Buying & Selling Strategy
When to enter, when to exit, and why it matters
Great investing is not about picking winners — it's about having a repeatable system for when to buy and when to sell.
**When to Buy**
• Buy when you have a clear thesis: you understand the business and believe the price undervalues it.
• Use limit orders to set your entry price rather than chasing momentum.
• Dollar-cost average into positions — buy in 3–5 tranches rather than all at once.
• Look for buying opportunities when the broader market is fearful (sentiment low, VIX high).
**Setting Price Targets**
• Set a price target before you buy — know what "fair value" means to you.
• Analyst consensus targets (visible on the stock page) give a benchmark.
• A simple method: P/E-based target = expected EPS × reasonable P/E multiple.
**When to Sell**
• Your original thesis is broken (the reason you bought no longer holds).
• The stock hits your price target — take some or all profits.
• Position sizing: no single position should exceed 10–15% of your portfolio.
• Cut losers when they fall 15–20% from your entry (a pre-defined stop-loss).
**The Hardest Part**
Emotions drive most bad trades. FOMO pushes you to chase already-risen stocks. Panic selling locks in losses. Set your rules in advance — entry price, target, stop-loss — and follow the plan.
Quick check
What is the best time to set your price target and stop-loss?