When is the Best Time to Sell Stocks?

In the trading world, the main investment moves are buying and selling. Although more investors and traders choose buying first because it is the initial move that starts the investment process, selling has an equally important role as well.

As the subsequent process after buying, selling is a is an important part of gaining returns from your investment. And much like buying, selling generates commissions and fees for brokers. What many investors need to know that even if buying is the act of setting the baseline for whether you are going to profit or not, selling is also a crucial part as it is the act of realizing, hopefully, such gains. This means that buying at the right time at the right price is as important as selling at the right time at the right price.

However, there are numerous cases in which you should sell other than simply gaining the standard returns. The following are circumstances in which it is best to sell your stocks:

1) Dramatic Price Hike

The main goal of selling is to profit so naturally if a price hike occurs right after you buy, it is normal to sell quickly. The key is to not be greedy. If you think the rapid price hike will continue, then you will be taking a risk as sudden price hikes are just that, sudden. And as sudden as it comes, the chances are that it will suddenly plummet as well. Make quick money and find new prospective stocks to profit on. It is possible to buy the same stock if it experiences a sudden price drop.

2) Error in Analysis

There is pride in knowing and admitting you’ve made a mistake. If, unfortunately, you’ve committed a blunder then pull out as soon as you can to cut down on potential losses. Even if despite your miscalculation, the price still went up and you’ve already sold your stocks, its better than continuing knowing you’ve made a mistake. Always, stand by the facts.

3) Unjustified Valuation

Once a stock’s valuation no longer justifies its price, its time to sell. Valuation is assessing the current value of a company’s stock. It’s an imprecise science but its better than no valuation at all. If the price of the stock is no longer justifiable at all, its best to sell the stocks.

Basically the best time to sell is when there is gain. And even if there is loss, so long as it serves as a lesson, it is also a gain, experience-wise.