Many traders often think about the idea of How to sell stocks and achieve maximal-possible-gain. Every trader wants to make the biggest possible gain in any single trade. It is not so complicated to know how to sell stocks with big gains in bullish (long) type of trade. Here are my ideas.
There are several rules that must be followed in every good trade to maximize potential gain. This does not mean that every trade is going to finish with huge gains. A trader should remember that there are four possible results of every single trade: big gain, small gain, small loss and big loss.
Professionals and profitable private traders understand that the option “big loss” must always be avoided. Profitable trading systems have an incorporated set of rules to assure this.
Plenty of traders and investors want to be right in every trade. They want to have only profitable trades. But it is not possible. Every good system trading stocks accepts having losing trades as well. But it is important to manage these non-profitable trades with stocks to minimal losses.
Risk reward and stop loss orders
Minimal losses can be achieved using two basic techniques for money management. The proper risk reward ratio calculation for each and every possible trading opportunity is the first one.
A good trade should expect to have profit at least three times bigger than maximal possible loss. If this ratio is less than two then you should avoid opening such a trade.
Using stop loss orders is a trade management technique that helps to achieve biggest possible gains from any single trade with stocks. Setting initial stop loss ensures that maximal loss will be low in a worst case scenario.
Using trailing stop loss orders helps to move the exit level to the price when our position is already above our entry price. It changes the result from a small loss to a small gain or even to a big gain if the position experiences a strong move up.
Partial closure of stocks position on a pre-defined target level is another way to answer the “how to sell stocks” question. The combination of limit order to sell a small or large part of position should be incorporated into your trading system for stocks.
Good pick strategy for stocks
Good stock picking also plays a very important role for profitable trading. There should be a list of rules for market screening. These rules should take into account prevailing market trend situation and select best stocks accordingly. If you plan a bullish trade then it is much better to open it during bullish stock market conditions.
If your stock screeners are based on fundamentals then you should know that price movements could move a lot before your fundamental opinion will show in the price action. So it is always good to incorporate some technicals into the timing of your entries.