# What do you consider a good % profit from shares?



## motion (10 May 2007)

Hi Guys, 

I have been share trading only a short while but a couple of my shares have made good profit. When I started trading I said I will sell them once it gets to 40% profit. The reason behind this is I only 6.80% in a savings account and minus trading fee, tax and time. I thought this was a good percentage to take home. 

What do other people consider a good percentage of profit on a share before they take it out or do you ride it as much as possible? I would like to know your thoughts on this. 

Thanks


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## Broadside (10 May 2007)

This is a market that dare I say it is just about as good as it gets, and the shares I hold that are gaining are running and running far beyond my expectations, obviously it depends on the nature of the stock you're referring to so it is a very tough question to answer.  Every stock I own I have different expectations for, some I want to double and then sell half for a free carry.  Others I like to make a quick 30% but these tend to be riskier for me because I am trying to make a quick buck and am less familiar with the underlying story.  But this is at the speccie end of the market and it is happy days for now. Some are languishing of course, INL for example.  Generally I like to get on a stock as early as possible and then ride it for a year or more and sell for a multiple of the entry price, this year has been great but I won't kid myself that all the conditions are in my favour at this point in time.  In a bear market 10% here and there is precious.  So I enjoy the sunshine while it lasts!


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## CanOz (10 May 2007)

motion said:


> Hi Guys,
> 
> I have been share trading only a short while but a couple of my shares have made good profit. When I started trading I said I will sell them once it gets to 40% profit. The reason behind this is I only 6.80% in a savings account and minus trading fee, tax and time. I thought this was a good percentage to take home.
> 
> ...




Generally most traders here would be looking at a specific target price, not a % profit. They would take thier entry signals and exits according to thier plans. % profit would vary with each trade. In cases where the target price could look like being surpassed most will lock in profits with a trailing stop or look to break even on the initial investment. 

Those FA types would just have an infinate view perhaps, or fair value.

Cheers,


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## Realist (10 May 2007)

Setting a profit target is never going to work.

1. If you  aim for 40% and hit a 30% profit along the way but the fundamentals (or charts) change and it is obvious you should sell, then what do you do?

2. Or if you hit your 40% but it looks so promising, why sell?

I had a couple of 6 baggers (600%+), in the past year, had I sold at 40% profit I'd be kicking myself in the head right now.


You need to trade on technical or my preferred fundamental reasons.  Do not trade on targets, apart from setting stop loss targets. 

If the Technical or Fundamentals look good I see no reason to sell.


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## bvbfan (10 May 2007)

Depends on how you look at it.
If you are doing it as a single stock then I think its bad to set a % gain as a exit. What I've found through numerous sells on meeting % gain is the shares kept continuing.

If your looking at a portfolio, for me I like to make sure the portfolio has outperformed the benchmark (XJO for me, but I could measure against XMJ since I'm mostly commodities)

Portfolio I set up in Jan this year is up 37% already and looking at one from the may correction last year is up 110%

All of them have about 10-12 stocks and 3-4 are still down on entry.


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## Sean K (10 May 2007)

CanOz said:


> Generally most traders here would be looking at a specific target price, not a % profit. They would take their entry signals and exits according to their plans. % profit would vary with each trade. In cases where the target price could look like being surpassed most will lock in profits with a trailing stop or look to break even on the initial investment.



I agree, it's stock specific for me. I have long term investments that I would like to make 12%, I have short term investments that I descretionary trade pending the stocks profile (market caps v value, support and resistance lines and TA price targets), and I day trade for 10% profit (poorly  ). I could probably just get away with the 12% from long term investments, but short term trading's entertaining. (for the moment!  ) I'm an 'investor' really, not a 'trader'. I must say that the bigger the % gain you're after, the larger the risk, and the bigger the chance of failure. Maybe.


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## wabbit (10 May 2007)

What do you consider a good % profit from shares?

Profit > 0


wabbit


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## nizar (10 May 2007)

Agree with Can and Kennas.
I dont have specific % targets.
I want to ride my stocks for as hard and for as long as they allow me to.


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## professor_frink (10 May 2007)

motion said:


> Hi Guys,
> 
> I have been share trading only a short while but a couple of my shares have made good profit. When I started trading I said I will sell them once it gets to 40% profit. The reason behind this is I only 6.80% in a savings account and minus trading fee, tax and time. I thought this was a good percentage to take home.
> 
> ...




an alternative could be to sell a portion at a specific target, and then let the rest run. That way you are banking profits, and still have the possibility of further gains.


