How To Improve Your Profits in Stock Market

By vikas
Aug 6th, 2011
The biggest confusion with every trader remains always the same even when he is sitting in profits and the question is:”When to sell your holdings??”.It is human nature of having greed and where some don’t sell because they think that their stock would further rise by another 100 or 200 RS, others think that their price will come even if continuous negative news they get related to their stock.Therefore to avoid you from such confusion , here are some tips which you can follow and improve your returns :-

Adapt Stop-Loss Trigger Strategy 
: The maximum stock holders face losses because no one adapts stop-loss strategy. There are people who buys a stock at say 1000 Rs. and even if its falling daily , they don’t sell because they think their price will come.Th stop- loss avoids this huge loss as it gets triggered when a stock falls to a particular price.You should believe that stock will go up but at the same time, you must protect your invested money.The stop loss can also vary from 15% to 20% price of that stock.

Target Your Returns From a Stock 
: Whenever you buy a stock, target your return depending upon the risk you can take.The target can be 20% to 40% of the stock price.This strategy makes your selling decisions easy and avoid panic situation and huge confusion while selling.

Time Constraint : There are chances when we are targeting a particular thing like a child’s education, marriage or vacation. In case you have an opportunity to realise this sum before the time period is over, you can sell your holdings and place it in in a safer avenue such as fixed deposits, bonds.By doing this, you may avoid market risks.

Asset Allocation : Asset allocation is also a very important part in one’s investment portfolio.The fixed sources of income must increase as men grew older and the stock portfolio should be looked after time to time as increase in one stock price and decrease in other must be looked after and selling or buying decisions must be made on it.

Fundamentals of Stocks Changes From Time to Time : There could be fundamental reasons why you should think of selling the stock that you have long owned. It could be a sudden about turn in the company’s financials or prospects — the loss of market share, declining margins, or liquidity problems that increases the risk of holding the stock. By selling out now, you may get a chance to buy later at a lower price.

Mismanagement in Company : Whenever you come across any mismanagement in the company or any fraud then it is always better to exit from the stock at the earliest opportunity available.After all it is the CEO and management who runs the company and their laziness and mismanagement may cause a steep fall any day.

Comment to this article if you find something is missing and adding to it can help people improve their returns further.

via Businessline

About the Author

- Co-Founder of IdleBrains is a software engineer by profession. Other interests are Playing and watching Cricket, reading finance news.

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