NOT ANOTHER HOLIDAY
Unbelievably, it is Easter soon! Where did the year go already? And we’re off to Spain on holiday.
That made me think about the one question that I get asked a lot, which is, “When do I sell?” Of course, the hardest part!
So before a holiday I whizz through my spreadbet accounts and just topslice (sell some) of a lot of my bets. Bank some profits. And I do that a bit with my ISA too.
And while away I’d have a trailing stop on most things, well away from the current price so they would only be sold if something majorly bad was hitting the market.
If you are really unsure whether to sell after your share has gone up quite a bit the thing to do is topslice.
Most people seem to think they should sell the lot. I think you should always just sell some assuming you’re not in some poxy oil company that found water again. In fact I rarely sell the whole lot of anything in one go. If I made 30% on something, I might sell a quarter of it, or… topslice.
So if it carries on up you are still in it, if it starts to go down, well, you banked some of the profit and you can keep topslicing from there.
Probably the worst time to sell is after the market has gone down for a bit and you are feeling scared. As Warren Buffet points out “Buy when people are fearful, sell when they are being greedy.” Which means it’s usually best to sell on a great market day and not a good idea if shares have fallen a lot on fear, as the fear can often go and they bounce back up.
Better than what most people do, which is “Buy on a bulletin board tip, sell just when the last pumper has dumped”.
Of course there is no right or wrong answer. None of us can get out at the top and in at the bottom. Let’s just go for part of a ride and if you get one wrong put it down to experience.
The main thing with selling is: don’t wait for it to be down 50% plus!! You should never ever be in anything down by more than 20%. For a lot of traders I meet that seems to be impossible.
Indeed I often have a look down my spreadbet positions and check anything that is in the red. Then I will ruthlessly just sell them. I entered the trade because I thought I was going to make a profit. I don’t mind waiting for a profit but I do mind if the share in question keeps going down.
It might well be a share I have already done well on – I have some winning positions bought lower but a more recent trade on it may be in the red. So I cut that trade, the losing one.
Selling is never an easy decision. But if in doubt, you are frowning, not sure, cut a few. You can always buy back later....