Knowing when to sell is just as important as knowing what and when to buy.
If price gets you in a trade or investment, price should take you out.
Don’t mix momentum investing with value investing
If we buy stock on basis of Value investing then we must sell when any of below condition satisfies:-
–For Better opportunities
–Fundamental change in business model/Structural change
–Valuation goes out of whack/Targeted returns achieved
–Initial investment thesis is wrong
–Too much concentration on Portfolio level
If we buy stock on basis of Momentum investing then we must sell when any of below condition satisfies:-
–Stock gives earning surprise (Very Poor earnings wrt analysts expectation)
–Stock gives poor reaction to good news
–Sock reaches Severely Overbought Levels (When Weekly RSI Goes Above 80)
–Distribution:
- Institutional Selling
- Transfer of ownership from strong to Weak hands
–When Trend is over
- Stock corrects 20% from recent Top
- A lower low – Stock closes below the most recent time consolidation
- Stock price closes below 50-day price
- Stock price closes below 100dma
- Stock crosses 200DMA
- Stock price closes below the 50-week moving average
Source For Momentum :-The Next apple