Stock To Sell - When Should You Sell Your Stock?
A stock once bought, has to be sold. Whether you will make a profit or incur a loss on all those stocks that you have bought will not be known until you sell it. Many stock brokers suggest that buying a stock at the right price will eventually determine how much profit that the investor is going to make. But the actual profit is made only when these stocks are sold. However, determining when to sell a stock is not an easy task. Some investors get greedy when the stock price is rising and refrain from selling at the appropriate time which may later come back to haunt them. It is very important to find the right balance and not allow emotions such as greed, fear or regret cloud your thinking.
Set a Target
Seasoned investors are known to have a target price or price range in mind for the stocks that they invest in. Once this target is reached, they consider selling it.
Keep an Eye
Investors often tend to follow the company or the industry group in which they have invested in to keep track on how the business is performing. Any drop in the numbers and the alarm would have been raised and they are prepared to sell their share. Both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) publish their 52-week lows list where investors can find below par performing stocks and determine whether they should be sold.
Cost of Opportunity
Investors generally compare existing stocks with better prospects to determine whether investing in them will gain them more profit than what their current shares are returning. If the alternative provides better returns, then it makes sense to sell the existing stocks.
The Takeover Situation
Mergers or takeovers deals may take a long time to be formally completed, and with the idea of Opportunity Cost in mind, it is suggested to look out for alternative options that are performing better and invest in them and sell shares of a company that is going to be taken over.
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