Different Ways To Sell Stocks Using Sell-Rules

The truth is that for every buy, there is always a sell. Here are the different ways to sell using sell-rules,

The idea is to wait. It is to wait patiently, watching consistently for as long as you can – at least for the most part. However, there is also the truth that for every buy, there is always a sell. As such, it is inevitable.

Knowing when the right time to sell a stock can be arduous. Yet, there will be times to take the emotion and make certain sells. It will be great if you understand how to do it. Below are the different ways to sell stocks.

Some of them also constitute reasons for the sale of stocks in the first place. They include:

Down-From-Cost Sell

This method of selling requires that a sale is made when there is a percentage reduction or increase (in the case of up-from-cost sale). While it is an automatic way to sell your stock, it also creates a very straightforward system of knowing when it is time to sell.

In a situation where it is to be sold when it reaches a certain percentage of loss, it serves the purpose of a stop loss order. Also, in the same vein, when it reaches a certain high level, it is sold as a way to cash out gains.

The main factor required here is knowing the right percentage with which you can no longer withstand a loss as well as the right percentage where you are willing to make a gain.

Consequently, this is not as straightforward as it seems. This is also similar to the target-price sell method makes use of a specific stock value to prompt a sell.

Valuation-Sell

Another way to sell stocks is what is known as the valuation-sell. This comes up when the investor’s stock hits a specific valuation range. As opposed to selling when it gets to a specific higher limit in terms of price, this one is based on valuation.

Using tools or ratios like price-to-book or price-to-sales ratio, the investor can determine what stocks are overvalued or undervalued. Based on that, the investor waits for the value to hit a certain range and makes a sale with the objective of attaining optimal value.

With this, the emotions like fear are taking out of the process and the investor simply sells when it is time to.

Deteriorating-Fundamentals Sell

As the name implies, a way to sell is to do so when the fundamentals of the company you have invested in are deteriorating. This simply suggests that when the fundamentals found in the company’s books falls below a specific level, a sale is made.

In terms of reason to sell, the plan is to sell when the reasons for which you have the stock have changed. The rule is to sell when it has deteriorated. The fundamentals could be its liquidity level, its equity-debt financing structure etc.

Written by Lawretta Egba.