@BaulklikeGresh
I think you have to be clear in your mind what your actual strategy is as an investor.
So it seems to me you are talking about risk management and how YOU actually manage risk. Traders can use rules/ stop losses etc as a way of managing risk. But there are big risks in missing opportunities. Many massive multibaggers have seen 50% drawdowns at times and/or long periods of stagnation. If you don’t have a sound strategy on the basis you are going to be making a decision then you will likely make a bad decision.
I have a high conviction, long-term philosophy although am agnostic in terms of the types of investments I make (I only look for asymmetric risk reward propositions). When my ascertained risk is higher I dial down the position size and vice versa. The advantage of holding through is- it makes it a lot easier mentally not wasting time trying to predict market movements (noise) and just focus on business fundamentals. There are also major tax advantages in this approach (MAJOR). The risks in this approach is you have to be willing to re-visit your premises in case you are wrong and you can’t afford to make high conviction mistakes which burn capital.
There is no right answer to your question- having a good idea of your own strengths and weaknesses, where you make cognitive errors and your own biases is a good place to start.
I would say that the phrase ‘you can’t go broke taking a profit’ really irritates me because there is ample evidence that often market outperformance is achieved by letting your winners run and cutting your losers early.
A good book on the topic is the art of executioj by Lee Freeman Shor.
