Trading Patience

Patience (no, not the card game) - and lots of it - is the one thing you'll need if you're going to make serious money on the stock market.

What I'm really talking about is the patience to hold onto a winning share for a good while. Staying patient and keeping composed while riding out any volatility, or market-maker tree-shakes really is the key to successful trading.

Of course shares go up and down, but if you possess a good quality one over time, it will continue rising, making you a lot of money.

I know various traders who moan to me about taking the profits far too quickly. They're happy to take one or two points profit - they just can't help banking the tiny ones, scared incase they lose them.

But after commission and stamp duty, what's the point?

One e-mailer I know buys "T plus 10". This means he buys shares on credit but it also means he has to sell after ten days, taking a profit or loss. Now I really don't see the point of that.

Another one just can't help himself. If he bought a share at 500p and it goes to 520p he just has to close it off and take profit. For less than 5%? You must be joking!

Now I'm not saying buy and hold is the way to do it. I agree that shares are for buying and selling. But there will have been times when you bought a share you thought was undervalued, but it just kept on going. So ride that wave!

A few examples: I bought Isotron at 458p in November. I loved the look of it. I bought tons of shares (around £25,000 worth). It kept on going but a number of times it fell back - one day the market makers pushed it down 25p. Yet still I held on grimly. Nothing had changed about the shares except for an excellent statement and director buying.

Now it's hit nearly 600p. Am I temped to sell four months later? No! Because I look at it now and would still be a buyer. I think I'm going to nearly double my money. Some people would sell half. No way. I'm riding that wave.

Another one is Carrs Milling. Bought for 392p in November, this one too is hitting 600p. Only a couple of days ago the market-makers tried to scare holders into taking profits by savagely dropping the price by 20p. It didn't scare me. In fact, I decided this was a bullish sign. The market-makers needed some shares, and I reckoned there was a big buyer out there.

I have lots of examples. Dart bought at 296p, now pushing 400p. Burren bought at 239p, now over 500p. RPC bought at 203p, now nearing 300p - all profit-making, well run companies.

I could've easily taken profits on any of these a long time ago, but I would not have made so much money!

So when is it time to sell? When I feel the shares are rightly valued, or the statements start to sound cautious, or maybe when a director sells. Or perhaps if I see some real selling volume coming in. Until then, I'll sit tight and watch my money grow.

I'm actually more likely to sell a share I haven't held onto for that long, but which hasn't started to rise as well as I thought it would. I'm also more likely to sell a share that's starting to lose me money. I would rather cut losses.

What I'm saying is, don't be too hasty on the sell button. Taking a small profit is no good at all. To be a fat cat, stay patient and let the money grow.

I believe everything that I've said holds true in the current mini-bull run. But, of course, there will come a time when the market turns bearish. Now that could mean it's time to sell up - even the good long-term winners. But I think there's a bit more of the bull run to come.

There we are, my friends. Think long and hard before you press that sell button!