Equity

Most trading strategies have inherently made in such a way that we need to define target and stop loss as well.

But What about investment strategies? How do we decide to exit from an investment?

To answer this question first we need to understand certain conditions.

• Are we exiting because we think that company or business has lost its edge- like newspaper industry 1970 vs 2000(internet age)

• Are we exiting because we have more ideas than the money we have. In this case some investor try to book profit so that they can buy some more cheaper stocks where they think that can give more future returns.

Other than these two reasons, there shouldn't be other reason to exit.

If you are exiting just because you have gained enough profit often might not be the correct way to exit.

How sure you are that this stock will rise only this much?
Have you taken compounding effect into consideration before exiting a good stock?
What better decision will you be making after booking this profit from a solid stock(because I am assuming that investment is done after proper research)?