Now Ev'ry Trader Knows that the Secret to Survivin'
What's the dadgum secret that this gambler knows that will allow us to succeed long-term in trading the markets?
Well let's just say it's a very simple secret: it goes like this...
[It's] knowin' what to throw away and knowing what to keep.
Now to translate it for us traders:
There's a time in place when to keep a trade, when to sell it, when to cover it, and when to let it just keep on going. Knowing when you are going to sell a stock, why and how you will sell it, and before you even enter the trade preferably - yes conditions change, but you should have at least a gameplan going into it though - is absolutely a must.
There are always reason after you get in the trade for holding a stock when it is running in your favor. That might include tightening the stop to lock in gains, or it might be recognizing the stock is parabolic and that there likely won't be a better time than the present time to cut the stock lose and move on with the profits in hand.
There's other reason too, including outside forces, like quarterly earnings, FDA announcements, Fed-related news events. The list goes on and on and on.
The secret though is knowing that you need to get out even if that means you run the risk of leaving money on the table - if the risk is stacked or heavily increased against your trade, then get out. Move on. Plenty of other stocks to trade and make some money off of. Now Ev'ry gambler knows that the secret to survivin'Is knowin' what to throw away and knowing what to keep.
'Cause ev'ry hand's a winner and ev'ry hand's a loser,
Here's the rest of the post.