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How do you decide when to sell a stock?
Posted on 5/21/13 at 1:09 pm
Posted on 5/21/13 at 1:09 pm
This is something I am struggling with. I have a hard time not locking in gains when I am up more than 15-20%. What methods do you use to determine if a stock should be sold or held on to after nice gains?
9
Posted on 5/21/13 at 1:19 pm to LSUTOM07
This is the method I use, keep in mind every investor/trader has a different theory on this.
If you are worried about losing all of your gains place a stop order to lock in some of the profits. Steadily move up the stop as the price increases. If the stop is hit, well congrats you exited the trade with a nice profit.
Stops are also very important to use when a stock is going against you.
If you are worried about losing all of your gains place a stop order to lock in some of the profits. Steadily move up the stop as the price increases. If the stop is hit, well congrats you exited the trade with a nice profit.
Stops are also very important to use when a stock is going against you.
Posted on 5/21/13 at 1:20 pm to LSUTOM07
I usually sell just before the stock goes up 25%.
Posted on 5/21/13 at 1:22 pm to LSURussian
quote:
I usually sell just before the stock goes up 25%
I sold Apple at $125ish in June of 2009. There was no way in hell it would ever go above $150.
Posted on 5/21/13 at 1:25 pm to LSUTOM07
I have a bunch of stocks that I never sell, EVER.
For the stocks that I will, short term positions, I only sell for 1 of 3 reasons:
1.) The stock hits the price target I had when I bought it. (different for different stocks. but generally, 35-100%)
2.) After a merger, can usually sell shares at a 20-40% premium, and usually mergers have a lousy track record of being successful.
3.) A better opportunity comes along, but it has to be significantly better for me to exit a position that hasn't had a chance to hit its target.
You may have to sell for 1 other reason, the company declares bankruptcy .
For the stocks that I will, short term positions, I only sell for 1 of 3 reasons:
1.) The stock hits the price target I had when I bought it. (different for different stocks. but generally, 35-100%)
2.) After a merger, can usually sell shares at a 20-40% premium, and usually mergers have a lousy track record of being successful.
3.) A better opportunity comes along, but it has to be significantly better for me to exit a position that hasn't had a chance to hit its target.
You may have to sell for 1 other reason, the company declares bankruptcy
. This post was edited on 5/21/13 at 1:28 pm
Posted on 5/21/13 at 1:51 pm to Vols&Shaft83
I typically ask myself if I would be willing to buy it at the elevated price. If the answer is no, I will then put a stop around there. There are also a few elementary technicals I look at to get an idea if I think it will keep going.
Posted on 5/21/13 at 2:17 pm to LSUTOM07
There's a few stocks that I don't sell. Others I just try to lock in 5-7% and wait for it to drop again. Others I hold for large gains like 20-25% then I usually get out.
Posted on 5/21/13 at 2:26 pm to LSUTOM07
In similar vein to other responses, consider selling when it becomes an outsize holding in proportion to other stocks.
Apple is an extreme, but valid example. A one thousand dollar stake took on something ridiculous in time. Many managers would suggest rebalancing. A category of energy stocks might be another example. Say you target having 25% in energy holdings. They perform, rise in value, then constitute 50% of your stocks. Trim them down to meet your targets.
This assumes a longer term outlook, and a focus on the overall portfolio.
Apple is an extreme, but valid example. A one thousand dollar stake took on something ridiculous in time. Many managers would suggest rebalancing. A category of energy stocks might be another example. Say you target having 25% in energy holdings. They perform, rise in value, then constitute 50% of your stocks. Trim them down to meet your targets.
This assumes a longer term outlook, and a focus on the overall portfolio.
Posted on 5/21/13 at 2:31 pm to Janky
ya'll don't get smoked with all those sucker stops sitting out there ? are we only talking about blue chips ?
Posted on 5/21/13 at 4:46 pm to Zilla
Zilla, what is a sucker stop?
Posted on 5/21/13 at 5:47 pm to LSURussian
Am I stupid for holding on to stocks that have 100% and 199% returns if I really don't need the money?(no brag got lucky)
Also if I sold one of the stocks it would be within one year so wouldn't I have to pay a nice short term capital gain tax on that?
