Page 308 - THE MARKET WHISPERER

304 PART 10 - Winning Trades

When to Sell?

Entering a breakout is a precision technique. It does require no small
amount of experience, technical ability, and psychological stamina, but it
can be clearly defined. By contrast, identifying the exit point is far more a
matter of “artistry” than precise information.

As we learned, you should try to estimate the breakout target in
advance. This estimate will be based on past price behavior and market
conditions, but during the breakout, you need to examine several variables
in real time:

• Has there been a reduction in volume following the breakout, indicating
decreased enthusiasm?

• Are buyers increasing their buy orders during the uptrend? When
buyers chase a stock, its chances of success are greater. You can watch
the pursuit in the form of renewing quantities in the BID.

• As the price trends up, can you see a large seller displaying a serious
quantity in the ASK?

• Is that seller renewing quantities each time he or she successfully sells?
• What is the market direction? Does it assist you? Go against you? Or is

it going nowhere?
• What is the direction of the sector to which the stock belongs?

All these factors need to be taken together to present you with an
overall status of the stock and its chances of lifting off to new heights,
or the immediate need to click the button and realize your profit. As you
see from the bulleted points above, there is no precise, black and white
answer, as you may have wished. A rule of thumb generally says that most
breakouts end with taking a partial.
• The first profit-realizing point, which is a partial profit, is known simply

as a partial.

A first partial can be taken at between 14 to 30 cents from the breakout
point. High-priced stocks, however, may allow you to take a partial of a half
dollar, dollar or even more. As you see, there is no hard and fast rule.