"never hurts to take profits". Balderdash! Detector just went off! We respectfully disagree Zab.
Taking profits when one should not can be one of the biggest mistake an investor or trader can make.
There are times to take profits and times to let those profits run or even add more to a winning position instead of sell with a profit.
Often times it is mere nervousness or a feeling of uncertainty about the future in general that causes one to take a profit with the thinking...Hey, a profit is a profit, Don't be greedy, pigs get slaughtered etc etc.
Quite often those are mere rationalizations for making an irrational decision that springs from the anxiety caused by uncertainty.
The core of investment success has not changed in 120 years.
Let profits run,
cut losers with corollaries:
Be willing to add to winners,
Do not add to losers.
One could argue...
You have to take profits some time! It's occasionally OK to buy more of a loser if loser is defined as down in price from the previous buy[s].
All true, but the exceptions are just that and not the rules.
We could take a ton of profit on GFRE for example right here or Silver Wheaton for that matter and sure, it would be pleasant to have that money on the sidelined and exposed to no risk of loss but is that a wise thing to do?
No. The weight of the evidence is on the bulls side with both GFRE and SLW.
Does that guarantee further success with them?.
Nope. It's all figuring out the probabilities which means some times the lower probability outcome wins out.
No one said investing or trading was all about being psychologically at peace.
If it was easy to make a living at this, over half the country would amble to their computer in comfortable sweats, sip a beer, avoid traffic and office politics and deadlines. They would trade or invest for a living.
It is very difficult to make a living at this game and one of the reasons is one has to train one's brain and emotions to be at some peace with elements of uncertainty and risk always present when exposed to the opportunity to make substantial gains.
One has to become uncomfortable when others are comfortable. Comfortable and bold in action when others are uncomfortable.
That is not an easy transfer of emotions to come by.
There is a huge difference in what is required of one makes a living living primarily from markets and that which is required to get by trading for fun or secondary or tertiary income.
One can then give into "normal human emotions" much easier and the consequences in lack of performance are not lifestyle altering.
One can even cut profits short without fail and add to losers and let them run if it's not a case of making a living from markets.
There's the inheritance, side job income, spouses income, soc. security, pension etc to make ends meet no matter how subpar market returns may end up being.
Then it's just a game done for ego, boredom relief, whatever.
Pro's do not have that luxury...if they give in to "normal human emotions", they end up out on the street looking for work.
Fabian
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