Disciplined traders will understand this.
Others will struggle with it. As a trader, I learned a LONG time ago that if you make big profits very quickly, it's generally a good idea to take them. If I see a potential 30% profit on a trade and I quickly make 10-12% within a day or two, the reward-to-risk of holding changes. There's the guaranteed 10-12% profit RIGHT NOW vs. the hopes that the trade continues to move in your favor, so that you can capture the full 30% profit. I'll take the "bird in the hand." Altimmune, Inc. (ALT) was a potential trade candidate that I passed along to our EB.com members, via our Daily Market Report, earlier this week. The stock was trading near 12 price support and I suggested we might see a move back closer to 15. Here's the chart:
Enter Altimmune, Inc. (ALT):
ALT gained 13.25% the very next day and seemed headed for that 15 price target. But in the DMR, I suggested that members "....take the money and RUN!" if they traded it. Why? Well, at that point you have a guaranteed significant profit in just one day or risk holding and hope that ALT continues its rally. Well, you can see what happened the very next day. ALT lost nearly 9%. As a trader, you can always buy back in on weakness if you'd like. If the worst trading decision you ever make is to take a 13% profit in one day, I think you'll do fine and be a successful trader. Greed kills many traders. If you make a great call, reward yourself. It's liberating.
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Happy Trading!Tom BowleyChief Market StrategistEarningsBeats.comBetter Timing. Better Trades. |