Although this question was originally directed to @hitesh2710, I’ve been grappling with it for some time, and here’s what I’ve discovered that has proven to be highly effective for me:
It’s crucial to assess and consider every position within the portfolio comprehensively. As you pointed out, trailing the above position to its 200-day moving average would require waiting for the stock to drop below 100 levels, resulting in a 50 percent decline from its current level. While a 50 percent loss on a 2 to 5 percent position may not be significant, it can have serious consequences if applied to a larger position, say 10 percent or more, and could significantly impact the overall portfolio.
To make informed decisions, it’s essential to have a clear understanding of your average win rates and the biggest gains achieved in recent history. For instance, if your average gain per position has been around 25 percent, the law of averages may start working against you. In such cases, it’s essential to look for exit signals, as consistently improving the average gain percentage is crucial for long-term success.
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