How to Know When to Sell a Stock: A Quick Guide

When to Sell a Stock
Learning how to know when to sell a stock is the difference between cashing in on big opportunities or losing out. There’s a lot of advice out there from people you think would know. 

Just look at Elon Musk. He recently turned to Twitter to see if it was the right time to sell some stock. That’s probably not the best idea for everyone, though.

In the following article, we give you six tips to make the most informed decision. Let’s begin!

Check the Valuation

The first rule of knowing when to sell a stock is to learn its valuation. If a stock is priced well above its valuation, it is likely to set for a tumble. 

The question of when that tumble will occur is up in the air, but you should definitely be thinking about an exit strategy. At least, you should if you’re thinking of cashing out in the near future.

Compare the Valuation to Competitors

Before you sell a stock, you should also look at how its valuation compares to those of its competitors. If it is way higher than the competition, then it could be heading for a downward slide. 

If the companies are pretty much moving at the same rate, that’s different. It’s a sign the industry is still growing and all players are in a great position.

Read Pundits

Pundits aren’t always right when it comes to how a stock will perform. They look at differing indications of what is important and try to make predictions accordingly.

Even when they’re wrong, however, they can help educate you on how markets work and which signs to look out for. The more you trade, the better you’ll get at drawing your own opinions.

Selling stocks can be profitable if you’re just flying by chance, but it’s not as likely. See which philosophies are being submitted to the public, and decide what you agree or disagree with.

Watch Earnings Reports

Revenues rise and fall. You can keep up with the direction they’re going through quarterly earnings reports.

If a company beats revenue expectations, it tends to go up. If it falls short, expect a selloff.

One of the best stock selling tips we can give you is to learn when the companies you’re watching post their earnings reports. This familiarity will help guide your decisions on whether to buy, sell, or hold.

Watch News

Any stock selling guide wouldn’t be complete if it told you to ignore current events. What’s happening in the world, particularly how it relates to the company, can have a dramatic impact on stock prices.

Look for both company and industry news to see where the concerns or opportunities lie. Pretty soon, you’ll be able to anticipate the rise and fall of a stock.

Find the Right Platform

It may sound like a trivial consideration, but how and where you trade matters. You need a platform that will make it easy for you to buy and sell without getting in the way of your understanding.

You could use a broker for this if you don’t mind paying fees. Platforms like help you do it without that burden.

Learning How to Know When to Sell a Stock Takes Time and Patience

Studying how to know when to sell a stock will make it easier to spot the opportunities that exist in each industry you’re following. Put the tips we’ve shared with you here to use, and you won’t be making as big of a risk as you think. For more financial and investing articles, check out some of our additional posts!