sell stocks - Selling of stocks3. Rules for stock selling4. Sell

Introduction: Investment in stocks is a form of equity investment. When a person buys the stocks of shares of a company, he gains partial ownership of that company. Conversely, when he sells the stocks the ownership is transferred to the person or organization that purchases the stocks. The price of stocks of a company rises when it performs well and falls when the performance is bad.

Selling stocks: The basic intention behind selling stocks is to make a profit on the sale. The greater the difference between purchase price and selling price of a particular stock, the higher is the profit margin.

When a person wants to sell stocks, he will obviously have to wait long enough for its price to reach the levels he desires. After the sale, he will have to pay the taxes due on profits he has made out of the transaction.

If the market is going through a bear phase, then he has two options. Either sell it at the prevailing low price and make a loss in the process or hold his stocks for such period as when it starts to make a profit. His option would be exercised according to his urgency for getting liquid cash from his stocks or the time till he would like to hold on to his stocks. If the prices show a steady decline, he might sell it immediately rather than wait in order to minimize his losses.

RULES FOR STOCK SELLING: There are some simple rules; one would do well to keep in mind when he wants to sell stocks. Selling and buying of stocks are both conducted through stock brokers in stock exchanges. Stocks can also be sold online these days, if a seller is connected online to the stock exchange.

SELLING AT THE TOP: Every seller ideally wants to sell his stocks when they reach top i.e. the highest value before they decline. Determining the top accurately is almost impossible, except that one might sell at the top coincidentally. There is any number of instances when a person waits a bit too long and sees the prices starting to take a down slide. Or he might just sell just too early to discover later that prices hit much higher in the long run than the one he sold at.

WHEN TO SELL: As already stated, the top or highest value of stocks of any company is hard to predict with exact accuracy. Although, indicators such as P/D,P/E or computer aided programs may be used to come as close to that point as possible or even coincide with it, one can not say with certainty whether the stock price will decline after that or rise yet higher. Hence there is no answer to the big question, as to what is the appropriate time to sell stocks.

CASH REQUIREMENT: If the prospective seller wants immediate cash, then there is not much problem there. He can sell his stocks at the prevailing price and hopefully at a margin.

STOCK BROKERS ADVICE: Advice from stock brokers is very helpful in regard to both buying and selling of stock. Brokers participate in the market directly and hence can use their experience to detect even minor market fluctuations. They can give advice as to when to offload the stock. Although such advice comes at a price, it is worth the price.

KEEPING ONE INFORMED: A serious player in the stock market should ideally keep himself well informed about all the major happenings not only in his own place or country, but all over the world. These days, when trade and finance have crossed national boundaries and the fortunes of one country are closely related with that of another, a small upheaval in one corner of the world might lead to a stock market crash in another corner. Thus it is necessary to follow the indices of other major international stock exchanges simultaneously with that of ones local exchange.

MAJOR INTERNATIONAL EVENTS: It is also important to follow the course of major events which can cast its influence on certain kinds of stock. Any disturbance like war or conflict in the Gulf will lead to fluctuation in oil prices across the world and not remain localized to the Gulf States.

INSIDE INFORMATION: Inside information about a companys performance or major decisions likely to be taken by the Board of Directors, are also important information in this regard. The governments policy in respect of certain commodities is also crucial. Change in policy will lead to a change in the prices of those commodities as also the stock prices of companies that manufacture those commodities.

SELLING STOCKS AT A PRE-DETERMINED PRICE: When a companys stock is making profits in the stock exchange, one can sell at a price he thinks is satisfactory for him. This might not fetch the top price, but surely eliminates endless delays and unnecessary risks.

SHORT SELLING: This is the practice of borrowing stock, usually from ones own brokerage, with the expectation of prices to fall at some stage. Once the stock prices fall to desired levels, he can buy back the stock making a profit in the process. If the prices rise, it results in a loss. However, short selling is considered illegal in most of the countries.

CONCLUSION: Stock trading is speculative business. It would be important to exercise a lot of caution while selling of stocks. Keeping ones greed for maximizing income and profits in check is vital, as unlimited greed can wipe off a persons entire investment.