Knowing When to Sell To be a successful investor, you have to learn

when to sell your stocks to take profits or to cut your losses. The
main reason why investors end up losing money or not being able to
maximize their profits is because of failing to sell at the right time.
In fact, I have found that knowing when to sell is more important
than knowing what to buy and when to buy. Two investors buying
the same stock at the same time can get very different results
depending on when they hit the sell button. Imagine if you had
bought Research In Motion (RIMM) (maker of BlackBerry) at $20.
If you did not know when to sell RIMM when it lost its competitive
advantage and went on a downtrend, all the profits you may have
made from 2006 to 2008 would have been evaporated. Worse still,
you could have ended up losing everything you put in. Selling at
about $100 would have made a difference between a 700% profit
and a -65% loss (if you had sold at $7). Buyer: Duc Anh Nguyen
Ngoc (ducanhnguyenngoc14@augustana.edu) Transaction ID:
3X971665P3039974C 178 HOW TO PICk STOCkS Of WINNING
COMPANIES II Scenario 1: When the Price Falls below Your
Purchase Price They say, “If I sell now, I will realize a loss. I will
sell when it gets up back to even.” Scenario 2: The Price Keeps
Going Up They say, “Why sell now when it keeps going up? I will
sell when it stops going up.” Scenario 3: The Price Starts Falling
after Rising to a New High They say, “I should have sold it when it
was higher. I’ll wait for it to get back to its high.” Chart 6.10:
Research In Motion (RIMM) 2006 – 2012 Credit:
www.thinkorswim.com, ProphetCharts® It is very easy to make a
purchase. However, it is psychologically very difficult to sell a stock.
As you can see below, untrained investors will always find excuses
for not selling a stock under all three scenarios. As a result, they
never hit the sell button until they lose it all. Sell $100? 700% Profit
Buy $20 65% Loss Sell $7? Buyer: Duc Anh Nguyen Ngoc
(ducanhnguyenngoc14@augustana.edu) Transaction ID:
3X971665P3039974C WINNING THE GAME Of STOCkS! 179 a)
Management is accused of mismanagement b) Two or more directors
sell a large proportion of their stock c) Profit margins decline for
more than four quarters while competitor companies continue to
show consistent margins d) Accounts receivable start to increase
much faster than the increase in sales revenue In every possible
scenario, the untrained investor will always find an excuse not to sell
yet. Fear of taking a loss will cause him to keep holding even when
the stock goes down and the greed for even more profits will cause
him to keep holding when the stock goes up. Training Yourself to
Sell To be a profitable investor, you have to train yourself to have the
discipline to sell. The moment I mastered this discipline, I started
making more money than ever before. The secret is to know when
you are going to sell even before you make the decision to buy. Most
people only think about selling after they have bought the stock. As a
result, their emotions cloud their judgment and they start to get
confused when the stock price moves in the opposite direction.
Selling Rules There are two main reasons you should sell a stock:
Fundamental reasons and technical reasons. 1) Fundamental Reasons
— Company Is No Longer Profitable If reports from the company
show that it is losing its competitive advantage or its management is
not acting in the best interests of shareholders, then you need to sell
immediatel