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Don't Forget To Take Profits In Stocks

Trading stocks is all about making money. Yet, many people forget that they don't actually have a gain in a stock until they take it.

Sounds simple right? Take a solid gain when you have one.

This is actually the hardest part for many novice investors. When they see a stock rising in value they seem to think it is going to keep going up forever. Anyone who has been in the market for more than a few years knows that this is not going to be the case.

Stocks go up and stocks go down. When you have a healthy profit in a stock, I recommend that you sell. You don't necessarily even have to sell your whole position in the stock. Let's see an example.

Say you owned 100 shares of Netflix and you were lucky to buy in at around $120 a share. You saw the stock steadily rise to nearly $300 a share. It looked like Netflix was never going to quit, it had all the momentum in the world.

Then, almost overnight things changed. They started shooting themselves in the foot with execution issues. Competitors starting coming out of the woodwork and the price of content skyrocketed.

Well, the stock plunged and now sits around $65 per share.

Those that booked profits when the stock was high are happy right now. Even if they didn't sell at the top, they still made money.

While those that were greedy, had their heads handed to them.

Remember, take profits when you have them. The worst that can happen is that you made money and the stock went higher without you. Trying to pick tops and bottoms in stocks is extremely difficult. The idea is to make money, not to try and squeeze every last dime out of a hot stock.
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