We often wonder for how long we should hold our stocks before we sell it, and the answer that comes to mind is to leave it as it continues to rally and make us more profit. However the moment we see a slight down turn in the market we panic and become restless...why?
The reason we find ourselves caught up in the above is because we do not plan our trades before we execute them, and we do not apply methodologies with proper money management. For instance, Mr A holds his stocks for X years because he is investing for growth and Mr B holds his stocks for Y years because he is investing for income. What we have here are two individuals with different goals in mind. This goal is what determines how long we stay in the market on a particular trade, and the deciding factor on how long it takes to realize our set goals.
So before you dump your money into the stock market and walk off to brag to your friends about how you trade the markets, it is worth while for you to take a moment and visualise what is happening in the market at the moment you intend to invest and decide how long you intend to hold the investment for. The reason you need to do this is because you are setting for yourself a pre determined level of involvement before hand, also deciding at what point to exit the market acts as a guide to tell you when you have moved from the realms of investment to out right gambling.
Before you enter a trade there must be a reason why you think that stock is a good buy at the time and if for any reason you wake up tomorrow to find that this reason is no longer present, then it might be time for you to think long and hard about staying in that position. There is no rule of thumb about how long an investor should hold their stocks so stop looking for one and simple follow the plan you had drafted before you entered the trade.
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