"$tairway to Heaven" or How to $ell soaring stocks!

[CaptD]

Ok, you now own a stock that is soaring upward, how do you maximize your profits?

After some thought and missed "profit" here is what I suggest:
1. Plan on getting you original investment back with the first sale.
2. Next divide your remaining "free" shares in several groups, (say three).
3. Sell your next group when the stock pps (price per share) doubles again.
4. Sell your next group when the stock pps doubles again.
5. Sell your remaining group when the stock starts to fall!

Here is an real life example of how that would have helped me

I bought 50,00 shares NPWS at 0.011 for about $560 with trade:

What I did was to sell 40,000 at 0.0145 to get my original $ back $570
Then I sold the rest of the 10,000 at 0.0184 for a gain of about $176

So I made 746 - 560 = $180 profit.

But the stock kept climbing on future good news!

So using the above $tairway to Heaven here's how I would have made out:

Same first trade of selling 40,000 at 0.0145 to get my original $ back $570
Next sell 3,300 shares at 0.022 for ........................................... $ 72
Next sell 3,300 shares at 0.044 for ........................................... $144
Next sell 3,300 shares at 0.060 for ........................................... $198

So I would have made 984 - 560 = $424 profit.

Which would have been the better "play" $424 or $180

I would have come out 2.35 time better!

Try looking back on some of your past "soaring" stock trades and see if this method would have maximized your profits. Please post your findings so we all can learn to do trade better.

[CaptD]

I'd like to add to # 5 above, so it should read:

5. Sell your remaining group when the stock starts to fall, BUT
wait several days to make sure it is really going down and not
just pausing in it's upward climb!


With that said here is what that difference would have made today with NPWS above 0.091...

So using the above $tairway to Heaven here's how I would have made out:

Same first trade of selling 40,000 at 0.0145 to get my original $ back $570
Next sell 3,300 shares at 0.022 for ........................................... $ 72
Next sell 3,300 shares at 0.044 for ........................................... $144
Next sell 3,300 shares at 0.091 for ........................................... $300

So I would have made 1086 - 560 = $526 profit.

Which would have been the better "play" $526 or $180

I would have come out 2.92 time better!

p.s. This would allow for stocks that really rocket upward into $PACE...

[BlueCat]

Excellent post! I'll keep this in mind the next go around!

[CaptD]

Thanks Blue, Hopefully it will be very $oon!

[Quikshft]

I'm sure with some examples this would make more money an a particular trade. I've only had my online brokerage for about two years now, and pretty much with every decision I make I can look back and say "I should have...." That's why the slogan at the top of the page is something I quote once in a while "There's no such thing as bad profit". Ya you might have made more if you could employ hindsight as you trade but of in the heat of the moment you make a decision and then it's yours. I was up 33% on SPNG this week and I didn't act...just watched it all disappear back down to where I'm about even, a little red actually. Hindsight man I should have sold and bought back which WAS MY ORIGINAL PLAN! I was afraid to sell thinking it was going higher with two 'fluffy' news items. IF I had employed your suggested strategy I'd be much more smiley right now.

[WeatherCat]

Hello Captain...I like your strategy and will refer to this page occasionally once TDCP begins to fly northward. I do have a few suggestions that are related to this thread...One of them is to guide investorsmthrough the mindfield of tax bombs to help folks that want to learn how to shelter money from capital tax hits...etc...

[goodmast3r]

Cool strategy. But how do we know that it will keep climbing?

[CaptD]

I suggest that you rely upon your trading strategy (or your gut!) for situations where any one or all the following apply:

1. A stock is really climbing fast perhaps due to new and or sudden change in volume which may be a good indicator of "imminent" news that will affect a stock's price, like a new large contract, split or a potential merger!

2. You are not sure if you should sell or not, because you don't want to lose potential future profit; in that case selling a portion of our position and retaining "free" shares is a great idea!

3. You would rather sell a small number of shares so that you don't affect the current Bid & Ask; this is especially important when the Bid may drop suddenly costing you a large percentage of you profit or when the Bid & Ask are far apart!

4. You don't need all the money "now" and or want to consider retaining some "free" shares for the future "market rebound"...

Run some different scenario's, do the math and know ahead of time what your selling strategy will be...

Remember, "$mart Trading is Profitable!"

[profittaker]

Definitely an interesting approach. I'm in a similar situation in SPNG where my average price is too high and I've purchased more to average down...just didn't do it well enough. I had an opportunity to do so now twice...

So, this "stairway method" also works on buying. I'll call it the Slippery Stairway to Hell!