On my Yahoo options forum a discussion today took place on optimal time frames for exiting trades. An investor discussed how a website he frequented indicated 45 days was the optimum time to exit a trade.
The Easy Formula
Investors are always looking for a “formula” that they can apply to their portfolios and the easier the better. Investing without understanding how markets, individual stocks and sectors fluctuate and relying on myths such as the 45 day exit time frame, will not produce consistent profits but instead subpar gains. It also keeps investors ignorant of how to become a better more profitable investor.
No Optimum Time Frame
After investing for more than 4 decades and plotting every trade I have done I can guarantee there is no such thing as an optimum time frame that can be applied easily to most trades and certainly 45 days would not be even close to being correct. How such myths get started I can only guess, but the internet has certainly created a world of legends, myths and half-truths that many consider as “fact”.
I plot out all my trades and review them looking for patterns, similarities and anomalies than I can exploit for further profits. During the past 40 years of investing, I found no evidence of a 45 day optimum time frame to exit trades and I do hundreds of trades annually. If anything I found just about every trade I did would disagree with both the 45 day period as well as there being any one single optimum time frame.
Instead what I found is there are some similarities that can be considered by investors to assist in timing an exit but even these could never be applied to all stocks, trade types or methods or even all market conditions.
In no particular order here are some of the “optimum” exiting periods or guidelines I have found after 4 decades of investing…..the rest of this Mentoring Tips article is for FullyInformed Members.
Dispelling Myths – Investor Mentoring Tips for Dec 1 2015
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