Investor's Corner: In A Rough Market, Settling For Small Gains Can Be Very Profi

A sharp downturn, like the one over the past few weeks, can put a dent in even the biggest winners.

That's why it's important to watch your stocks closely and be willing to sell at modest gains, rather than wait until all gains are gone.

Locking in a series of small profits can do more to bolster your portfolio's return than risking a loss by holding on in hopes of future gains.

Say you sell stock that's run up 10% or 15%. Don't get hung up on it if it starts to falter badly. You can always buy it again when it offers a new buy point 14 the future.

IBD research has shown that in a market rally, leading stocks tend to climb 20% to 25% after their breakouts before they take a break.

As a rule of thumb, if a stock you buy in a strong market jumps 20% or more in the first three weeks, you should hold it for eight weeks.

But not every stock is a winner, and markets don't always rally. If the overall market is acting shaky and you're sitting on a stock that's climbed 15%, don't be afraid to lock in profits.

By taking small profits and cutting your losses to 7% to 8% below your purchase price, you'll come out ahead in the long run.Say you bought Comtech Telecommunications (NasdaqGS: - ) as it broke out of a base May 8 at at 40.33 (point 1).

It sprinted as high as 45.98 a share, then fell back to its 50-day moving average (point 2) as the Nasdaq notched a series of distribution days.

A prudent investor may have taken a 10% profit at around 44.

Comtech found support at the 50-day line. But later the stock sliced through its 50-day line on above-average volume (point 3).

Selling on the close of that day at 43.56 would have yielded an 8% gain. Comtech continued falling, undercutting its buy point.