When to Sell a Stock?
What is a Stock?
When it comes to investing in the stock market, the first investment instrument that comes to mind is stocked. It is the name given to the valuable documents given to the shareholders of the equity capital companies to document their shares and partnerships. In other words, it is also seen as one of the equivalent parts of a company's capital. Stocks also represent ownership or partnership. Stocks do not have a standard return and their value varies according to the company's balance sheet earnings and investment decisions.
It is obligatory to obtain permission from the Capital Markets Board (CMB) in order to issue the said shares. Institutions that can issue stocks are joint-stock companies, limited partnership companies whose capital is divided into shares, and institutions established by special law. The shares of these cases are also issued under the supervision of the Capital Markets Board, which we mentioned above. Stocks, which are the most traded investment instruments of the stock market, are therefore very important for both investors and companies.
When to Sell a Stock?
To buy and sell stocks, in its simplest form, there must be a buyer and a seller. When you buy 100 shares of a company, it means that someone else actually sold those shares. During the trading process, either buyer or seller can be more aggressive than the other by pushing the price up or down.
If the stock price is falling, it means that the seller is aggressive, in such a situation usually the sellers intend to sell their holdings at a low price. Buyers are calm and just want to buy stocks at a low price. Prices continue to drop to the point where buyers step in and become aggressive by buying shares at higher prices, after which stock prices begin to rise.
Investors do not all have the same schedule, which pushes sellers and buyers to sell or buy stocks at different times. If we look at it from the seller's side, an investor who holds stocks with very high prices can sell their shares and turn their shares into money in order to take this profit to their safe. Another seller may have to sell the shares at a low price, which he bought at a high price, which means that the seller is at a loss. This seller can dispose of the shares in his possession immediately to avoid further loss. In addition, investors and sellers may be putting their shares up for sale because they anticipate that the prices of their shares will decrease in line with their research.
When is the right time for this?
Many investors say that it is not difficult to predict the right time to buy stocks, but it is difficult to predict the right time to sell stocks. This is true in a way, but since not all investors have the same program and strategy, the answer to the question "when to sell the stock" is not the same for everyone.
However, the following four little tips can help give you an idea of when to sell your stock. But remember, the best times are not limited to the ones below, your current situation can change everything.
If prices have reached the targeted bar, it is the right time to sell shares. When professional investors buy shares, they set a target price at which to sell the shares they bought. They research the shares thoroughly before buying them and establish what the appropriate target price is from the very beginning. Then, when the stock rises and reaches the target price, they sell the shares and make a profit.
If one company buys another company, the shareholders can make a significant amount of money from it. Generally, high returns can be obtained before and after the merger after the merger is announced to the public. It should also be noted that this return increase has a positive relationship with the size of the merger. However, according to studies, the consolidation effect on stock prices has a positive effect between 3 and 5 days in the short run. For this reason, there may be suitable times for sales after mergers.
If a better opportunity comes your way, it may be the right time to sell your shares. Always compare the profit potential difference of one stock with another. The opportunity cost can be difficult to predict, but it may mean that investing in a competitor is far better if the prospects for growth are attractive enough.
If a company's foundations are starting to shake, it may be time to divest its stock. The ideal of this work would be as follows; When the company's profit margin, cash flow, and key functional fundamentals of the company decline, those shares are immediately put up for sale before stock prices drop. Financial explanations are very helpful in this regard.
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