(2) Stock Hitting Stop Loss Levels
It is one of the most reasonable & proven tips to know best and right time to sell stocks. Stock movement is not unidirectional in nature. It can move on either side.
If you purchased a stock that depreciates significantly from your levels, you may encounter loss. But, you can limit your loss by placing stop loss order. This order is usually placed at a level you are willing to lose if the stock moves in opposite direction.
For example, you purchased a stock at a price say $100. You decided to cut your position if the stock falls below 10% i.e. below $90.
Stop loss order can help you to cut your positions automatically at those levels during trading hours. However, if your stop loss order doesn’t get executed due to any reason you should sell it manually at those levels.
(3) When Stock Hits Your Price Targets
It is one of the most common & proven tips to know best and right time to sell stocks. A stock is known to fluctuate in a reasonable price range. You can’t buy at lowest price & sell at highest price.
Generally, you have to buy a stock around lower side of a trading range & sell it around the higher side of it. Once you purchased a quality stock, you should set a price target to sell & book profits.
You should always be realistic in setting price targets for your stock investment. For example, setting a price target of 20% to 25% from your purchased price would be a reasonable price target.
It is much better to set a range instead of single price target. However, you should never set a higher price target of say 50% to 100% of current price.
A higher price target of more than 50% indicates that stock is undervalued by more than 50%. It’s not possible under normal circumstances.
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