Trading in stock involves the careful analysis and observation of a company’s performance to help you decide when to buy or sell its shares. The main objective is to buy shares when prices are low and sell them for a profit once their value increases.
Stock market values are constantly fluctuating, so the kind of profit you enjoy depends on when you sell your stocks. Some helpful tips that can be used to identify the right time to sell your stocks include:
When the stock no longer fits your investment portfolio
A good way to plan your investment is to design a portfolio that will act as a guide to the kind of stock you wish to acquire. You can read up on the different options available in the market on TheStorkDork.com before deciding on a suitable strategy for your needs. The website provides traders with current news, investment tips and educational pieces on the stock market.
As a portfolio develops, a certain stock might no longer fit the direction taken by the investor. For example, a growing portfolio might evolve into stocks with larger values ranging in the $25 to $50 price range. Stocks valued below $20 will then no longer be in line with current investment needs and should be offloaded.
When the stock experiences massive appreciation
As mentioned earlier, values in the stock market experience regular fluctuation, with prices rising and falling according to market conditions. When your stock experiences a sudden and massive rise in value, selling them at that point could be your best shot of maximizing your profit margins.
You shouldn’t be too quick to offload your stock as soon as the prices start rising. It’s crucial to wait for signs of stagnation - where the value no longer rises, indicating it has reached its maximum potential.
When the company experiences a negative cash flow
When the company you’ve invested in is hemorrhaging money, it might be time to pull the plug and sell your stocks. It’s important to always keep a close eye on the progress and development of the companies you’ve invested in.
Their success or failures directly impact the value of their stock value. If a company experiences continuous losses, its stock value is destined to plummet as its profit margins decline.
The longer you hold on to the stock of a company losing money, the more money you’re likely to lose from the investment. If you can still make a profit from the current value, then selling as soon as possible is your best course of action.
When you reach your price range
A great way to decide whether or not to sell your stocks is by setting a target value for the shares in question and selling when it reaches that point. Having an initial target clears up a lot of the confusion and hesitation involved with deciding whether to keep or sell your shares.
Trying to figure out whether you should offload profitable stock or wait just a little bit longer can be nerve-racking. Instead, you can decide to sell your stock once it doubles in value, setting a clear and simple action plan for your investment objectives.
You come across a better alternative
If you come across shares that represent a better opportunity as compared to the stock you already own, selling your shares and changing sides could be your best move.
A company’s stocks could represent a better opportunity for several reasons. They could offer more value for money, or have more potential in terms of growth and profitability, or represent a direct danger to the value of the current stock you own.