Quote Originally Posted by MTman View Post
Mike,
I often find it difficult to know how long to hold a stock or when to take profits. In your experience, do most of your CANSLIM quality stocks reach the 20-25% profit zone from which you take profits? Or, do you take profits more based on the stocks previous move and other general market condition factors? I realize there is a different set of rules for holding the big winners that O'Neili discusses in his book, but it seems that little direction is given on the other stocks that often make or break a persons portfolio and confidence (other than the 20-25% rule). Your insights are appreciated.

Mark
Mark,

I like it when they reach 25% but there are times when stocks don't seem to get there and I need to adjust my sights downward toward taking profits at 15%. I know when to do this when the market just isn't robust enough to allow most stocks to run up. I monitor breakouts and just eyeball what is happening to them. If I adjust my profit taking to 15% I must reset the loss taking to 5% vs. the 7-8% O'Neil suggests. This is to maintain a 3:1 profit:loss ratio.

Some other sell rules I use are as follows:

1. Cut all positions at 7% loss (if not before). I actually hate taking a 7% loss and will be out earlier.
2. Sell stocks that break a long-term upper trend line (more on this later)
3. Sell stocks that have held the 10-day moving average for at least 7 weeks if they fail the 10-day moving average. Otherwise use the 50-day as your selling guide.
4. Sell stocks that exhibit a sharp pullback and recovery to a new high. This pattern needs to be 4 weeks or less. Something like two weeks down followed by two weeks up to a new high.
5. Sell largest daily down volume since the beginning of the advance.
6. Don't let a stock roundtrip to zero after advancing 15% or more.

Establishing a long-term upper trend line. This is drawn only on a weekly chart over 18-weeks or more. The line should contact at least three bars with six or more weeks between the bars. The break should come at least six weeks after the last touch.

One other thing. Mostly monitor your positions using a weekly interval chart. Daily charts can cause people to sell early. I stay away from intraday interval charts.