Whats the most important sell rule that investors should know?
Rule No. 1 is to always protect your account by selling a stock if the price falls 7 or 8% below your actual purchase price. If you don’t cut every loss quickly, sooner or later you’ll suffer some very large losses. Cutting losses at 8% will always allow investors to survive to invest another day. It is nothing but an insurance policy. You can be wrong on three out of four stocks and still make a fortune in the market if you cut losses when you’re wrong and add to stocks that are working.
