In my last post I mentioned I would probably sell my AGNC stock because it was dropping rapidly (see blue line in chart above).

But that’s not the only reason I sold.  I sold because it had dropped below a limit I had set in the past.  In other words, I knew when I bought the stock what price I would sell it at if it fell.

This is key to investment success.  Because it keeps you from taking a small loss and turning it into a big loss.  And I use a special method that often allows me to make a profit when the stock starts dropping.

So let me ask you a question.  Do you know what price you will sell a stock you own if the price starts dropping?  Most investors don’t — and this is why they always seem to lose money.

Believe it or not, even though this stock was dropping like a rock, I made money on it.  I made 40% over what I paid for it, including the dividends it paid.

So how did I do that?

Well, when I bought it, I decided I would sell it if it dropped 25% from the price I paid for it.  But then I did another things as well.

And that is that every time the stock went up, I raised my 25% limit to be based on the new, higher price.  You can see this in the red line in the chart.  See how I kept raising my sell limit every time the stock hit a new high?  And also note that I never lowered the sell line.  Once the stock went higher, I kept my selling price at the new higher limit.

Over time, this really increases your odds that you will make money with a stock even when it goes down in price.

The technique of setting a limit for when you will sell a stock if it goes down is called “stop losses.”  It’s called that because it helps you stop your losses at some point when a stock starts going down.

And the more advanced technique I used of continually raising my limit as the stock price moved up is called “trailing stop losses,” because your new limit tracks (or trails) your stock price as it moves up.

And using this technique, I pocketed a 40% profit on a stock I owned that was dropping like a rock.

This is how you make money in the stock market – with thought out simple techniques like this.

Perhaps you should start doing this too.

What do you think?

To your health and prosperity – John Roberts

P.S. To learn more about stock investing, check out my latest book Stock Investing For Beginners.  It’s written in a simple, easy to understand, conversational style, and full of more profitable stock investing tips.  You can browse through it for free right here http://a.co/0kJOvww.

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