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## Realist (10 May 2007)

wabbit said:


> What do you consider a good % profit from shares?
> 
> Profit > 0
> 
> ...




Actually....

Profit (after all expenses like tax, trading tools, and brokerage) > current inflation rate (say 4%)


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## Realist (10 May 2007)

professor_frink said:


> an alternative could be to sell a portion at a specific target, and then let the rest run. That way you are banking profits, and still have the possibility of further gains.




I still don't agree Prof.

Brokerage and tax will get you if you do this..

If you have shares in a great company that has made you money and there is no fundamental or technical reason to sell them, then hold!!  Your tax and brokerage is reduced for one.

If you sell, what are you going to do with the money?  Buy shares in another company?  Yeah probably, and that means you'll have to pick 2 winners or more. Instead of just picking the one winner you had and holding.

The odds are definately in your favour if you hold a winner!


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## nizar (10 May 2007)

Realist said:


> I still don't agree Prof.
> 
> Brokerage and tax will get you if you do this..
> 
> ...




Yeh i tend to agree with Realist (for once!)


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## professor_frink (10 May 2007)

Realist said:


> I still don't agree Prof.
> 
> Brokerage and tax will get you if you do this..
> 
> ...




Agreed. If you are on to a winner, it's definitely better to hold on.Anyone will be far better off doing this over the long term.

It can also be pretty psychologically damaging to watch a 5 bagger turn into an average winner. Taking profits, whilst also having the potential to make money off further gains in the share price is good for keeping the emotions in check. Usually, it will turn out to be less profitable, but can still be useful for someone starting out to help build confidence.


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## Realist (10 May 2007)

Almost everyone will agree it is wise to hold a winner unless there is a fundamental (or technical) change that creates a reason to sell.  Virtually no one would suggest you sell a winner purely cause it has made you money.


The argument's start when we discuss "when or if it is wise to sell a loser?"

A value investor who has picked a fundamentally good company and it is not approaching the end of the tax year (when a sale may have tax benefits) is probably wise to hold his loser, and in fact may be wise to buy more.

Traders will disagree though. Cut your losses and move on is usually their logic.

There's merits to both arguments, and it really depends on why you bought the share in the first place. If you bought it cause you thought it was about to go up quickly based purely on Technical analysis it probably is wise to sell and cut your losses.


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## wayneL (10 May 2007)

Realist said:


> Almost everyone will agree it is wise to hold a winner unless there is a fundamental (or technical) change that creates a reason to sell.  Virtually no one would suggest you sell a winner purely cause it has made you money.
> 
> 
> The argument's start when we discuss "when or if it is wise to sell a loser?"
> ...



Thank you for your expert appraisal Realist.


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## professor_frink (10 May 2007)

Realist said:


> Almost everyone will agree it is wise to hold a winner unless there is a fundamental (or technical) change that creates a reason to sell.  Virtually no one would suggest you sell a winner purely cause it has made you money.
> 
> 
> The argument's start when we discuss "when or if it is wise to sell a loser?"
> ...




Your being very agreeable tonight Realist! I don't think I've ever heard you say there is any kind of merit to TA before

I'm going to bookmark this for future reference!

I think taking partial profits is more appropriate when you have a short hold period. I use targets heavily in my trading, but we are talking about a holding period of an hour tops. If I was making an investment, the ideal sell time would be never.

Horses for courses and all that stuff


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## Julia (10 May 2007)

Yep,I agree with Realist who appears to have had a personality transplant to enable him to make some really sensible and balanced comments.

(Sorry, Realist, just kidding about the latter bit.  Bet you're pleased about your RIO shares, huh!)


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## nomore4s (10 May 2007)

Realist said:


> Almost everyone will agree it is wise to hold a winner unless there is a fundamental (or technical) change that creates a reason to sell.  Virtually no one would suggest you sell a winner purely cause it has made you money.
> 
> 
> The argument's start when we discuss "when or if it is wise to sell a loser?"
> ...




Realist is that really you? Has someone else commandeered your computer? Never thought I'd see you type what's highlighted in bold. Could be a case of idenity theft.:


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## Dutchy3 (10 May 2007)

Also ... need to grasp the concept that $ also has a time value ....

