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Financial Website Directory Ireland

Share Trading Tips - Deciding When To Sell Your Shares And Bank Profits

Author: John Robertson
Category: Trading: Stock Market
Date Added: March 15, 2011 09:38:12 AM
Page Views: 2849

Many share traders agonize over when they should actually sell their shares when they are stuck in losing trades. However it can be just as hard deciding when to sell when you are running some profitable positions as well. So when is the best time to sell your stocks?

 

Well it all depends on what kind of stocks you are invested in. If you have a similar investing style to the great Warren Buffett, who is obviously one of the best stock market investors of all time, then you could argue that you should never sell your shares.

 

Well it all depends on what kind of stocks you are invested in. If you have a similar investing style to the great Warren Buffett, who is obviously one of the best stock market investors of all time, then you could argue that you should never sell your shares.

He primarily invests in big market-leading companies that have long and established records of both earnings and dividend growth each year. In the past he has held stocks for years and years and accumulated truly massive capital gains along the way, and this is a great strategy overall.

It is even more effective if you reinvest the dividends you receive each year back into your investments. If you sell these growth stocks very early, then you are unlikely to make those huge gains that we all dream about making.

Most investors these days do not have the patience to stay invested in the same stocks for years and years, so they have to time their exit points before looking for the next investment. This is very hard to do because you have to make sure that your winning trades more than compensate for any losing ones.

So for example if you automatically set your stop loss at say 20% below the entry price every time you buy a stock, then you don't really want to be banking profits of around 10% or less. In an ideal world you want big winning trades and small losses when a trade doesn't work out as planned. So a stop loss of 10-15% and a profit target of at least 20-30% could be very profitable if you pick the right stocks and time your entry points well.

Overall I would say that there isn't really an optimum strategy for deciding when you should sell your shares. However long term investors who invest for dividends and growth should definitely consider holding on to their shares in companies for as long as they are still growing their profits. Short and medium term traders should consider their profit target before they enter a position, and ensure that their targets are always bigger than any potential losses they may incur.

Click on the following link for reviews of various different brokers and to find lots more investing tips and strategies:

http://www.stocks-and-options.com

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