When do you let go of a stock?
Do you have formula, pamphlets, or a lucky quarter that tells you when to let go? I've heard of people selling after 10% gains or 5% losses. When do you let go of a stock? I've held on to stocks after a 50% gain and held on until it went back to a loss.
Please tell me a winning formula that has worked for you. Thanks in advance.
Best Answer
4085 points
EthanR answered one year ago …
ChiDog, the answer to your question depends on a couple of things. Are you looking to make long term investments or short term trades? If it's long term investments, than the fundamentals are probably more important than the technicals. If the fundamentals change for the worse, then you sell.
However, if you are talking about trading stocks within a month, then I use the following to guide me on when it's time to sell.
Does the Point and figure chart change from a column of X's to a column of O's?
Has the RSI risen above 70 and then moved down below it?
Has the MACD given a sell signal?
Are the stochastics dropping from above 80 to below 80?
These would all indicate a change in trend following a run up of price, and I would sell at that point. If you like the stock, you can always rebuy it at a lower level and play the run up again. If you need more information on RSI, MACD, and Stochastics, go to:
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicator s
For more info on Point and figure charting, go to:
http://stockcharts.com/school/doku.php?id=support:using_sharpcharts_po
Good luck!
Answers
2775 points
Oldman answered one year ago …
Use a 25% trailing stop on any gainer, so your profits don't vanish. Don't take a position to >4% of the portfolio, and except for broad -based mutual funds, don't hazard more than 2% of your portfolio for an initial buy.
These stop losses have to be followed by you, because if you list them with the brokerage, then traders can short you out of the stock,particularly with the VIX >15.
Example...if X was purchased for $10./share and has risen to 16, set a 25% trailing stop by planning to sell if the share price drops to $12.
904 points
jillybeansisme answered one year ago …
I agree with Oldman, although I often set a mental 20% stop loss because it's too easy to have the market trade through before the sell order takes place.
Also, if a stock rises 50%, I sell a portion of my shares and then ride it further. This way I realize my original money but leave myself the potential of the gain.
You have to figure out what is comfortable for you. Make a plan and stick to it. In the future you can always make adjustments to the plan.
379 points
dustbusterz answered one year ago …
ok you want to buy stock in company abc. first thing you need do is figure out what this company's stock is actually worth. second thing you need to do is buy it below that figure you just did your home work on. the next thing you need to do is sit back ignore all others who would scare you out of a stock you have fully researched.wait till that stock reaches its share value(i.e. the price you worked so hard to figure out what its worth). once it hits that price, you can sell it or go back and see if the company is now maybe worth more money(perhaps it has grown in value over time) so now you could hold it till it reaches its grown up value.
Now when you purchase stock, you always want to go in with an exit plan (meaning a stop loss set at ,lets say 10 to 15 % below current price) so you can protect your money . its not always about making money as much as it is about preserving your money so you can continue to buy in the future.we all hope to make money by buying below(while on sale) but if things are not working in your favor, be sure to have that stop loss in place to save your butt.
as some have mentioned, while a stock is on its way up, you can help preserve your earnings by selling some here and some there.
