In this week’s episode of his hit YouTube series State of the Market, Chief Income Strategist Marc Lichtenfeld takes on a difficult topic…
Buying stocks is easy. Positive research findings can lead to feelings of optimism, and thinking about potential gains can inspire confidence.
But when a beloved stock dips lower, the decision-making process can get clouded. And as Neil Sedaka sang in 1960, “Breakin’ up is hard to do.”
Investors justify to themselves that the stock is bound for a recovery… and often ride it all the way down to the bottom.
This kind of emotional attachment to a stock’s positive first impression is known as “anchoring bias,” and it can affect even the most seasoned investors.
It’s the same kind of bias that could lead you to see a $14 stock as “cheap” compared with a $17 one without considering important valuation metrics like price-to-earnings ratios or price-to-book values…
And the same kind of bias that you could feel when falling in love with a stock’s story and ignoring its weak fundamentals or volatility.
But love for your favorite stocks doesn’t have to be a losing game…
In this week’s episode, Marc pulls back the curtain on one simple technique investors can use to protect their profits and minimize losses when a near and dear holding begins to slip in value.
Multiple studies have proven its success against self-sabotaging emotions, and Marc even uses it in some cases for readers of his income-focused newsletter, The Oxford Income Letter.
The technique is setting a trailing stop. This is a predetermined value at which you’ll sell a stock if it drops. That value increases along with the stock’s price, keeping your earnings safe.
The Oxford Club recommends setting trailing stops at 25%.
Take the worry and uncertainty out of your decisions to sell. Watch this week’s video and learn how to make a trailing stop work for you.
P.S. Just three days until Marc sits down with Chief Investment Strategist Alexander Green and TradeSmith CEO Keith Kaplan!
These three experts are teaming up to reveal how one kind of trailing stop could help you earn up to 4X more on all of your regular trades without taking on more risk through options or leverage.