Hello Hiteshji,
I have a query wrt selling of the shares bought from momentum/technical perspective. While I have been learning on buying the stocks when they breakout or consolidation , I am still not clear about when to sell and how much to sell once the stock makes a move.
For ex, SJS couple of days back broke out above level of 510-515 with good volumes. In subsequent session it went above IPO price also but came out at the close. For the last 3-4 trading session, it was opening higher but closing lower towards the low and today it closed below 500. Clearly the breakout has not panned out as per expectation. However, I am trying to understand when could I have sold it to reduce the losses. Some hypothesis can be,
A) If is say 10% percent lower than the swing high, you reduce your positions and protect your profits or take your loss?
B) You wait for it to go below the breakout point ?
C) You wait for it to go lower as per the initial stop loss decided?
Similar query can be how to protect the profits in case the stock moves up and then starts to correct. A stock is up in 25-40% range and then fall by 10-12% below the high? Do we sell full, partial or wait for it to come near your trailing stop loss/ rebound?
These are momentum bets where business conviction is on lower side.
Kindly advise.
Nikhil
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