Whenever you enter the stock market it is a good idea to have two targets. Each one of these is critical to being successful in a given trade.
The first target someone should have is where you believe the stock will go. You do not want to just blindly buy a stock and hope that it works out ok somehow. Instead buying is only half the trade. The other half is selling.
Having some point where you will sell if you make money can help you actually see your profits as well as getting out before the stock turns around, hopefully.
The next target that can be critical is where you will exit if you are wrong. No one likes to take a loss, because no one likes losing. But if you do not want to let your losers grow then it is necessary.
Unfortunately not every trader wants to believe that they can be wrong, so often time’s people will ignore this. Then they hit one losing streak and lose all of their money, all because they refused to exit out for a small loss, while the loss was still small.
The side benefit to having these two targets is that it gives you the ability to figure out how much you could possibly lose vs how much you could possibly make. This lets you get into trades where you have a large upside if you win, but a very small downside if you lose.
And often times that is the key to being a successful trader.
For more on stock trading visit http://www.stocks-simplified.com
For more Stock Tips visit http://www.stocks-simplified.com/stock_tips.html
When I was young I wanted to learn how to trade the stock market. So I traveled around the country listening to professional traders talk about how they are making money in the market. Now I understand how easy it is to make money in the stock market and started a site http://www.stocks-simplified.com to help others learn.