Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Thursday, November 11, 2004

Know when to sell

…I was asked an excellent question by a member on a free forum that I have associated with for several years:

How do I determine my sell points when I already own a stock that has made a profit?

This is an excellent question, if fact, it’s the toughest question that I face with every stock that I own that goes up.

If I own a stock and it immediately goes down, this is the easiest decision I must make – SELL and sell fast. I know how to cut my losses and have been doing it for years. Yes, it’s a blow to my self esteem but I always feel better when I see that particular stock several dollars lower a few weeks later. This is when I feel good about the insurance policy I have (sell rules) to protect my capital.

Take ELOS for example: I started to see this stock on my daily screens in mid October and listed a text case study about Syneron on 9/22/04.

I wanted to buy ELOS in the $15-$16 range but it did not dip back down and give me a solid entry point in this range. I knew the company financials looked great, the product was in demand and the stock was a recent IPO. I did buy ELOS in two separate orders that averaged out to $17 and change.

Recently I see ELOS advancing quickly but the volume the past 3 days has been weaker than previous days. I tightened my actual stop at 12% to the intraday high.
The intraday high was $31.67 which makes my stop at $27.85.
***This is only for protection and can change as the days wear on***

Now that the market has closed, I will review the stock in more detail tonight. I don’t see my self doing anything crazy. I will leave the 12% protection stop (from intraday high) and watch the action in the first hour tomorrow morning, after this point, I will decide if I need to sell any or all shares. If it hits the stop, so be it, I have made a considerable amount in a very brief period. If it doesn’t, I will loosen the protection stop back to 15% and reestablish my mental stop tomorrow night. This is the process every day!

Piranha

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