Share market tips: When to sell a stock for profit - These points may make you share bazaar expert
Sometimes it becomes really hard to understand the market trend and what to do with your stock under those conditions is the problem with many investors. These are the conditions recommended by industrial experts, that one should verify before setting off the trade.
Are you looking to sell a stock? Confused! whether it's a right time or not? Many investors find it difficult to make a decision on selling a particular stock at a particular time. Someone advises holding the strip further, while someone would suggest booking profits\losses at a given time. Sometimes it becomes really hard to understand the market trend and what to do with your stock under those conditions is the problem with many investors. These are the conditions recommended by industrial experts, that one should verify before setting off the trade.
Equity Technical Analyst, Simi Bhaumik and Executive Director, Choice Broking, Sumeet Bagadia talked to Zee Business Online and mentioned the conditions, an investor should verify before calling off a trade.
Here are the conditions one should meet before looking to settle the trade:
1. Is it meeting the range of profit, loss and risk:
The first condition that the investor should meet to end the trade is whether the current scenario is matching up the initial profit prediction or calculation of the investor. While, in case of a loss, the investor should never go beyond his\her the risk-taking capacity on that particular investment.
"An investor should never listen to anyone with no expertise and look for his\her profit and risk status during a trade settlement," Bagadia explained.
2. Is the valuation of the stock is expensive:
The current valuation of the stock should be examined before ending a trade. However, valuations of the stock depend on various factors like time, news, event, government's intervention, market sentiments etc.
"If the current valuation of a stock is expensive, an investor can book a profit. However, valuations depend on external factors and should be carefully examined" Bhaumik added.
3. Is the selling price as per the stock range and time:
The selling price of the stock should be as per the range of a stock and trading time. Every stock has different ranges like 52 week high and low, monthly breakouts, moving averages, record highs or lows etc. An investor should compare all the ranges and end a trade accordingly.
4. Check fundamentals of the company:
Fundamentals of a company include financial studies like results, balance sheets, management, news impact, financial analysis etc. It provides the investor a clear picture of the stock's future and present.
"If a quarter or annual results of a company indicate some triggers for a particular stock, one should derive the best for himself before making any decision," Bhaumik claimed.
5. Check technical aspects of the stock:
Technical aspects like studying price charts, movement patterns, trend-lines, moving averages, shapes and figures, historical analysis etc require professional knowledge. However, an investor could seek an expert's advice before ending a trade.
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6. Is it better to book a loss:
"Sometimes, it is better to book a loss rather holding further for profits as markets can never be predicted right. So settling on a lesser loss is always better than incurring a massive loss in future'' Bagadia mentioned.
Equity markets are famous for its surprises and miracles. Therefore, in an eventful and sentiments driven market, one should never wait for recovery or ending up safer in future.
7. Do you have a better option to invest the realised amount:
An investor should make sure, he\she has a better option to invest the realised amount. An investor should have a pr-decided option to get invested with the realised profits or losses in order to get better returns.