To learn how to make money in stocks, you need to know when to sell off your stocks. As the saying goes, you must know when to hold your stocks and when to fold them. Selling a stock is a more difficult decision for the investor than purchasing the stock.
Some of the investors sell their stocks when the market crashes so that they don’t suffer higher losses. However they should take into consideration the trend that the stock will follow in the future.
If the stock has the potential of increasing in the future it is better to hold on to the stocks. Similarly people sell their stocks when the stock prices rise so that they can earn a good profit.
However the investor should check whether the stock prices will increase any further in the future and he should hold on to his stock at that time so that he can make more profits in the future.
Do Not Fear Losses, Control Them
Also there are many investors who suffer from fear of loss instead of rational decisions and so they are very much confused as to when they should sell their shares. An investor should think about selling even before he even buys stocks.
Consider what your motive is and within what time frame you want to hold the stocks. You should monitor your investment regularly and then finalize your decision to sell which will be based on your original goal. If your stocks reach the magical figure before the time frame set by you then you can happily sell your stocks and earn good profits.
However if the time frame has passed and you are too far from your goal, then you should consider selling your stock to avoid further losses.
Next on the list is the decision as to how much you can afford to lose. Prices of some stocks will go down much against your wishes. In this situation you should be able to decide ahead of time how much you can afford the stock prices to go down.
Once the stock price goes down to the price decided by you to sell the stock, you should go ahead with your decision. As a result you will be able to absorb a certain percentage of your loss if not all of it. The price at which you decide to sell of your stock in case of decreasing prices is known as the stop loss point.
How To Make Money In Stocks: Invest For Dividend Yield
Seek for alternative investments that can get you good dividends in case your stock options are not working. However you can do a proper survey of the market before you abandon your plans completely. Resist the urge to let emotions control your investment decisions, as this can lead to disaster.
If the price of your stock increases beyond your expectations then you might have the urge to wait for a longer time to earn more profits. In case you want to keep it further, set a maximum price limit again and sticks to it at all costs. It is a good idea to consider stop orders as a part of your trading strategy, as these can help automate the trading process, and help you stick with a trading plan.
Follow these tips wisely and you will be on your way to make money in stocks.