12 tips on selling stocks that every trader or investor should know

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从南京到北京买的没有卖的精。什么时候exit open positions 是很不容易掌握。Here is a guidance by Tom Bulkowski. My general understanding of these rules is to minimize the risk.  希望对有些个童鞋有帮助。

12 tips on selling stocks that every trader or investor should know.


Selling Tip #1. Use Stops!
Using a stop loss order makes trading for a living easy. There's little stress involved because the sell decision has already been made after you file the stop price level with your broker (and DO file it. Mental stops -- stops held in your head -- should only be used by professional day traders).
If you raise the stop as price rises (a trailing stop), you keep more of your profit or narrow a loss. Without a stop in place, you'll keep wondering if now is the time to sell? Or "I should have sold yesterday when it was 3 points higher!" You'll not have regrets like that if you use a stop.

Selling Tip #2. Sell the Unexpected!
If a stock does the unexpected, then sell. If you expect an upward breakout from a stock and it breaks out downward instead, then dump it and fast. If a downward price trend doesn't reverse as you predicted, then sell. If earnings were supposed to be good and they are not, chances are the market will confirm that by punishing the stock. The sooner you realize that the market is telling you to get out, the better.

Selling Tip #3. Sell On Trend Change!
Use the 1-2-3 trend change method to determine when to sell. Testing shows it adds value (meaning it correctly predicts a trend change, just not all of the time). The method can help you detect a significant trend change in time to save your skin.

Selling Tip #4. If You Get a Sell Signal, Obey It!
How many times have you received a sell signal from an indicator or trading system and ignored it? Examine your trades and ask yourself if you had followed your trading rules would you be more profitable?

Selling Tip #5. Sell on Adverse Breakout!
If you have a tidy profit in a stock and it forms a reversal pattern (such as a double top) which confirms (confirmation can vary by chart pattern, but it's often when price closes below the lowest low in the pattern), then sell the stock. Don't let an adverse breakout from a chart pattern erase too much of your gain. Don't let a small loss grow into a huge one by continuing to hold a sinking position.

Selling Tip #6. Sell on Divergence!
This is not an automatic sell since price can diverge from an indicator for weeks or even months. But if price makes a higher peak and the indicator does not, then the indicator is showing weakness and the stock is likely to follow it lower. Find out why the indicator shows weakness. Divergence doesn't always work, either, so confirm the stock's weakness with other indicators.

Selling Tip #7. If Price Hits Its Target, Sell.
This is often best for swing or day traders that have a shorter-term view of the markets. But it's useful even for position traders, those that can hold for months or even years until the trend changes.
A utility stock I own, for example, likes to rise to 50-52 and then drop. Each time it hits that range, I sell some then buy it back in the low 40s. Easy money!

Selling Tip #8. Sell When Price Plunges Through Support.
If price reaches a support area and bounces up, then you're fine. However if it closes below support then get worried. It will likely continue lower, perhaps after a pullback, so it's best to sell immediately. In fact, place a stop a penny or two below the lowest price in the support zone to make execution automatic.

Selling Tip #9. Sell On A Bearish Chart Pattern Breakout.
This one is related to the prior one. If I see a symmetrical triangle chart pattern that breaks out downward, for example, then that's a bearish signal. It's time to exit. My Vivus trade is a recent example. I sold a day after a bearish breakout from the symmetrical triangle, missing a 55% plunge in the stock.

Selling Tip #10. Sell If Others In The Industry Are Weak.
If other stocks in the same industry are struggling, then that is a signal that all is not well. Several years ago, I owned Home Depot. When Lowes reported weaker than expected earnings a few days before Home Depot's announcement, I knew that Home Depot was going to get hit, too. It did, twice, when Lowes reported and again when Home Depot reported.

Selling Tip #11. Sell On Weak Fundamentals.
Fundamentals are not a timely indicator, since they can lag recent events by months, but if you see earnings declining from quarter to quarter or sales struggling, then take the hint. It could be time to sell.

Selling Tip #12. Sell On Technical Indicators.
If your indicators are saying sell, why are you holding on? Don't forget divergence, too. And failure swings. And don't forget to check anything else that you forgot to check.  

-By Tom Bulkowski