Skim The Milk

Making money from Momentum Investing is similar to Skimming the Milk. When you heat the milk for first time, the butter/malai skimmed is maximum. To make more malai, you need to boil the milk much longer.

Similarly in Stock Market, When your stock moves up 30-40%, book profits aka skim the milk. The same stock may go up another 10-20%, or go back down 40-50%. If you skimmed the milk, you would retain the profits, and will be able to capitalize when stock moves down.

Key to this strategy is defining your set of rules for skimming. If you do not have defined rules, you will end up taking the ride up, then the ride down and then sitting duck as long investor expecting the stock to move up.

Fine example is myself, who brough Parsvnath on 4th Jan for Rs. 476, saw the stock move up to Rs. 576 in 3 days, failed to book profit (Got busy couldnt give time to skimming) and saw the stock plummet back to Rs. 505 on 10 Jan.

Had i skimmed the milk, i would have made cool profit of Rs. 7000 and still be riding the bull by purchasing the stock again at lower levels.

Rectifying the mistake by defining the Rules i'm going to follow from now on in the My Investing Rules Post.