tip
How long to keep a stock at a loss?
First, always set a loss limit. Know when to get out when you are losing money. Depending on your goals you may want to set a 5-10% loss to trigger a sell.
Now if you are like me and when you got started you had no idea what a loss limit was, then you may have a few that have lost big. Here are 4 questions to ask before you sell:
Is this a long term goal/investment? The beauty of the stock market is that it does bounce back. Depending on the industry and the company, you could see it bounce back.
Is it a good value company? Do your homework. Is it a good value stock. This is a good sign it could bounce back.
How much are you down? If you are down over 25%, then it may be time to sell and take the hit. Keep in mind that farther it goes down the more it has to earn to bounce back to your entry point.
Can you off set your winnings with this loss? Taxes! Uncle Sam gives investors some breaks. One is that you are taxed on your profits minus losses. Check the tax law or a trusted accountant for more details.
If you have other suggestions, please leave a comment below!
The Best Time To Invest – Recession!
I know everyone has lost money in the stock market due to the recession, but this is the best time to get started. The news has calmed down and found other things to blast us about. Companies appear to have stabilized, unemployment is starting to ease (or at least not making a sky dive into the metaphorical ground). The best part of this is that once things turn around, they go up. Up is good! Getting in the market now means you are getting in the ground floor. Remember the oft and over used saying, “Buy low, sell high”. Its low, time to buy.
Get in and get started. Learn the ropes and make some money. And of course, check back here or subscribe to the RSS for more articles and tips!
Stop Loss or How not to lose your pants while away from your computer!
Like all valuable lessons, this one cost me money. I did my research and bought my stock. This was the one (aren’t they all). I set my alerts to notify me if it dropped below 5% of my buy point. I even went as far as to set an automated Sell Limit to take profits when the stock would hit (because I knew it would!).
All was well, except!
Meanwhile at my day job (I don’t trade professionally), I was in a meeting and my cell phone was going nuts (I was losing money). I couldn’t leave, I couldn’t sell, I was stuck. Once I got back to my computer, I sold the stock for (yikes!) an 8% loss instead of the 5% that I originally planned (just in case). Moral of the story, I need to set automated Stop Loss and Sell Limits to both protect and profit.
Another reason to automate is to protect from the greed voice. That little voice that whispers, “What if it goes higher?” or “It’ll go back up, really!”. It’s rarely right.
I learned my lesson and hopefully you too won’t make my mistake.
Happy Trading!
Sell Limit- Getting the Profit
This is a horror story of making and losing money in one hour. One hour!
I bought my stock, set my alerts for my sell price and my loss price (not all are winners and I’m ready to cut my losses after a certain point). Cell phone was charged and ready. The stock was bought on Monday and I knew (yes KNEW!) it would hit my sell point within a few days. I was right. It hit the next day. My cell was buzzing with anticipation of profit! It sang and cheered! It vibrated all over my desk, SELL SELL SELL!
I didn’t sell. No I wasn’t breaking my rules for greed. I didn’t know. I didn’t have my cell phone with me. An hour later, I picked up my cell phone to see the alert! Yes! Profit!
No!!! The price had dropped to just above my loss sell point. The stock peaked where I expected it too (sometimes I get it right). So, the profit that I was expecting turned to a loss and the stock kept dropping. Fortunately, I kept with my rules and sold at the loss limit.
If you are like me and can’t monitor your stocks at the pace that they change, learn from my mistake. Keep your cell phone with you when you expect an alert and always set a Sell Limit. It’s the difference between profit and loss.
Tip:
Set to automatically sell at your expected sell point. No emotions and you get to walk away with the profits without the worry.
Happy trading!
