There is a huge difference between trading and investing. When you “invest” in a stock, you should have a long-term view. You can always change your opinion as time goes by. But you shouldn’t plan to hold a stock for years and then get nervous just by one bad earnings report or a minor event.
Trading is different. A trader is mainly looking for a specific catalyst. This could be a technical breakout to a new high as a reason to expect the stock to go even higher. Traders also look at upcoming earnings reports as important catalysts. It is a common behaviour for a stock to surge or fall after reporting results. It is important to have a near-term catalysts for your stock to move. Otherwise, you have no reason to believe the price will quickly go higher. Without a reason to expect a stock to jump in the near term, your investment could be dead money and it could just sit there, doing nothing for a while. If you’re putting your money to work in the market in the short term, you want the trade to be completed quickly. Make money, get out and move on to the next opportunity.
Sven Franssen