Make money from bulls & bears—but don't be a hog

If you own stock, there's nothing better than a big gain, right?

Of course, it feels great! A giant advance in share price is the reason you own stocks.

Jim Cramer sees a major mistake being made with investors over and over again. They get a little too excited when the market goes up and fail to know when to sell at least a portion of their position.

Ultimately, that leads to gains made only on paper and losing the opportunity quickly. You snooze, you lose!

In fact, the “Mad Money” host sees this mistake so frequently, it has triggered one of Cramer’s main rules for investing: Bulls and bears make money; pigs get slaughtered.

Holding a stock with major gains is nothing short of being just plain greedy. Investors must take some off the table. And in Cramer's book of rules, greed is bad and discipline is good. Strict discipline leads to the ability to cash out when you're winning.

Of course, Cramer understands wanting to stick with a winner, wanting to let it ride. Nobody likes to forfeit gains, and that's how selling a winner can sometimes feel.

So, the next time you see a stock climbing ever higher, change your mindset to see your stock as getting more and more expensive. Eventually, it will become so expensive that it won't attract new buyers and will start to go back down.

And you want to be out by that point. It's a simple case of buying low and selling high. Kind of.

Yes, it would be ideal to sell at the very moment a stock tops out, but the odds of that happening are very unlikely. But it's all about instincts.

Therefore, when you have a large gain on a position, find a level where you can feel satisfied with what you have. Then take at least a portion of your bet off the table. Otherwise, you put your gains at risk, and Cramer says that's piggish.

"When things get crazy expensive and I know you have a lot of gains, you will hear me say that you are being a hog, and the bottom line is that I don't want your head to be in this guillotine when the party ends and big wins turn into losses," Cramer added.