When it is the Right Time to Sell? A Consideration When Trading Stocks (Part 1)

The question of when to sell a stock in one’s portfolio, if not left up to the person’s portfolio manager / broker, is a question that can be tough to decide –  especially if that ‘when to sell’ wasn’t a part of their original plan. 

With the S&P 500 trading down into a 10% correction this week, many investors are likely asking themselves and or their brokers is it best to sell stocks and preserve capital or not.

I am going to offer a consideration for stock holders over the next two weeks, this one and next.

I’ll consider this week’s article Part 1.

Long-term investors really don’t have to worry about when they have to sell their stock. They tend to have a viewpoint of being in the stock for the long haul. They may own a dividend paying stock and regardless of stock price so long as the dividend is consistently being paid they seem pleased with that.

For those of you who like to do as I do with some of my money is buy a stock or an ETF with the intent to sell them for a profit within an average of 30-40 days’ time frame. In these cases, I have an exit plan in place before I spend my first dime on the security. This makes my ‘when to sell’ decision much easier because that is part of my original plan.

What we are doing on a pure stock and ETF publication I make available to subscribers called Stock Cycles Trader is to send out an alert to buy the stock or ETF. The alert specifies the Avg. % goal it has accomplished over the past 10 years. This data is taken from the powerful scanning tool, Money Calendar – which finds stock with a 90-100% win rate (9 or 10 of the past 10 years) it traded higher or lower over a specific range of days.

Money Calendar calculates the Avg. % Gain for the security over the past 10 years.

We note that Avg. % gain is our initial target goal for the move on the stock. We also state at the initial alert that if it doesn’t get there we have a time stop of selling the shares at the last hour of the End Date, day.

When that % gain gets hit we send an alert to sell half the shares and hang on to the rest until further notice.

Then if the stock goes DOUBLE the initial avg. % gain goal we send another alert to sell the last half

(in essence the ‘further notice’ is if the security goes double the initial avg. gain target goal)

Process for Stock/ETF Trading with Money Calendar

• Find a Stock or ETF with a bullish or bearish pattern then consider buying shares
• Realize the Avg. % gain and that is our initial price target goal for the stock or ETF
• When that target goal for the security is met, sell half the position
• Hold the last half until the security goes double that initial Avg. Gain % and sell the rest of one’s position
• If none of the above scenarios happen sell the entire position in the last hour of trade on the End Date, day.

Latest Example: The Progressive Corporation (NYSE: PGR)

January 14 the alert was sent to buy shares at market and the price showing at the time of the alert was 235.78 (Entry Price in table below). End Date, April 09.

On Valentine’s Day it was trading at 264. We sent the alert to sell half the position at market ($264 at the time of the alert). We noted that would make for a profit of +28.22-points or a % gain of +11.97% – exceeding the initial Avg. % goal.

Fast Forward to March 3 and PGR was trading $283.07 at the time we sent the alert to sell the remaining shares in the trade.

The bottom horizontal line in Figure 1 represents the entry price when the initial alert was sent out, ($235.78).

The alert was showing the stock then trading at 283.07, which is a % gain of +20.06%

The initial target % goal was +9.73%. Double that is +19.46% and the resulting +20.06% is larger than +19.46 so it was deemed time to close the rest of the position.

Taking half off at initial Avg. % Gain goal and last half off at double that % has happened more than once this year…

App: Toms Option Tools

Toms Option Tools scan the markets for bullish and bearish trade opportunities using our proprietary scans and strategy algorithms. TTR Darknet finds bullish entries based on triple stack channel collisions. Money Calendar identifies seasonal patterns with at least 90% accuracy looking back 10 years. Weekly Cash Clock finds short term opportunities that last a week on average. Microcurrency Trader applies Darknet technology and moving averages to cryptocurrencies. Velocity Trader utilizes volume spike and Velocity indicators on custom stock lists. Quantum Scripts scans the markets for momentum acceleration signals and employs Quantum noise filters. Optimal Trader finds directional pre-earnings opportunities that are optimized for entry date, stock movement, and volatility surge. My Trades tracks the profit/loss of your trades, displays stock charts and risk graphs, creates new trades, and edits existing trades. Morning Report provides top 10 option rankings in 6 categories each day.

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You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.

This is neither an offer to buy/sell/ or recommend a particular stock or option.

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