12% (say) over 12 months is OK .... 12% in 3 months is better ...

I'm always having one eye on what I call the opportunity cost of holding a position. For those interested please refer the NDO post as a current example. I entered in April with parcels around the 20 mark. Over the next few weeks this hit 26 - 27. So around 30% ... or annualised 350%+. Now here's the rub ... this stock then fell to a low of 23, and today closed at 26. 

While I do expect this stock to move to a price beyond 26 - 27 again, and higher ... will it do it in a time frame that exceeds it's initial run and take out the   350%+ mark? .... For me this is the more important measure. Trading cute enough to capture these flash moves is beyond me ... I need to hold for at least weeks / months until I'm satisfied the FAST move is over ... yet I do know that I would have many multiples of capital now if I could capture the FAST bit of each stocks move then close out the position for the next opportunity.

The time period waiting for that next opportunity might be a topic of conversation all to itself .... again the opportunity cost of missing out on the next best favourable deal ...

It's a beautiful thing ... temptation that is


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## tech/a (11 May 2007)

> personality transplant




You wouldnt think such mundane words would have me in fits!

Perhaps Realist should change his handle to Realised!

*In answer to the question*

Most responses are linier in that % profit gained on any particular trade is king.
I* would argue that its much easier to return mediocre profit and use leverage
and pyramiding correctly to turn mediocre into spectacular.*

I know I use Techtrader as an example often but thats what it is---an example.
Average 26%  return 
each year over nearly 5 yrs has equated to 1300% return on initial capital.
ie $30,000 to $435,000 in that time.


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## motion (11 May 2007)

Guys, 

It seems you all have some good valued points with lots of experience. It's interesting to see everyone’s point of view and ideas on what’s a good way to take your profits from your investments. I guess me being new to this and making what I think is good profit on some of my investments is just trying to work out what’s a good balance...

I think I'm getting a better understanding of how to handle my investments and what I mean by this is buying and selling shares with confidence.....

On that note I’m going away to think about the comments that have been made here and chew the fat on my trading strategies. 

Thanks again for sharing your thoughts with me.


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## yonnie (26 May 2007)

tech/a said:


> I know I use Techtrader as an example often but thats what it is---an example.
> Average 26%  return
> each year over nearly 5 yrs has equated to 1300% return on initial capital.
> ie $30,000 to $435,000 in that time.




Cant see how you do that, even with a margin loan. with $ 30,000 you can borrow $ 70,000 so after 1 year $ 126000.
etc etc.

Could you explain your leverage?


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## Bomba (27 May 2007)

Anything that ends in the green is a good result


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## tech/a (27 May 2007)

yonnie said:


> Cant see how you do that, even with a margin loan. with $ 30,000 you can borrow $ 70,000 so after 1 year $ 126000.
> etc etc.
> 
> Could you explain your leverage?




Margin is approx 2:1
Increase position size with increased equity.
So your getting leverage on your compounding.
The 26% is a rough average as there is open equity profit.


All here if interested.
http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=74;t=000029;p=6


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## Baka_Gaijin (1 June 2007)

"Generally most traders here would be looking at a specific target price, not a % profit."

I am only newto trading but isn't the profit % intrinsic when calculating the target price?


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## Baka_Gaijin (1 June 2007)

Bomba said:


> Anything that ends in the green is a good result




If you can't beat the returns a managed fund is getting, you are losing out.


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## ben007 (10 June 2007)

Interesting psychology represented in everyone's responces. People often set profit targets because their skills are not good enough to know when a trade should be exited. After all the golden rule of trading is let your profits run and cut your losses short. This means if you exit a trade and you have made profit then no matter how big the profit you have done well. Trading is about trading well, win or lose. Let the share tell you when to buy and when to sell and you will make more money than most in the share market.


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## legs (10 June 2007)

I've turned my 26k super balance into 81k in three years with about 6k been added to it through contributions each year (total added 18k).

So thats 142%, if I'm right in 3 years, or 47% a year and thats trading solely ASX200 stocks and only being able to hold a maximum of 20% of my balance in one stock and a total of only 50% of my balance allowed to be traded by me. So really I believe my return is greater than 142% as I have counted their returns as well.
Is that a respectful return? I know its a hell of a lot better than what the super company returns itself.


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