Ask Colin

How do you manage the size of your position once it moves into profit?

If an initial investment moves in my favour, I will build it in stages to a maximum initial position that is 6% of my capital. If it then continues to grow, I will sell half of my position every time it doubles in price. The effect of this is for it to grow from 6% of capital to a notional 12% of capital (all other things being equal, which they are not) before I reduce it to the initial maximum position size again.

It should be noted that this strategy cannot be taken in isolation. It is not independent of the risks assumed in other parts of my investment plan. For the full picture, you need my videotaped seminar Building Wealth Through Shares, details of which are on my free access web site www.bwts.com.au. The videotaped seminar will also explain why I do this.

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