How to Know When to Sell a Stock

Buying gets most of the attention, but an exit plan determines whether you keep your gains.

Most investors know how to buy. Almost nobody knows when to sell.

That gap is where months of gains disappear in a matter of days.

Buying a stock gives you a clear decision to make. Selling can be harder because you don’t know how much of the move is still ahead.

If you only decide how to exit once you’re excited about a gain or worried about a loss, your emotions can start rewriting the plan.

Here I’m talking about individual stock trades. A diversified long-term portfolio needs a different approach based on your goals, time horizon, and risk tolerance.

The problem with “let your winners run”

The most repeated piece of investing advice is to cut your losers and let your winners run.

It’s true. But it’s incomplete.

A large gain can shrink, and a rising price won’t tell you when to sell. Decide what would make you reduce or close a position before you feel pressure to act.

The investor who held a stock from $160 to $450 and then watched it fall to $220 didn’t let a winner run. They let…