When to Sell?

One question a i get a lot is when to exit the trade. Because if you study a little bit, you will find that it is easy to get it right when to buy, the problem comes later when it’s time to sell.

Mr. Market knows how to get your mind mixed up and that’s why there is this complex movements that make you exit at the lows and enter at the highs.

That’s why I think you need to have some sort of strategy to help you exit without making you think a lot.

One way to this is to plot a moving average of the lows. In the following chart you have a 3 day MA of the lows, and you can see that it helps you with the trend.

You can tweak the indicator to get a more accurate setting of the stock in play.

However, remember that this kind of strategy is best as a trailing stop, and that’s because when you enter is also when there’s more volatility and the only way to overcome the noise is to have a fixed initial stop that is in line with your risk parameters. As the price enters in trend mode, you place your trailing strategy.

Thanks,

S.