Regret Selling a Rising Stock? Here’s a Practical Approach to Avoid It!
When a stock hits your short-term target, you have three options:
[1] Book full profit and move on.
[2] Book partial profit and let the rest ride.
[3] Hold with a trailing stop loss to capture higher gains.
For Long-Term Holding : One can use the 200-day SMA as a stop loss to safeguard profits.
For Short-Term Holding : Set realistic short-term targets by multiplying the company’s EPS growth (after quarterly results) by its current P/E ratio.
This method is generally valid until the next quarter.
Example:
Current P/E = 16
EPS Growth = 25%
Target P/E = (16 × 25/100) + 16 = 20 P/E
💡 A disciplined approach with clear targets and strategies helps you avoid emotional decisions and regrets.
When a stock hits your short-term target, you have three options:
[1] Book full profit and move on.
[2] Book partial profit and let the rest ride.
[3] Hold with a trailing stop loss to capture higher gains.
For Long-Term Holding : One can use the 200-day SMA as a stop loss to safeguard profits.
For Short-Term Holding : Set realistic short-term targets by multiplying the company’s EPS growth (after quarterly results) by its current P/E ratio.
This method is generally valid until the next quarter.
Example:
Current P/E = 16
EPS Growth = 25%
Target P/E = (16 × 25/100) + 16 = 20 P/E
💡 A disciplined approach with clear targets and strategies helps you avoid emotional decisions and regrets.