ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Investment Myths - Myth 4: You can’t go broke taking a profit

Updated on December 16, 2016

You can’t go broke taking a profit

From a certain point of view, it’s true that you can’t go broke taking a profit. However at the same time, you may be preventing yourself from getting rich. If you are holding a profitable stock, your broker will persuade you to or agree with taking the profit simply because he/she can take the commission earned from the completed transaction. Secondly, brokers may want to recommend another stock for you, as they make money from securing a sale.

Newcomers often can’t wait to take small profits from a trade. This results in winning the small profits, but losing a prospective large profit. . Although a small profit is indeed still a win, it’s not always the short winning we should worry about, rather, we should endeavour to focus on maximising our profits. Because the opportunity of a growing stock and growing profit is more difficult to come by, it is invaluable that we maximise the potential profit during this time frame. Therefore, it may be a mistake to sell stocks early and take profits prematurely. Having said that, the best traders in the world still make mistakes and not all their trades are winning trades. However, they still make money because they have foresight to cut losses short and reduce total loss prices, and let profits run to maximise winnings. They lose small, win big. With this trading principle, you may cover all your small losses with one single winning trade.

Most importantly, do not be governed by emotions. Many investors close the winning positions too early due to the fear of losing their winning trades. These type of investors will tend to hold onto large losing trades as well due to fear of losing the whole trade and clinging onto hope of it bouncing back. This causes even further, more damaging loss. A savvy investor will not panic when the price of a stock is shrinking because he has risk management strategies in place to cut losses before they decline beyond his tolerance level. He will also maintain a clear mind to let the profit run when it should and only close the position based on a strategy plan; selling when the various signals present themselves. Letting profits run requires courage but it will pay off and build your conviction.

All trend analysts know correction is part of market movement. If you are familiar with the market, you would know that the price usually pulls back even in an up-trend market, before it breaks a new high. Market correction is inevitable and should always be expected.

Therefore, it’s important that we know how to gauge, and have a good understanding of the market volatility to avoid the mistake of taking profits prematurely.

Overall, trend analysis is vital in helping you develop a better trading strategy to maximise your profits. Not being governed by emotions, having a strategy plan in place, minimising losses and maximising your profits are smart ways to increase your trading successes. In the next topic, we will examine buying cheap stocks.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)