While this is all good, what happens if you pick another company that turns out to be a loser and so on? Eventually you have compounded your mistakes by trading a bunch of losers and getting nothing back in return.
While many of these companies start to experience their massive run-ups, these stocks are closely meeting or exceeding their value from 6 months to a year back. The problem is that many of the people who waited to sell the stock at the bottom are not experiencing this move higher. Instead they are out searching for the next “non-loser.”
In this age of the stock market, everybody is looking for the quick fix. Why wait a couple months to make a good return, when we can try to do that in just a couple weeks?
Because of this, many of us are quick to give up on stocks and try to find the next winner; however, if you are really doing true market research and find a stock you want to trade, then shouldn’t you have more faith in it?
According to a great article, 10 Investment Strategies for 100% Profit,
4. Never sell at a loss, wait it out.
If your stock is down, wait it out. Never get impatient.
In general, stocks move up and down, have peaks and valleys, and move in trends, so abandoning ship at the first sign of loss does not always seem like the optimal situation. Very rarely can anybody constantly call tops and bottoms.
While we should still practice using designated stops, entries, and exits, remember that we should always allow room to incur losses and wear them out. Ultimately knowing when to actually sell a loser or wait it out, will bring your enormous success in stock trading.
source-http://thewildinvestor.com