When to Sell Stocks and Shares (Exit Strategy)

Knowing when to sell your stocks and shares is crucial to your success as a stock trader. This is called share exit strategy, which is the most difficult decision any investor has to make. With a good stock exit strategy, you will exit earlier and for a better price.

Generally, there are five basic share exit strategies in the stock exchange:

1) Price exit strategy: This strategy is based on price patterns. Before you buy a stock in the market, you will have to set a higher target price at which to sell. When the share price has reached the predetermined target, you quickly sell-off to take profit and move on to other stocks.

2) Period exit strategy: This strategy is applied when you have to purchase and sell your stocks within a period of time. In other words, you sell your stocks within a time frame so that you can have the money for some other purpose like buying another promising stock or investing in some other financial assets.

3) Past performance exit strategy: With this strategy, you sell your shares based on the historical price trend of the shares.

4) Situational exit strategy: This strategy is applied because of situation or news event. You exit the trade when there is an announcement that pushes up the share prices.

5) Closure of register exit strategy: With this strategy, you sell a stock at a day after the closure of register to benefit from dividends, bonus and capital appreciation. The date for closure of register refers to the date at which members are entitled to the declared dividends or bonus.