When to Sell a Stock
Many investors find it difficult to judge when the right time has come to sell a particular stock. Besides the personal reasons that may guide your decision there are times when the market requires you to sell a stock.
Some examples of market reasons for selling a stock would be:
A decrease in the price of the stock
- When the stock drops
If you trader, which means that you are interested in short-term profits, a drop in the price of a stock by a particular percent means that you should sell the stock. When you have bought the stock you have set a floor for the stock, which typically ranges from 6% to 8% from the current price. If this range is passed it is better to sell the stock and minimize the losses.
- When the stock is expected to drop
It is possible for the value of the stock to be inflated. This means that the price of the stock is about to fall. If your stock is experiencing this, it is time to sell it and wait for the correction of the market to move the price down. When this happens you can again purchase the stock, but only if you still consider it a profitable investment.
On the other hand, this tactic requires a good knowledge and feeling of when the price of a stock has reached its peak and is about to fall. Additionally, it is always better to sell a stock that is overvalued than purchasing such.
A fundamental change in the company that has issued the stock
A new CEO may change the company's direction drastically. As a result you may end up with a company that greatly differs from what it was initially. If you have bought the company's stock because of the company's mission and activities, it may be time to sell the stock. Before embarking on the selling, you should make a careful research to see whether the change in the company will have a negative impact on the performance of your stocks.
These are only some of the market reasons for selling a stock. No matter what reasons you hold, carefully consider the costs you will incur from the selling of the stocks. These may include taxes, transaction costs, fees and many others that may greatly decrease your profits.
Rate this article : Low | High |
- The Long-Term Scope of Stocks
- Investing According to Dow Jones Industrial Average
- Allocating for Investing Purposes
- Stock Trader vs Company Investor
- When to Buy and Sell Stocks
- Before You Buy Stocks
- Bull and Bear Market Strategies
- Electronic Trading vs Stock Exchange Trading Floor
- Long-Term Stock Investment vs Short-Term Trading
- Stock Market Prices and Buying Strategies
- Personal Reasons for Selling Stocks
- Beating the Market Strategy
- Direct Stock Purchase Options
- Stock Portfolio Diversification
- Dogs of the Dow Investment Strategy
- Purchasing Your Company’s Stock
- DRP Types and Benefits
- Dogs of the Dow Performance
- Investment Strategy Types
- Common Stock Investing Strategies
- The Warren Buffett Way - Principals for Successful Investment
- Value Investing Basics
- Has the Time for Selling Stocks Come
- Selecting Your Investing Strategy
- Dollar Cost Averaging Benefits
- Determining the Number of Stocks to be Included in Your Portfolio
- Ex-Dividend Date - Why It Matters
- Constructing a Successful Stock Purchase Plan
- Understanding After-Hours Trading
- Strategies to Deal with a Down Market
- Stock Market Day Trading
- Strategies to Deal with a Weak US Dollar
- Buying Stock on Margin
- Stock Price Forecast
- Stock Option Strategies
- SEC Order-Handling Rules
- Stock Portfolio Balance Maintenance Techniques
- Short Interest Ratio Monitoring
- Holding Your Securities: Physical Certificate
- Holding Your Securities: Street Name Registration
- Holding Your Securities: Direct Registration
- Management of Investment Decisions Through Stock Screens
- Direct Stock Purchase Plans
- Down Market and Discounted Stock Opportunities
- What Investors Need to Know about After-Hours Trading
- When to Apply Averaging Down
- What Investors Need to Know about Auto-Trading Programs
- Financial Analysts: NYSE and NSAD Rules and Disclosures
- Insider Trading Tracking
- Asset Allocation – Choosing the Best Allocation Strategy
- Investing in Equity-Indexed Annuities Explained
- The Pros and Cons of Exchange-Traded Funds
- Prepaid Tuition Plans versus College Savings Plans
- Characteristics of Variable Annuity Products
- Diversification of Assets
- Rebalancing Your Assets
- Cross-Market Trading Circuit Breakers
- Margin Requirements for Pattern Day Traders