Investors can make a lot of money by owning a hot stock with a lot of momentum. Cramer's trick to making the most money is knowing when to get out.
"The key to figuring out when interest has peaked and it is time to sell is by watching the analyst coverage," Cramer said.
Once a hot stock has at least six analysts covering it, then the love for it may die down because it means it has gotten too popular, Cramer said. Stocks tend to cool off when everyone who was interested in buying it has already done so.
Learning how to trade around a core position in a portfolio can be an investor's best technique to combat volatility in the market. In fact, it was one of the techniques Cramer used to become successful on Wall Street.
"This is a discipline that is incredibly useful, especially in volatile, crazy markets," Cramer said.
Trading is all about profiting from short-term fluctuations in price, which can be caused by an unexpected catalyst or a wild market. In Cramer's opinion, knowing proper trading strategy will make you a better investor. That is why it is so important to know how to trade around a core position.
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