I remember giving a friend a tip once. I told him to buy a stock that was trading at $10 a share. I said that I had bought 2,000 shares and that it was going to go higher in the near future. About three weeks later, I sold my 2,000 shares at $19.20, a huge profit. I sold into strength, just like the pros. About a month after I first gave my friend the stock tip and a week after I sold my shares for a huge gain, I ran into him. He was furious with me. My friend said that he had bought 1,000 shares at the $10 price, but when the stock pulled back three days later to $9.00, he had panicked and sold. He took a $1,000 loss and blamed me. I explained that I had not panicked when the stock fell because it held above support at $8.60. I had given the same tip to a second fellow as well. He also bought shares at $10. But when I told him to sell into strength at $19.20, he got greedy and refused. He wanted at least $40 for his stock because he wanted to pay off his car. I couldn't figure out why he would choose such a strategy. Sell at $40 because that gives enough money to pay off a bill. Well, I am sorry, but the market does not work that way. You should sell based on technical resistance or because of fundamental reasons, not because you want to pay off your car. This method will never work! That fellow is still holding his stock with a loss because he refused to sell when it made sense. Another important lesson.
