Now that we are in a nice bull market, selling a trade can be hard. After all, it the stock could keep going up! So today’s bull market trading tip is simple: practice selling.
Of course, you know that selling is the right thing to do, but so many traders will just sit on a trade. The reasons for this inaction are vast and wide. Some traders get cold feet, others are just greedy.
In fact, greed is a big reason why investors and traders don’t sell when they could or should, but there are other reasons, too. FOMO, or the fear of missing out, is one that resides in our brain constantly. Nobody wants to sit on the sidelines and watch markets rising.
You can try to look at selling rationally: “Okay, selling makes sense right now. I’ll take a some risk off the table.” But in my experience, most of the time selling does NOT make sense. When it comes to hitting that sell button, risk management is often thrown out the window. Emotions take over, and we make costly mistakes.
So here’s my bull market trading tip of the week: Practice selling!
One of my daily trading exercises is to sell right at the start of the day. Whether it is a winner or loser, a sale is my first trade of the day. This gets my mind focused on what is happening in my accounts and not the emotions driven by market behavior. I have also found that it makes it easier for me to look for and find new trading opportunities the remainder of the day.
Practice hitting the sell button, whether it is to book a win or a loss. You won’t feel bad about it, I promise! Remember, stocks are not a beloved pet or lifelong friend that we are emotionally attached to. Stocks are a piece of paper, a means of building wealth for the long term.
