LogFAQs > #938341538

THE STEADY HOLD METHOD
You put $1,000 in stock A at $5 and sell it at $6.
This is a 20% gain which comes out to a $200 profit.

THE SELL AND PARTIAL RE-INVEST METHOD
You put $1,000 in stock A at $5.00. It goes up to $5.50 at which point you sell. You immediately buy back in for another $1,000 at $5.50. It goes up to $6 and you sell.
This starts with a $100 profit in the first sale, and a 9.1% profit the second time ($91). This comes to $191 profit.

THE SELL AND FULL RE-INVEST METHOD
You put $1,000 in stock A at $5.00. It goes up to $5.50 at which point you sell. You immediately buy back in using your original $1,000 plus the profit of $100, totaling $1,100 at $5.50. It goes up to $6 and you sell.
This is a 10% profit the first time you sell to for a $100 profit and a 9.1% profit the second time for a $100.09 profit, totaling a $200.09 profit.

THE SELL AND MARKET TIMING METHOD
You put $1,000 in stock A at $5.00. It goes up to $5.50 at which point you sell. It then drops to $5.25 at which point you put in another $1,000. It goes up to $6 and you sell.
This is a 10% profit the first time you sell it ($100 profit) and a 14.29% profit the second time ($143 profit). This comes to $243 profit.

This is not a perfect science as there are numerous variables such as risks with attempting to time the market, how high the stock ends up reaching, how much you reinvest after selling, etc etc.