Many experts say that the common mistake of investors in stock investing is they sell a winning stock too soon. So, the question now, “when is the best time to sell the winning stocks?”
Some will suggest to not sell winning stocks, while others may say that selling stocks must be a deliberate process as buying. When you own winning stocks that are now in a good run, then you usually wonder whether you should make a profit now or wait for signs that the stocks head to reverse direction.
These are the signs that you should sell your winning stocks in stock market.
Company’s fundamentals start to fail
The example of a company’s fundamentals is sales, debt, and cash flow. Once those things show signs of stress, then, some changes might have happened. Be careful, that changes can negatively affect the stock’s price.
If that happens, you should not wait for the stock market to panic over a revenue or other fundamentals decline. You have to be ready to unload your stocks whenever you still have a healthy profit.
Stock hits a target price
Investors usually set a number on the stock’s price. So, if it goes below that number, they sell the stocks. Besides, you can also set an upper limit to trigger your sales.
The rationale behinds that are they afraid that stocks will have a difficult time supporting a market price above a certain level. Then, any hint of bad news will drop the stock prices.
Eliminated or cut dividend
You have to consider selling the stock if companies start to cut or eliminate dividends. It is a serious event. It shows there is a serious financial issue within the companies.
Be careful with frequent trading
In stock investing, traders usually want to maximize their investment. But remember, you should not eat your profit by paying the high cost at your stockbroker commission through too much trading. Do a few smart trades, instead.