The most critical part of buying any stock is the actual moment you pull the trigger. There is nothing more disconcerting than buying a stock at say 50 and ten seconds later it's at 49.85. Ouch. Naturally that's not what you are looking for, and it hurts. Yet the fact is, it's going to happen to you time and time again, because stocks don't just go up or down. They wiggle, they bounce, fade, pop, shuck and jive.

The question of course is, what do you do about it? What do you do when the stock you just bought is on the way down? Do you sell right back out and take the little hit, hoping it doesn't become a big hit? Or, do you wait it out, fingers crossed that it's just a wiggle and it's going higher? This is the toughest decision you'll ever make folks. Yet we have to make it day after day.

I believe that you have to stick to your plan when this happens. You bought the stock for a reason, maybe it's a breakout, maybe it's a bounce, what have you. But you entered the trade with a stop in your mind, and if it hits that stop, I think you have to bail out. Yes it hurts. Yes it hurts even more if you bail and the thing reverses and roars higher. But it hurts the most when you don't bail and the stock keeps falling.

Likewise, when the stock you buy at say 50 runs to 50.35 and then comes back down, what do you do when it's back to 50? Do you hold it even if it goes lower? Some would say yes, hold it till your stop. But I disagree with that for the most part. More times than not if I'm up on a trade and then it rolls over and threatens to fall below where I got it, I'll eat the lousy commission costs, and get back out. I can always buy right back in if it comes back up again.

Sure there are times when I'll hold lower than my entry. Nothing is written in stone, but for me to do that, I have to have a good reason to think it's just a temporary dip and that it's going to come back. Now for me, this is easy, I'm sitting here all day. But for the guy who has a life and a job, and can't sit in front of a silly box all day, his best bet it to probably set a stop, make his purchase when it triggers, and let the play develop.

I don't care which guru you want to listen to, this is not an easy decision to make, and yes it will frustrate you. Over all these years I've found the first 10 minutes after making a buy, to be the most stressful of all. You'll outthink yourself, you'll panic at times and you'll make the wrong decision often. Don't think you're alone, we all go through it. Just remember that there was a reason you bought the stock. and if nothing has fundamentally changed, being underwater immediately after making a buy isn't a need to scare you. Just don't let it fall further than your stop, or you'll find yourself trying to come up with reasons why you should hold it. "That's a recipe for disaster".

The Stocks2Watch