Here’s your chance: http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=UPS&sid=0&o_symb=UPS

You implement a trailing stop loss to prevent profits turning into losses.

also trading in and out of stocks is very tax inefficient. if you want the thrill of trading, use synthetic stock positions (which I discussed recently on my blog).

Catch a Gideon

If you had bought and held AOL from The early 90’s until now, you would have seen your $120 stock drop to $15. If you had bought and held Kmart from the early 90’s til now you would have watched your stock disappear at $0 when Kmart declared bankruptcy and restructured.

There are millions of ’should have held’ stories that can be told after the fact. Instead of looking at what could have been, look at the fact that you doubled the market average in less than a year.

Buy and Hold is great if you pick a company that always moves forward, but there are very few of those compared to how many crash and burn.

If you could make just 2% gains a month, getting you a little over 24% gains a year (once you compound), even after taxes it’s still a better return than the market average of 11% or the dividend stock average of 14%.

The key, to me at least, is to protect your capital and let your profits run. If you can do that, you’ll come out way ahead.

You could also avoid the tax issue almost all together if you just sold your profit and kept your initial investment in the stock and then used that cash on dips of the same stock.

Interesting post, thanks for making it.

My mistake. Must read more closely next time.

I think this is one of the most dangerous trading truisms. While it is true that you do not lose money on a trade where you take a profit, this approach makes it much more likely (inevitable?) that you will lose overall.

Acting on this maxim means you limit your profits. You simply cannot make a large profit, which you need to counteract your inevitable (hopefully small) losses. Even the best trading systems score 40% - 55% winners.

A better maxim is “cut your losses and let your profits run”. Now … if I could just stick to it …

you can always try the many other discount online brokers for these type of investment account, cutting out sharebuilder’s wacky $18 “real time” trade fee will save oodles.

e.g., same trades at trade king will save you $24. that’s a movie night out w/ dinner! woot!

(Another good reason to buy and hold.)