When to take Profits - Investing or Day/Swing Trading?

[mancunian]

OK so I am in a a trade/investment which is currently quite profitable with a strong but quite volatile upward trend but I cannot decide whether to :

 

a)  take profits in smaller chunks along the way every day or so  as the upward trend continues and allows i.e. cash in before the pullbacks and rebuy the the dips

- this may be digffficult as I would have to be be able spot the interim tops before the pullbacks happen and Ithe bottoms of the pullbacks.  am also having to pay the spread each time  I move in and out of the market.  This would take a lot of monitoring and time and I guess would turn me into a day/swing trader.

OR

b)  just leave the trade alone and ride the rollercoaster for a few years until I think it has reached the end of its long trerm upward trend.  This may mean I do not make as much profit as I do not benefit in the extra profit made by buying the pullback dips but is easier to do - just sit back and wait?

c) a better option?

I would appreciate anybodys advice or opinion as it always tempting do a)  grab the chuncks of profit along the way but I fear this may take more skill and actually result in a lower profits.

Your thoughts please thak you?

 

[dmedin]

You could leave some money in for the long term (investing) and add to your position on dips (trading)?  Need to manage your stop losses though.

[mancunian]

Jst to add I purchased the shares in the above trade (not doing spread bet or cfd)

Dmedin - hey that sounds like a clever approach thank you

Edited August 18, 2020 by mancunian

[Caseynotes]

45 minutes ago, mancunian said:

Your thoughts please thank you?

Great question though I'm not really the one to answer it. 

Be sure to bump the thread up again later on so the evening crowd can see as well and hopefully add their ideas.

It's a tough one but very pertinent at the mo, a lot of the big US caps are in a similar position, sitting on big gains but are especially volatile as we close in on the indices ATHs as well as Covid news striking at any time. 

I look forward to seeing what the longer term players think.

[TFFX_]

I'm a little confused by what you are looking to do here. Is it an investment (long term) or is it a shorter term position trade? You mention investment, but then talk about taking profits each day or so.... 

1 hour ago, mancunian said:

a)  take profits in smaller chunks along the way every day or so  as the upward trend continues and allows i.e. cash in before the pullbacks and rebuy the the dips

 

1 hour ago, mancunian said:

b)  just leave the trade alone and ride the rollercoaster for a few years until I think it has reached the end of its long trerm upward trend. 

If it is an investment, I would say there are a couple of scenarios. 

Is the stock dividend paying? 

If not, you could let the trade run and accumulate some profit and then sell out of your initial stake and leave just the profit in the trade for as long as you like - this could free up capital for another investment you find in a few months time... 

If it is, you could ride the stock as you mention and take some yield along the way. DRIP could be an option here also (although I have heard it is painful through IG) and the idea of compounding is interesting to some investors. 

You also could buy the dips as mentioned above. 

I think it comes down to - what is the motivation for the trade....and this can help decide the path you take. 

 

[mancunian]

tffx thank you for your feedback.

No dividends will be paid out.

Yes my original aim was a short term investment - probably 18 months to 3 years unless US elections or COVID force me out sooner.

However, when I see the profit building daily with sharp sometimes large pullbacks it does become tempting to day/swing trade as all those rises should exceed the total gain from just investing.

But my gut tells me that will be a lot of careful work and time for me which, unless my timing is very good, may not actually make more money than passive investing due to misjudging the pullbacks.

 

[mancunian]

https://www.investingadvicewatchdog.com/market-timing.html recommends buy and hold along with most other websites I read