Thursday, March 20, 2014

How To Define A Profit

     The ultimate goal of an investor is to earn a profit by investing their own money in a company which they believe will grow.  For many beginner investors though, the thought that always comes to mind is what do you consider a profit?  When should I sell?  Remember that any time you make money it is a profit.  I will say that again, any time you make money it is a profit.  Though it may be hard never kick yourself for selling early because once you sell for a profit you now have more money then when you started.  Below is a list of recommendations and advice to keep in mind when determining your acceptable profit.

  • Determine if your profit is decided by a percentage or monetary gain.
  • Stocks on average shift 5% - 10% a week.  If you are looking for a short term gain use this as a goal.
  • Your monetary gain is affected by how much you invest.  5% of a $1,000 investment is not equal to 5% of a $10,000 investment. 
  • Determine if your profit gain is going to be reinvested or put aside.
  • I do not sell for a loss because you should only invest with money in stocks that you are not afraid to loose, or will not require in a short time.
  • Take advantage of a limit or stop limit sell to maximize a gain.  (Future post will cover limit sells)
  • Maintain visibility on a group of stocks (20 max). Study, follow, and read-up on these stocks.  Follow their chart, know their average trading level and buy when it is low.

These are a few recommendations for deciding what your profit should be and how to maximize it.  If you have other suggestions post in the comments below.


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