Also if I sold one of the stocks it would be within one year so wouldn't I have to pay a nice short term capital gain tax on that?
This post was edited on 5/21/13 at 5:48 pm
Posted on 5/21/13 at 5:48 pm to LSUTOM07
quote:
How do you decide when to sell a stock?
Good question... I def would like to see the boards response on this.
I know a lot of stocks are at or near all time highs right now, I'm trying to decide whether to continue the ride or begin cashing out and diversifying more
Posted on 5/21/13 at 6:17 pm to LSUTOM07
I usually sell when I don't hit the Monday night football bailout parlay. Don't want Moose or Rocko to come calling with nothing to give them.
Posted on 5/21/13 at 6:54 pm to lighter345
quote:
Am I stupid for holding on to stocks that have 100% and 199% returns if I really don't need the money?(no brag got lucky)
Also if I sold one of the stocks it would be within one year so wouldn't I have to pay a nice short term capital gain tax on that?
I'll use one of my own trades as an example. Just to simplify, I'll use round numbers and not include trading fees.
Last May I bought 1000 shares of Sprint @ 2.50/share
1000 x $2.50= $2,500 is my investment
Let's say buy May 30th it hits $7.50/share (very likely btw). Or a 200% gain.
My investment is now worth $7,500
My play is to take keep my original $2500 in Sprint because I think it could go to $12/share, and take the $5,000 gain and roll that into 2 other stocks, let's say XOM & Microsoft because I'll hold them forever and collect dividends.
So now my initial $2,500 in Sprint is still in Sprint and I have 2 New stock positions that I didn't have to pay for.
Make sense?
Tying from Tablet so bare with me
This post was edited on 5/21/13 at 7:06 pm
Posted on 5/21/13 at 7:00 pm to LSUTOM07
I don't worry about it. Every time bitcoins peak I sell them and buy dinars. Eventually the trend reverses and then I sell the dinars and load up on bitcoins again.
My main problem is that the medical bills for heart attack treatment is eating up the profits.
My main problem is that the medical bills for heart attack treatment is eating up the profits.
Posted on 5/21/13 at 7:08 pm to foshizzle
I'm still long on Beanie Babies and Tickle Me Elmos
Posted on 5/21/13 at 9:14 pm to PlanoPrivateer
quote:
Zilla, what is a sucker stop?
I once bought some shutterfly stock for $6 or something (close to $50 today
) ....they had a CC coming up and I wasn't really sure what to expect so I put in a trailing stop limit/loss the day before... the stop was at like $5 or something ...a good 20% off that days last trade.....All I know is the 1st trade that morning after the good CC was for something stupid like 100 shares at 4.99...triggered my stop loss, my entire position dumped (which was exactly the 2nd trade of the day, I had fidelity check the tape), then the next trade was for like 6.50, etc etc...they ended the day at like $8 ...I was pretty pissed....haven't used a stop since..... I think the practice is called "running stops"... supposedly the market makers can see the stops out there... LINK
If someone knows a way to use them but prevent this from happening, my portfolio could use the help....
This post was edited on 5/21/13 at 10:48 pm
Posted on 5/21/13 at 10:18 pm to Vols&Shaft83
Yea makes complete sense. But what if you had bought those shares last September? Would you wait until sept to sell, even though it hit that 7.50 in May?
This post was edited on 5/21/13 at 10:20 pm
Posted on 5/21/13 at 11:57 pm to lighter345
I had 1000 share of Home Depot. The P/E was around 25; I prefer somewhere 15-18, so I sold half.
It still continues to climb!
It still continues to climb!
Posted on 5/22/13 at 6:08 am to Zilla
quote:
If someone knows a way to use them but prevent this from happening, my portfolio could use the help....
Yeah, I understand what you are saying about stop orders. Once your set price has been broken it becomes a market order. In your case it gapped down at the open and you got screwed. You can always use a stop limit orders and put 2 prices in, but it gets more complicated.
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