Profit from stocks

ChesterDog

pioruns said:

Old_Lifer said:

I would agree  totally with   Prism .

If you had invested in funds  the risk would be spead   but you have chosen to invest in individual shares which is much riskier.   You may simply  have been 'lucky'  with your timing.    If you want  a quick profit , it may be better to take a £2000  profit now, rather than let greed  take over and   hang on for months  or years ,   chasing that £5000  profit at the end of the rainbow.

Why would he exit now, when he can use stop loss to exit in controlled manner, and potentially securing more profits without risking anything?

A stop-loss won't stop your loss if the price falls quickly straight through it.

Rather, it will crystallise it.

yellow1231231

SueRight said:

Hi.
I put around 9k savings into several stocks inside an isa a few weeks ago. I’m around £2k up in profit. Should I cash out as I’m worried in case of a 2nd wave of the virus causing another crash.  My friends said I should wait until it reaches 5k profit and are encouraging me to deposit the rest of my savings, leaving only a few hundred or so left for a rainy day.  I need to realistic advice. Thanks.

the general advice would be 1000 pounds plus 3-6 months expenses in easy access savings 

MinuteNoodles

Could always pull out the £9k initial investment and leave the £2k in there to grow then if the worst happens you've not lost a single penny.

Sorcerer2018

Some good general advice, i would say to think about why you put the money in the first place, and decide if you are an investor or a trader. It does sound like you went into the market to try to make a quick buck. In which I would agree with other get out now and never look back, and be happy you made some money, many other didn't. And don't take financial advice from people who have no experience in the markets. I have found my best profits have come when i ignore everyone, and do my own thing. 

aroominyork

pioruns said:

Old_Lifer said:

I would agree  totally with   Prism .

If you had invested in funds  the risk would be spead   but you have chosen to invest in individual shares which is much riskier.   You may simply  have been 'lucky'  with your timing.    If you want  a quick profit , it may be better to take a £2000  profit now, rather than let greed  take over and   hang on for months  or years ,   chasing that £5000  profit at the end of the rainbow.

Why would he exit now, when he can use stop loss to exit in controlled manner, and potentially securing more profits without risking anything?

OP has £11,000 of stocks. You say that setting a stop loss at 10% below that does not risk anything. Nonsense - it risks £1100.

ChesterDog

aroominyork said:

pioruns said:

Old_Lifer said:

I would agree  totally with   Prism .

If you had invested in funds  the risk would be spead   but you have chosen to invest in individual shares which is much riskier.   You may simply  have been 'lucky'  with your timing.    If you want  a quick profit , it may be better to take a £2000  profit now, rather than let greed  take over and   hang on for months  or years ,   chasing that £5000  profit at the end of the rainbow.

Why would he exit now, when he can use stop loss to exit in controlled manner, and potentially securing more profits without risking anything?

OP has £11,000 of stocks. You say that setting a stop loss at 10% below that does not risk anything. Nonsense - it risks £1100.

And that's only if prices drift gently down to that level.
It's perfectly possible for them to switch from above it to a long way below it with nothing in between.

steampowered

Realistically, you and your friends do not know what is going to happen to a particular stock better than the stock market does. If a company is known to have good prospects that will already be factored into the share price.

Your £2k profit could stay where it is; it could become £5k profit; it could become a £5k loss. You have no way of knowing which way the market will turn.

It then becomes a matter of looking at whether your investments match your risk appetite and expectations. Being invested in individual stocks is much higher risk than being invested in a diversified investment portfolio, though of course the possible returns are also higher.

Currently, you have taken a very high risk investment strategy by choosing individual stocks on the advice of your mates, but you say you are "worried" about possible falls. This suggests your investments are not suitable for your risk profile. If you are worried about falls, I would suggest selling your £11k worth of stock and instead investing into a multi-asset fund to reduce your risk profile.

[Deleted User]

aroominyork said:

pioruns said:

Old_Lifer said:

I would agree  totally with   Prism .

If you had invested in funds  the risk would be spead   but you have chosen to invest in individual shares which is much riskier.   You may simply  have been 'lucky'  with your timing.    If you want  a quick profit , it may be better to take a £2000  profit now, rather than let greed  take over and   hang on for months  or years ,   chasing that £5000  profit at the end of the rainbow.

Why would he exit now, when he can use stop loss to exit in controlled manner, and potentially securing more profits without risking anything?

OP has £11,000 of stocks. You say that setting a stop loss at 10% below that does not risk anything. Nonsense - it risks £1100.

Nonsense - unless OP is trading penny stocks, maybe then he can have big slippage.

OP put in 9k and now is +2k in profit. By selling right now, he locks that profit of 2k and takes it home. 100% chance of 2k profit and 0% of more profits.

By putting stop loss back at his purchase price for example, he risks zero of his initial capital and 2k of profits he made. Hes got 99% chance of profit between 0 and many thousands (if markets continue to go up) and maybe 1% chance to have *any* loss if market EVER slips.

By suggesting to sell now, he have 0% chance to actually gain more than his random 2k he made as of right now.

You obviously never heard of "cut your losses short and let your profits run".

[Deleted User]

ChesterDog said:

pioruns said:

Old_Lifer said:

I would agree  totally with   Prism .

If you had invested in funds  the risk would be spead   but you have chosen to invest in individual shares which is much riskier.   You may simply  have been 'lucky'  with your timing.    If you want  a quick profit , it may be better to take a £2000  profit now, rather than let greed  take over and   hang on for months  or years ,   chasing that £5000  profit at the end of the rainbow.

Why would he exit now, when he can use stop loss to exit in controlled manner, and potentially securing more profits without risking anything?

A stop-loss won't stop your loss if the price falls quickly straight through it.

Rather, it will crystallise it.

As I just mentioned post above, you shold let your profits run and cut your losses short, not the opposite.

Market can "fall quickly straight through it" maybe in some exotic market in 3rd world country or in pennystocks, be realistic.

aroominyork

pioruns said:

aroominyork said:

pioruns said:

Old_Lifer said:

I would agree  totally with   Prism .

If you had invested in funds  the risk would be spead   but you have chosen to invest in individual shares which is much riskier.   You may simply  have been 'lucky'  with your timing.    If you want  a quick profit , it may be better to take a £2000  profit now, rather than let greed  take over and   hang on for months  or years ,   chasing that £5000  profit at the end of the rainbow.

Why would he exit now, when he can use stop loss to exit in controlled manner, and potentially securing more profits without risking anything?

OP has £11,000 of stocks. You say that setting a stop loss at 10% below that does not risk anything. Nonsense - it risks £1100.

Nonsense - unless OP is trading penny stocks, maybe then he can have big slippage.

OP put in 9k and now is +2k in profit. By selling right now, he locks that profit of 2k and takes it home. 100% chance of 2k profit and 0% of more profits.

By putting stop loss back at his purchase price for example, he risks zero of his initial capital and 2k of profits he made. Hes got 99% chance of profit between 0 and many thousands (if markets continue to go up) and maybe 1% chance to have *any* loss if market EVER slips.

By suggesting to sell now, he have 0% chance to actually gain more than his random 2k he made as of right now.

You obviously never heard of "cut your losses short and let your profits run".

Poker players know that when deciding whether or not to call a bet, you look at the odds you are getting for the bet; you do not take into account the money you have already put into the pot – that is dead money. Likewise, it’s emotionally natural but financial nonsense for the OP to focus on his original capital. He now has £11,000 and that’s what he risks losing part of. If he had started with £900 would you suggest a stop loss of 91% because he would still not lose any of his original capital?