What do you consider a good % profit from shares?

[motion]

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

 

[Broadside]

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!

 

[CanOz]

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

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,

 

[Realist]

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.

 

[bvbfan]

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.

 

[Sean K]

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.

 

[wabbit]

What do you consider a good % profit from shares?

Profit > 0


wabbit

 

[nizar]

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.

 

[professor_frink]

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

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.

 

[Realist]

What do you consider a good % profit from shares?

Profit > 0


wabbit

Actually....

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

 

[Realist]

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!

 

[nizar]

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!

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

 

[professor_frink]

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!

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.

 

[Realist]

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.

 

[wayneL]

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.

Thank you for your expert appraisal Realist.

 

[professor_frink]

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.

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

 

[Julia]

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!)

 

[nomore4s]

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.

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.:

 

[Dutchy3]

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

 

[tech/a]

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.