Know and plan your exit point

Saturday, 9th May 2009 18:01 - by Boredmum

I think it is very important to know and plan your exit point when investing in individual company shares. This is especially important if your chosen share happens to move quickly. An example I can use is a share that I invested in recently; Mecom Group (TIDM code: MEC). I purchased at 5p and hoped to sell in the region of 6-7p. I suspected it would move quickly on news and then re-trace. I thought this because it was the usual way in which Mecom’s share price behaved. Well, on the day the RNS came for Mecom, the share price rose quickly in the morning. I tested a sell of 6.6p which, after costs, was giving me a healthy 30% increase on my investment. I didn’t go for it and decided it may go a little higher. Well, it didn’t go higher, the share price dropping-off instead. I should have reacted quicker, but I kept waiting for the bounce. The bounce didn’t happen. I am now back to just below break-even. I believe that, in time, it will increase again. Unfortunately, I missed my exit point and shall now be holding my Mecom shares for longer than first anticipated. Please don’t make the same mistake…I know I won’t next time.