right and how much you lose when you are wrong.' Pyramiding and cutting losses are two money management strategies in stock trading that will greatly increase your probability of success in stocks while protecting your capital and gains.
