When Is The Perfect Time To Sell Your Stock?
The Best Time To Sell Your Stocks In Nigerian Stock Market – Learn The Best Nigeria Stock Trading Strategies Using Technical Analysis And When You Should Sell.
A memory I won’t forget easily during my early years of stock market investing was when I watched one of my profitable stocks climbed from N15.7 to N34 in 3 months, but regrettably saw my profit nosedive from that peak level to N12.2 and eventually sold the same stock at a loss. Each time I recall that experience, I wonder why I never sold when it climbed to N20, inched up to N25 and greedily left it to N34 before selling at N12. The stock has been delisted from the market now but the bad experience isn’t what I would allow to repeat itself again.
Knowing when to let go or sell a stock is an attitude you should master if you must succeed in the stock market. A number of times, I tell my friends, it is not only a winning stock that is ripe to sell, losing stocks isn’t suppose to be held for a long time. When you buy a stock at N3.15 and its fall to N2.47, that’s like 27% loss, will you still hold on to the stock, hoping that it will rise again? As a short-term trader, I quickly sell all units to protect my portfolio. I have made lots of mistake in stock picks, which was a result of bad waggon effect; I wanted to take advantage of the price run but entered at the peak of the trend but now I cam well equipped to limit such error.
Back to the main discussion, when is the perfect time to sell your shares? The time to sell your shares isn’t all about cashing out or taking profit but also protecting your portfolio from losses on bad decisions. A stock could be bad for you and good for others, it all depends on your investment horizon. For a long-term trader who is looking for an opportunity to buy more shares in a good company, sell-offs are always their perfect time but for short-term traders looking for swing trading profits in 1-2 weeks, such fall may be disastrous.
To answer your question on when you should sell your stock, I will be sharing my personal opinion from the point of a short-term trader who is looking for 15-30% gain in two (2) weeks to two (2) months.
Target Selling Price
This is my best decision so far, I am not interested in taking all the profit from a bullish market, a modest and realistic percentage gain of 15-20% is all I need to sell off. While it is not going to double my cash overnight, it surely has a magical way of earning passive income to your pocket. A lot of stocks that rise faster have historic percentage limit they can’t exceed, so you need to ensure that whatever your target profit from a stock is, falls within an achievable return in weeks or months.
Let me tell you the truth, banks, insurance companies, pension fund and asset managers do not wait for a 200% when they trade stocks for short-term profit, 15-20% maximum gain is what makes the billions of trading profits, how? they trade millions of units which means that a 100 basis point increase in price equals millions of Naira. This is a modest realistic gain you should start adopting, it is not about the price but the quantity you bought. On several occasions, I see stocks gain up to 10-25% in 2 weeks to 2 months, which is a good return for short-term traders.
Let’s assume you bought 1,000,000 units of a share at N2 each, that is N2,000,000 investment, right? Now, imagine a 15% increase in your share to N2.3, that’s like N300,000 profit achievable in 2-3 weeks, would you still hold on to the share for another 50-100% increase? I bet you, the possibility of you losing that 15% and selling at a loss is higher than the potential for further increase, except there is a major news driving the share.
A return like 15%, 20% and 25% maximum is achievable in the stock, so why not capitalise on volume to make more money than wait for 200% growth overnight, the secret is in the consistency of your return.
Use your chart
Chart analysis is another favourite strategy to knowing when to sell a stock. The reason stock charts are great is that you can’t follow all news about a company, you may miss out on certain information that could cause the uptrend to reverse but will definitely not miss out on the time to sell when you follow price trend on the chart. Share prices always reflect market news and inventor’s perception about a company and as you follow chart trend, you will notice the effect of a bad news on your share.
When a company releases impressive quarterly result, you will definitely see the share price rise sharply while a-not-so-impressive financial result leads to an obvious and notable sell-off. Stay close to your chart, especially daily and weekly signals.
How do I know when to sell on a chart? I use four powerful technical tools which you will find in my book “The Little Trading Secret That Makes Money”, the guide contained in the book is all you need to make passive income from Nigerian and foreign stocks.