When to Sell

When to Sell and Take Your Worthwhile Profits



The key is to recognize when your stock has reached a point where it isn't going any higher.

Keep in mind that you don't want to be greedy and jump out too early, but you should also avoid staying on too long. Selling a stock at the right time requires patience and disciplined analysis.

A successful strategy is rooted in a valuation process that measures value based on fundamental data. The objective is to estimate the intrinsic value of your company and compare this with its current trading price.

The bottom line is that if you have a stock in which you have a good gain, sell it. Don’t give in to the temptation to let it run so you can make more money. It will run out eventually. You made a profit and now it’s time to cash in on it. It’s better to get a big gain now than a little later. If you want to make more money, put the money from your sale into another stock that has better potential for gains than the one you just sold.

Tight stop-losses aren’t always your friend either. Sometimes they can save you from further losses, but at other times they can cost you a big loss by stopping out of a stock too soon. The problem with tight stop-losses is that the stock could rebound strongly after hitting your stop-loss point and then keep going up. In this situation, you would have lost much of your profits if you had followed your stop-loss instructions and sold the stock when it hit that price level. If you had held on, however, you might have made even bigger profits!


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