Here is a very important question that you should always ask yourself before pulling the trigger on a buy order:
Why am I making this trade?
Are you buying a share because you like its fundamentals and you want to accumulate it?
Or are you buying to take advantage of a perceived opportunity that has suddenly appeared in the market?
It is essential that you maintain clarity regarding the nature of your trade so that you can also remain clear about when it is appropriate to sell.
If you are buying to accumulate a share then you may chose to disregard day to day price volatility. On the other hand, if you buy because you think you saw a short term opportunity, and then the market moves against you, sell and take your loss.
Don’t lie to yourself about your initial intentions:
“Oh you know, XYZ is not too bad…I’ll just hang on until the price goes back up.”
You purchased because you thought you saw a short term opportunity in the market, but you were wrong.
Accept that you were wrong.
Sell and take your loss.
And move on.
- TIP: The Thai Shares chat room is a valuable resource if you want to discuss short term share price movements in real time with other like minded investors trading on the SET.