Common Stock Selling Mistakes and How to Avoid Them

When selling stock, many investors make some common mistakes that could be avoided. These mistakes could potentially cost you a lot of money in the long run. Here are a few common stock selling mistakes and how to avoid them.

Ignoring Your Plan

One of the biggest mistakes that many people make is that they ignore an established plan in order to hold out for more money. If you are a smart trader, you are going to have a plan set up that governs your stock decisions. You will have decided how much you are going to invest and at what point you will be able to sell your stock. The only problem with plans is that they only work if you stick with them. Many people get to the point where they have reached their profit target but they get greedy. They want to keep going to see how much money they could make. When this happens, many times the market will reverse and that person will lose all of the profit that they could of had. You need to stick to your plan at all times so that you can avoid problems like these.

Timing the Market

Another problem that many people have is that they try to time the market. Typically, this ends in disaster. The market can move up and down on a daily basis. While it has been proven that the stock market increases in value over the long-term, you may or may not profit in the short term. If you try to time the market, you will inevitably choose the wrong time to cash out. You will sell just before the stock takes off in price. Instead of trying to time the market, take a more long-term approach to your investments.

Selling after a Loss

Many people will sell their stock after a huge loss. They rationalize that they are trying to get what they can out of the market before it hits the bottom. Unless you know that a company is destined to file bankruptcy, this may not be the best approach. You already lost a large portion of your money, but you still have ownership of the stock. Many times, the stock will rebound in price and make up for all of your losses and provide you with some profit. Many professional traders will buy at this time whenever people are trying to get out of the market. They can then ride these cheap stocks to a huge profit. Instead of being one of the regular traders that tries to cut their losses, you might want to not sell your stock after a huge loss.

Listening to Analysts

Many people also make the mistake of listening to stock analysts that say a stock is due for a downturn. They will listen to these analysts and liquidate all of their shares based on this recommendation. This does not mean that the analysts are always wrong. However, you need to do your own analysis on your investments instead of listening to someone else.

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