Entry & Exit


It is very easy to say exit at the right time and re-enter at lower levels, practicing this concept is not all that easy. It is a futile exercise trying to exit at the top or buy at the bottom on a consistent basis as it is very difficult.
But, there is loads of money to be made by capturing the major part of a particular trend on a consistent basis. It is always better to adopt a strategy of exiting at different levels on a phased manner.
Investors may sell a portion of their holdings once their minimum target return is achieved. Another lot may be sold at the next desired level of return. Hold a portion of the exposure with a trailing stop-loss, as this would ensure that you participate in unusual price run-ups that one gets to see in a few stocks.
A similar graded approach may be used when it comes to buying a particular stock. While buying, never let the losses run beyond your zone of comfort.
Exit from long positions when the stock declines by a margin, which is just within your tolerable limits, and never hang on to a losing trade in the hope of a recovery, which invariably would turn out to be elusive.
Investors should not hold a loss making position beyond a threshold limit of about 10-12 per cent. Any stock would struggle to recover to its earlier highs after having recorded a decline in excess of 12-15 per cent. Unless you are convinced about the long-term prospects and fundamentals, never hold on to a position, which has dropped by over 15 per cent.

With inputs from The Hindu Business Line

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