This post is not meant to argue whether the buy and hold strategy works better than active trading because I believe that many of us utilize both techniques in reality. The purpose of this post is to explain why making calculated decisions will maximize your capital’s opportunity costs. This topic came up when many people are waiting for their holdings to hit an extremely far off target before selling however, recent events in the market will probably make you question your decision. In today’s post, I will be using three scenarios to explain why taking action can be the best choice when the market is consolidating.
Again, these scenarios do not factor in trading commissions hence you should do some calculations with online calculators before selling to see if the profits are significant enough. Otherwise, you can always choose to add on to your holdings so that the cost of trading will be diminished.