No matter how much the investment world has changed, stock is still one of the most popular forms of investment. It has a low threshold, so anybody has a fair shot at the stock market. In this guide, we will walk you through the basics that can help you sell stocks smarter, the unique personalities a stock market has, and how to research for success.
Why Sell Stocks?
There could be many reasons you should sell your stocks. A better question would be when is the right time to sell the stock. For example, when you notice warning trends in your stock’s price indicating instability, you may consider selling your stock. On the other hand, your personal situation and risk tolerance should also affect your decision on whether and when to sell stocks.
So, how should you sell your stocks?
Step 1: Understanding How Stocks Work
The results of your stock trading come from the difference between your buying price and selling price. When the selling price is higher than the buying price, you profit. Otherwise, you will suffer loss. The price of each share could change drastically throughout each trading period, so it’s important to stay on top of new and other information related to the shares you hold.
Step 2: Control Your Risk With a Stop-Loss Point
Most investors want to maximize their return on each trade. And the more experienced an investor is, the more they may decide to hold onto a stock even when others might be selling already. The same behavior is less often seen among short-term traders.
Regardless of your trading style, you should always set a stop-loss price. At what point do you make the hard call to sell your stock to avoid a loss too hefty to afford?
Step 3: Sell When The Price Hits Your Goal
Now that you know your stop-loss point, all you need to do is patiently observe the price change and make the call to sell at the right timing. Remember to control your emotions and remain calm. Being greedy is the no.1 reason why a profitable trade may turn into a significant loss.
Know your goal: how much do you want to make off this trade? Your profit goal and the number of shares you own together determine your target price. And when your stock hits that target, do not hesitate to sell it off. Look into stock analytical methods so you can identify an opportunity or a threat when they arise.
In short, to sell stock, you must first understand how stocks work. Simply relying on one information source is rarely enough. Conduct comprehensive research to predict how the price will fluctuate. Next, create an exit strategy by setting a stop-loss. Don’t hold onto an unstable stock or a stock showing a decreasing trend if you cannot tolerate that risk. And finally, assuming all things go smoothly, sell when the stock hits your target price instead of hoping to go a little bit further. Greediness is the main reason why many investments fail.