Trading Techniques   

When and How to Sell a Winning Stock

Well said.  I like the last sentence.  Will make that part of my strategy. Have a great weekend!

 

It's very true that too many trades will eat into one's trading expenses...

That is why it is so important to identify good setups and only trade these setups. If there's no good setup, one simply stay out and wait (weeks, months, if necessary) for the setups to be formed in time.

Thus, trading doesn't mean to get in and out frequently... one needs only a couple of good trades to make good profits with really good setups...

And thus often, having no position (ie. not in the market) is a position in itself.

 

Note this point in Kilroy's post  "While you always want to maximize your investment, don't eat into your profit by running up a big bill at your stockbroker in commissions through excessive trading.

A few smart trades a year will beat a dozen mediocre ones any day."

 

It is a good post by Kilroy

 

There's a subtle difference in meaning in the words "punt" and "gamble".

When one punts, as in horse-race punting, one bets based on one's assessment of the odds.
Whereas a gambler can bet recklessly against overwhelming odds.

Like I said before, the stock market can also be treated like a casino.
In such a case the bettor just whacks a lot of money on a stock hoping to win bigly.

On the other hand, stock market trading can also be treated as a business. In this case, the player utilises a sound strategy consisting of  great stock selection, timely entry and exit, together with a defensive money managing strategy.

While the stock gambler may get wiped out very soon, the prudent stock trader will stay in the market for a long time to come.

 

yes, indeed they are different but somewhat there're a little similar..

I'm sure you're an experience guy that you've known how the BBs control and play with the market..

so does the stock follows its foundamental and economics? unfortunately, most stock are very much influence by "news" and "anticipation"... moreover Singapore market is so sensitive and I find in most cases over-react..

 

jasionfaxingliu,

If you intend to treat the stock market like a casino, then whats written here will not make sense to you.  Its like reading someone elses mail which is not meant for you.

Question directed to you would be, when punt thousand of dollars in a stock market when you can punt 10 dollars to 150000 dollars in a REAL casino?  :)

 

there's no fundamental here when we are like in a CASION

 

Selling at a loss is simply not the nature of ordinary humans.

Since almost everyone is afraid of loss (takut rugi), how can they so easily let a loss happen by their selling?

Furthermore, to them, a loss is not yet a loss as long as they don't sell !...

So how can they be convinced to sell at all?

 

To win in the long run, it is very important to cultivate the gentle art of losing...,


But for most people, this is simply the hardest thing to do...

For instance, when a person is losing in a certain favourite stock, he/she will almost certainly try to argue that "the fundamentals are still superb".

But that's beside the point! The point is to preserve one's capital, not argue one's firm opinion in order to preserve one's rightness... because ultimately our money is what matters.

 

Selling a winning stock is so much easier than selling a losing stock. Whether it is a winning or a losing stock, all Investors must learn to know when to sell!  Cheers!

 

A superb post!... :)


I believe the real meat of that post is in that last line ... hehehe... 

 

Not that I do have a problem with selling winning stocks but a couple of sell strategies may be worth adding to our peanut brain. :p

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When is a good time to sell a winning stock? Some would counsel to never sell winning stocks, while others caution that selling is a deliberate process just like buying.

Say you have a stock that had a good run and now you wonder whether you should take your profits and run or wait for a sign that the stock is about to reverse direction.

There are several warning signs that can tip you off to changes that may mean the price is headed south.

Fundamentals Fail

If the company?s fundamentals (sales, debt, cash flow and so on) begin to show signs of stress, it may mean something has changed that will negatively affect the stock?s price.

Don?t wait for the market to panic over a decline in revenue or another key fundamental, be prepared to unload the stock while you still have a healthy profit.

Target Price

Many investors set a floor on the stock?s price so that if it falls below a certain level, they sell.

You can also set an upper limit that triggers your sale.

The rationale here is that you may be afraid that the stock will have a difficult time supporting a market price above a certain level and any hint of bad news will send the price into a nosedive.

Other investors simply say, ?I want to make this return and when I hit that, I?m going to move on to another opportunity

Dividend Cut or Eliminated

When companies start cutting or eliminating dividends, it is time to seriously consider dropping it.

Dividend cuts are serious events and signal financial difficulties that investors should pay close attention to.

Strategies for Selling

Other strategies for selling include the thoughtful consideration that events are moving against your stock and you need to act. Here are some ideas:

• Watch out for hype. If a stock you own becomes the focus of media attention and receives a lot of buzz, it may be time to look at taking a profit. These types of stock-feeding frenzies attract inexperienced investors who bid up prices only to have the market collapse when the hype dies. If you?re not careful, you can watch the price fall right past your profit.
  
   
• Watch growth. Growth stocks grow. When they stop growing or growing begins to slow, it?s time to move on. The market is not kind to growth stocks that fail to maintain their growth.
  
   
• Take part off the table. If you have a good profit in a stock, consider selling part ? say 50 percent and taking your profit ? while letting the remainder continue to grow. This way you lock in a certain level of profit and, if you follow the other tips here, you can bail on the stock when it starts to fall with some more profit.
  
   
• Better deal. Remember, there are other stocks that may provide a better opportunity with less risk. Just because you have a good stock with a nice profit, doesn?t mean you shouldn?t stop looking for a better deal.

Don?t be too Quick

While you always want to maximize your investment, don?t eat into your profit by running up a big bill at your stockbroker in commissions through excessive trading.

A few smart trades a year will beat a dozen mediocre ones any day.