Picking stocks is the golden bullet that every trader aspires to find. I have spoken to several traders groups over the last 12 months and I always comment about how strong the Australian equities market has historically been. The market has performed considerably well with many companies recording very significant price gains.

Staggering numbers by anyone's standards. Now the reason why I say this is to illustrate a point.

Interestingly, there is always someone who will ask about how they find these types of companies that experience such staggering growth. "Stuart, excuse me, I was wondering how do I find those companies?", someone asks. The rest of the gathering normally laughs quietly thinking, 'yes, I would like to know that too'.

I admit that sometimes I have to prompt them to ask, but once I do, the question comes pretty quickly

My answer is simple however, and probably not what they were after. The reality is you don't find them. You really can't. I guess people want me to tell them a specific mix of indicators (with parameters set) and chart patterns that will find the perfect setup for them.

When you buy anything, you rarely have little idea of where it is going, let alone knowing it is going to appreciate 100% over the next X months.

This is where the focus of many people is wrong. Too many traders focus on the wrong things. Too many traders focus on the entry and not enough on the exits.

I go on to add that one of the most important trading rules is to let your profits run. It is widely accepted that cutting losses is hard however I believe that letting your profits run is certainly not easy. This is why having a strict, mechanical approach to trailing the price with our exit is very advantageous. It does as much as it can to reducing the emotions associated with the decision.

Back to the group of traders, rather than asking about what indicators or chart patterns they could use to identify a trading opportunity with such potential, they should be asking about what type of exit strategy they could use to ensure they are in the trade long enough to enjoy such a gain, and therefore to let their profit run. Furthermore, once they have asked that question, then they could ask how they prepare themselves mentally to stay in with a trade for such an extended period of time when it is going so well, and to resist the temptation to sell and realise the profit. In this particular scenario, these are the keys to success.

Picking stocks is not a predictable and realistic expectation you should possess. So focus on the right things and in this case, do everything you can and provide your trade every opportunity, to let your profits run. Then reward yourself when you do.