Good Morning Eric,
My strategy is sort of unusual this year, normally in past years I would buy a stock and hold on to it, "especially if I feel that some good news are coming around the end of the year". But this year I have been buying and selling more frequently (over 50 trades for the year, so far), my previous average have been around 20 trades per year. My new philosophy is to a) watch a stock price movement for a month or so and then b) figure out an entry and exit point to buy, then c) I would buy enough shares to make a 2-3 point movement worth my while, then I would sell, then d) I would buy back if the stock fall down again and do this over and over again until the stock stops been volatile.
In RACE's case, I am "locking in some profits" and like your example above I gained 2 points and I'm still in the stock. Regarding the taxes I have to pay at the end of the year, my philosophy has been that I have to pay taxes on any gains, whether this year or next year, no matter when I sell, so I might as well take some profits since we can never tell how a stock will be next year (I expect RACE to be higher next year, but no one can really tell.)
Also, I made a New Year resolution to myself, at the beginning of this year, to make a certain $$$ amount per month to see if my new buy and sell, buy and sell strategy would work. I met my resolution and actually this have been my best year (with a great deal of help from race), % of return wise than previous years, so I am sticking to it for next year.
Of course, the risk of buying and selling is that you miss the big runnup if you sell too soon, and you pay lots of commission to your discount broker (but the gains should cover it).
I got caught up in only 2 stocks that I didn't sell quick enough, so I took "my loss to offset my gains" so I could start fresh next year. Currently, I only have RACE and I am looking for another volatile stock.
I know this is a different strategy, but I wanted to meet my New Year resolution and it is also "kinda fun" to buy an sell although a little more stressful.
I hope my long explanation was clear.
Eric, what style or strategy do you use ?
Regards,
Carlos
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