InvestorQ : Is entry into a stock more important or is exit more important?
shivangi Arora made post

Is entry into a stock more important or is exit more important?

Answer
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2 years ago


To be fair they are equally important although traders believe that your exit matters a lot more. A stop loss on time is useful in covering your losses rapidly. Similarly, your profit booking at the right time can make a lot of difference. There is a popular aphorism in the market that you commit funds when you enter a trade but actually make money only whey you exit the trade. This applies to short trades and to long trades. That is why exit is so important. If you exit too early, you may miss out the really cream of the trade. On the other hand, if you wait for too long then you may end up missing out on other opportunities. Your exit strategy must be a proper trade-off between the need to get the best price and the need to keep churning your money funds to enhance the ROI. How you manage the profit targets also matters a lot when you exit the stock. Look at phasing out your exit if the stock is too volatile. If the trend appears to be in your favour then try to get the best of the momentum with the help of trailing stop losses. The basic point to remember is that you must never exit a stock when momentum is in your favour on an intraday basis. When you exit make sure that you can use the funds better!