The 4 Ways To Exit A Small Cap Stock Are

1. Trailing Stop – A price below the peak gain price where you will take profits if the stock reverses and starts to sell. The trail will follow the price up higher, but usually does not move down.You can also trail the price by either a percent below peak or close, or a point value below the low of a just completed bar on a chart.

2. Scale Out – Take the investment and scale out at fixed percent gain intervals. One example (especially for investing longer term), if you own a stock and get a gain of 25%, sell 1/4 of the position. Once the price rises to a 50% gain on the balance, sell half of what you have left. You have now locked in a 25% gain on your original purchase. The balance of the position should be locked in at breakeven – which means if it starts to go against you that means you will not let it go into a loss. On the balance of the shares, if it takes off strongly after a 50% gain, look to just exit the balance and move on to another trade. For intraday trading (day trading), you will want to scale out of half the position after a run of about 1/2%, and then move up your stop to breakeven on the balance.

3. Forever Investment – If you have a stock that you really think will be a winner for the long haul, once you get a 100% gain on it you should immediately sell 1/2. Why? Because once you sell 1/2, you have done a superb thing. You have retrieved your original investment out of it, all the money, and still have 50% working. Best of all, even if the company goes bankrupt, you cannot really lose. Ever. Take the 50% you gained out, and then try to find two different ideas that may do the same. The one thing to keep in mind here is there are only very very few Walmart, Home Depot’s, McDonalds etc. Even if you have locked in this part, be aware that tons of companies do superb for years, then the market changes and they bite the dust. It is super rare to find a new Proctor&Gamble or Microsoft. Most of the time you are better off to also have a “have to lock it in” price on the balance you hold, such as 200% gain etc.

4. Price Target – A fixed price from your entry price where you will exit if it gets hit. For example you might purchase a stock at 12, but be very happy if it went to 15 in a month or 2. So that is your exit. Price targets are entirely dependent on expected hold time and should grow the longer you plan to hold the stock (within reason). The thing to remember is you have to take what the stock will give you, not what your opinion of what you want the stock to do.Price targets can be made by looking at support and resistance as well.  In general, if the stock has to push a decent amount to your target, and your target you want is just beyond a resistance point, you should move the target down to underneath the resistance for a better chance of hitting it.

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4 Ways To Exit A Small Cap Stock