“How Did I Make My Fortune? By Always Selling Too Soon” Nathan Rothchild
Selling your stocks is as crucial as knowing when to buy them if you want to be successful in the stock market.
While buying stocks requires fundamental analysis, studying stock charts, technical analysis, selling stocks involves understanding investor psychology and keeping your emotions under control.
Here Are Some Important Tips for Selling Stocks
Cut Your Losses Short
Every position you take, the market can go against it for a variety of reasons.
It is essential to cut losses quickly rather than holding onto a declining stock in the hope of a rebound.
8% stop-loss is recommended from your entry price.
Stop-loss price targets are provided with the Invest2Success Advisory Trade Plans
Sell While the Stock Is Still Going Up
To lock in solid gains, sell your stocks while they are still on the rise. Avoid getting carried away by emotions like excitement or greed.
Have a Selling Plan
Always have a predetermined selling plan before buying a stock.
Set target sell prices for both taking profits and cutting losses.
Take-profit price targets are provided with the Invest2Success Advisory Trade Plans
Don’t Let a Large Gain Turn into a Loss
If you have a substantial gain, consider selling some or all of the shares to secure your profits and avoid a potential complete reversal.
Don’t Get Too Attached to Stocks
Be ready to sell a stock when signs of trouble appear, rather than holding on with hope. You can always buy back in later.
Sell Losing Stocks First
Prioritize selling your losing stocks and use the proceeds to invest in your winning stocks.
Focus on Stock Charts When Selling
While fundamentals are important for buying, technical analysis and stock charts are crucial for determining when to sell.
Look for price support resistance to determine when to sell or hold can easily be seen on the monthly, weekly, daily timeframe charts.
The Most Important Sell Rule Is to Buy at the Right Time
Make sure to buy stocks at the right time, with the odds of success in your favor.
Buying at the right time includes many things such as buying in with current trend of the broad market indexes.
Also looking for low-risk high-reward trade setups on individual stocks that can potentially provide you with an entry point and a tight stop-loss target of no more than 8%.
When Selling Stocks Use Both Offensive and Defensive Sell Rules
Defensive rules protect against major losses, such as selling a stock if it falls 8% below your purchase price.
Offensive rules focus on taking profits at the right time, usually in the ranges of 10% to 15%, 20%-25%, and sometimes 30% to 35% gains within two to three months from an ideal buy point.
Weekly Hold Rule is an Exception to the Profit-Taking Rule
If a stock gains more than 20% to 25% within three weeks of a proper breakout, consider holding it for at least eight weeks, as it may have the potential to become a much larger profit winner longer-term.
Leading liquid stocks with institutional buying usually are these types of stocks.
Selling Your Stocks and Booking Your Profits
Remember that selling stocks is not an exact science, and there might be instances when a stock rebounds after you sell it.
However, following these time-tested rules can help you make informed decisions and manage risk effectively.
Always prioritize protecting your capital and securing gains when selling stocks.