Knowing when to sell stock
Discussion
My wife had a 3-year SAYE plan working for LSE that matured in November. It did really well, but we have opted to carry on holding the stock for now. We need the money in mid/late January and today LSE is trading at almost an all time high.
I can't decide if we should sell today, or hold on the off-chance that it will go up in the next couple of weeks or so.
I feel like the sensible thing would be to sell today. We can afford to have a dip, but obviously want to maximise our gains.
Any tips? Thanks
I can't decide if we should sell today, or hold on the off-chance that it will go up in the next couple of weeks or so.
I feel like the sensible thing would be to sell today. We can afford to have a dip, but obviously want to maximise our gains.
Any tips? Thanks
Sell now. The only certainty is by getting the price you sell it for today. The reality is that you got lucky but that luck may change. If you want to improve profits after selling, create a premium workshop and claim that you're a trading genius and teach gullible customers the indicators that made you go all in*.
* - you may need to spend some of your profits on hiring a couple of Ferraris and the drive of a large country mansion for a photo shoot to pretend you're a rich trader.
* - you may need to spend some of your profits on hiring a couple of Ferraris and the drive of a large country mansion for a photo shoot to pretend you're a rich trader.
Another option is to do a kind of trailing stop.
Decide on a percentage drop that you’re willing to tolerate from the current market value. For the sake of argument let’s call it 10%. (In practice this might be too small a margin if it’s a volatile stock.)
If the stock falls to that level, you sell. You have locked in your profit at a level that you’re happy with.
On the other hand, if the stock rises to a new highest level, you recalculate your 90% selling level using the new high value. But if the stock falls, you do not lower your selling level. Hence you continually ratchet up the level at which you lock in your profit. If the stock keeps rising, you keep recalculating your selling point. But only when it rises to a new high.
You could do a sort of double stop, perhaps selling 50% of your holding if it falls 10% and selling the rest if it falls 15%, for example. This way, as noted above, you lock in some of your profit but retain half your holding to give some benefit if the stock resumes its climb.
Decide on a percentage drop that you’re willing to tolerate from the current market value. For the sake of argument let’s call it 10%. (In practice this might be too small a margin if it’s a volatile stock.)
If the stock falls to that level, you sell. You have locked in your profit at a level that you’re happy with.
On the other hand, if the stock rises to a new highest level, you recalculate your 90% selling level using the new high value. But if the stock falls, you do not lower your selling level. Hence you continually ratchet up the level at which you lock in your profit. If the stock keeps rising, you keep recalculating your selling point. But only when it rises to a new high.
You could do a sort of double stop, perhaps selling 50% of your holding if it falls 10% and selling the rest if it falls 15%, for example. This way, as noted above, you lock in some of your profit but retain half your holding to give some benefit if the stock resumes its climb.
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hstewie said:
hstewie said: Can you set a fill or kill to try to lock in todays price?
I retract my previous advice, this is actually the smartest option, but does require you to have some knowledge... which I’m assuming, in the politest possible way, that you might not have if you’re asking this question in the first place. See if your sharedealing provider will allow you to set up a ‘stop loss’. This is where they will automatically sell the shares if they drop to a price you have given them.
That price does have to be below today’s current price, but not by much.
So if the shareprice is currently 100p, you set a stop loss for 95p.
If mid January they are 120p, then lovely. If mid January they go up to 110p, but then drop to 90p, your stop loss should be activated and your shares sold at the point it went to 95p.
(Look up ‘slippage’, as it’s not always guaranteed, if a huge drop occurred for example)
Greshamst said:
I retract my previous advice, this is actually the smartest option, but does require you to have some knowledge... which I’m assuming, in the politest possible way, that you might not have if you’re asking this question in the first place.
See if your sharedealing provider will allow you to set up a ‘stop loss’. This is where they will automatically sell the shares if they drop to a price you have given them.
That price does have to be below today’s current price, but not by much.
So if the shareprice is currently 100p, you set a stop loss for 95p.
If mid January they are 120p, then lovely. If mid January they go up to 110p, but then drop to 90p, your stop loss should be activated and your shares sold at the point it went to 95p.
(Look up ‘slippage’, as it’s not always guaranteed, if a huge drop occurred for example)
Slippage. So no willing buyer at that price as it’s come and gone before you sell.See if your sharedealing provider will allow you to set up a ‘stop loss’. This is where they will automatically sell the shares if they drop to a price you have given them.
That price does have to be below today’s current price, but not by much.
So if the shareprice is currently 100p, you set a stop loss for 95p.
If mid January they are 120p, then lovely. If mid January they go up to 110p, but then drop to 90p, your stop loss should be activated and your shares sold at the point it went to 95p.
(Look up ‘slippage’, as it’s not always guaranteed, if a huge drop occurred for example)
Which is more likely than not in the coming weeks.
Some people talk about averaging in. So if you want to buy but are worried about price fluctuating then you buy in smaller chunks say weekly or monthly. You could do the same but selling.
The problem with setting a stop loss trailing the current price is that if the price whip saws around regularly then your stop will definitely get hit and you're basically selling at a lower price that you can right now.
The problem with setting a stop loss trailing the current price is that if the price whip saws around regularly then your stop will definitely get hit and you're basically selling at a lower price that you can right now.
ATM said:
Some people talk about averaging in. So if you want to buy but are worried about price fluctuating then you buy in smaller chunks say weekly or monthly. You could do the same but selling.
The problem with setting a stop loss trailing the current price is that if the price whip saws around regularly then your stop will definitely get hit and you're basically selling at a lower price that you can right now.
Plus fees if you hit a stop and then it bounces back up half a day later.The problem with setting a stop loss trailing the current price is that if the price whip saws around regularly then your stop will definitely get hit and you're basically selling at a lower price that you can right now.
You’re down the difference plus fees.
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