How Much Do I Look To Make In A Trade?

Posted By on Nov 25, 2014 | 0 comments


Questions like "What price target do you have for $XYZ stock?" or "How much are you looking to make in $XYZ?" are the most frequently asked questions I get when I just buy or sell short a stock. So what's the answer?

Answer: I don't know! After I get into a position, I watch the stock trade tick by tick. I usually don't know if I will be selling the stock in 3 seconds or hours later. It all depends on what happens AFTER I initiate my position. In daytrading, a stock which appears very bullish on the charts and tape may change in a second to be very bearish. This is because buyers may have gotten cleaned out by new sellers willing to aggressively dump shares. And since I don't know what is going to happen, unless the trading gods have instilled in me the power to look into the future, giving out a price target or gain amount is just purely guesswork and shouldn't be really relied upon by others. Yes, I "wish" for what I would like the stock to do, but again this is just hoping and we all know that hoping and wishing doesn't affect a stock's price.

Other things that contribute to my uncertainty in knowing when I exit a position are the following:

Boredom & Patience. If the stock market shows no volatility and I feel bored with very little patience, I may take whatever profit I can by selling really early and making only 10c on a trade. If the markets are exciting and volatile, I probably would be obliged to hold onto the position longer than normal hoping for a bigger gain.

News. Breaking news always affects my holding time and my profit goals in a stock. For example, if I'm bottom picking a stock with accounting fraud rumors, I try not to hold onto the position that long unless I believe them to not be true.

Confidence or Lack of It. Do I feel confident in the trade or not? Obviously the more confident I am in a trade the longer I will try and maximize my gains.

To summarize, knowing how much money I will make on a trade is just purely speculation. So if you don't want to sound like a newbie, please don't ask me this question in the MookTrader stock chat room 🙂 Stock exit strategies are influenced by so many factors it is impossible to accurately predict when to get out.

- Hubert Tsai

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