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Holding Stocks: You've Bought a Stock--Now What?

Learn From Your Experiences

Even the most successful stock investors make mistakes. You'll learn a lot from your own buy and sell decisions. Keep a log so you can analyze where you went right and where you may have gone wrong. Here's a list of items to track:

  • The name of stock you bought
  • The buy price and number of shares purchased
  • The IBD SmartSelect® Corporate Ratings of the stock at time of purchase
  • The buy point marked on a stock chart
  • The reasons you decided to buy the stock
  • The date and price at which you sold the stock
  • The amount of your profit or loss
  • The reasons you sold the stock

Key Points To Remember

  • Sell any stock that falls at least 8% below your purchase price. This is essential to avoid heavy losses.
  • Check IBD SmartSelect® Corporate Ratings to detect any significant changes in your stocks, such as a sharp decline in Relative Price Strength, Earnings Per Share or Accumulation/Distribution ratings.
  • Diversifying into too many stocks can hurt your overall performance. Stick to just a few stocks, but never buy more than six or seven or you'll find it hard to keep track of them. You'll make more on one or two good stocks than a broad stable of more mediocre ones.
  • Be prepared to spend time each day reviewing the general market. Read The Big Picture and the General Market & Sectors page to learn over time when you should be in or out of the market.
  • Charts provide important clues about a stock's strength. Look for signs of weakness, such as an exhaustion gap up, a climax run or falling prices on high volume
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