Stock market tips: When to sell my stock (2024)

Buying shares in companies listed on a stock exchange can be fun and rewarding. But deciding when to sell them is just as important so you bank the best profit you can.

If you want to invest in the stock market, be prepared to invest time as well as money in your quest for healthy returns.

In this article, we explain:

• How to know when to sell a stock
• When not to sell a stock
• When to sell stocks at a loss
• Stocks and shares FAQs

Good reasons to sell stock

There are no concrete rules on when to sell shares. But there are a number of indicators that should trigger the need for a review of your investment portfolio.

We explore those indicators and why they might suggest it’s a good time to sell.

How to know when to sell a stock

Sell when the share price reaches your target value

If a stock you hold has achieved your objectives – that is, reached a target price that you have set – it could be time to sell and reinvest the proceeds somewhere else.

This may take some resilience if it looks like the stock is still going up.

When long term problems arise with the company

Most companies will have their ups and downs, and short-term problems can often be overlooked.

Look at hospitality and travel companies, for example. They are fundamentally well-run, and poised to exploit economic recovery after the pandemic. But they have suffered during the lockdowns.

However, if long-term issues arise – perhaps demand for a certain type of product looks doomed to keep waning – then it may be a good time to assess your situation and consider selling.

Better stock opportunities become available

If you have already made a decent return on certain investments, you might want to take profits (sell some of your holding) and use the money to buy shares in another company where you have spotted an opportunity.

Equally, you might decide to sell out completely if you’re happy with your returns so far and believe that another firm would reap an even bigger profit.

Your investment thesis changes

Your investment principles are unique to you. They will depend on your investment goals, attitude to risk and how long you wish to keep your money tied up in particular stocks.

Should any of these things change, you may wish to sell out.

This could happen, for example, because you now feel differently about a certain market sector – perhaps you want to start investing ethically and to get rid of oil or tobacco stocks in your portfolio.

You might also change tack if your personal circ*mstances change.

Should you have chunky holdings in one or more particularly risky stocks, and you know you might need access to your capital some time soon, there could be a case for selling up and reinvesting in less risky shares – or simply holding your money in cash.

Find out more: The best robo-advisers

When not to sell stock

There are a number of clear-cut circ*mstances that will not represent good reasons to cash in shares:

Stock price decreases

Share prices fall and rise daily – that’s the nature of the stock market – and a dip should not in itself be the trigger for an investor to sell.

Sometimes it will be a result of bad company news – such as financial results being weaker than expected, a dip in the quality of service, or a delay in the manufacturing of a product.

Whatever the reason, think carefully about why you chose a particular share in the first place and whether the problems seem like short-term ones that can be overcome.

This could help you stand firm and avoid making rushed decisions, which could lead to you missing out on further profits.

After all, selling your shares for less than the price you paid for them will mean turning paper losses into real losses.

Find out more: ‘I’m a vegan. How can I invest ethically?’

Someone tells you to

Taking advice from a friend in the pub or someone on social media is unlikely to be a smart move.

You are likely better off sticking to your guns on what you think is right or even better taking appropriate financial advice.

Everyone has different goals and attitudes to risk, so it’s important to follow your own path and make decisions for yourself.

Before you have investigated in more depth

Making a snap decision before doing some research could result in a poor decision – and losing money.

Before selling out, it is important to look under the bonnet of a stock to see what’s going on.

There should be plenty of tools on your investment platform or trading app to help you understand recent share-price behaviour, and you will also be able to find more in-depth analysis online.

When to sell stock at a loss

The holy grail of trading shares is to buy low and sell high to make a profit.

But there will be circ*mstances under which the smart move might be to cut your losses and sell.

Where a company is in trouble and the share price is in freefall – and you are convinced that the problems won’t go away in the longer term – then selling sooner rather than later may be your preference.

It is sometimes better to keep the winners and sell the losers.

What happens when you sell a stock?

Each platform website or app will work slightly differently, but you will need to find the button saying, say, “deal” or “trade” and select the “sell” option.

You might choose a number of shares to sell, or a value in pounds and pence. When you place the order, you should be quoted a price for the sale and given a certain time in which to complete the transaction.

You might be charged for your trade, and the fee will depend on the investment platform or trading app that you use.

What is the best time of day to sell stock?

A quick internet search suggests that it’s within the first couple of hours after the market opens.

But without a crystal ball, it’s not possible to tell what time of day is best.

How much should I sell my stocks for?

The price at which you are prepared to sell will depend on factors such as:

• How much you paid initially
• What you think is a reasonable return based on the business and its current valuation
• The prospects of its market sector
• The state of the economy

Can you buy and sell the same stock repeatedly?

There is nothing stopping you trading the same stock repeatedly. But why not consider buying and holding to avoid all the extra costs you will rack up per trade – not to mention wasting time?

What is the ‘8-week Hold’ rule?

This is an American concept stating that when a share price climbs more than 20% above its buy point in three weeks or less, you put a lock on those shares and hold them for eight weeks.

Experts would probably class this as speculating rather than investing and say it involves spending most of your days peering at charts.

Learn more about investing

Those new to the world of stocks and shares might wonder when the right time is to start investing.

Experts will say that under the right circ*mstances it’s never too early to get your money working hard. Find out more in our article Is now the time to start investing?

Read more about people who started investing during lockdown. Andrew Briggs tells us how in “I started playing the stock market when lockdown stopped me playing football”.

Before you get started, take our Investing for beginners course.

Once you have decided to take the plunge, you may want to read more about how to buy shares.

Capital at Risk. All investments carry a varying degree of risk and it’s important you understand the nature of these. The value of your investments can go down as well as up and you may get back less than you put in.