written by reader Best way to calculate how much to sell.

By istvan550, September 14, 2020

Is there a method to calculate how much of a holding should be sold to take profits?
My apologies if this has been addressed elsewhere, I did not see it.
Thank you,

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Travis Johnson, Stock Gumshoe
September 15, 2020 11:40 am

There is no mechanical rule, you have to make your own choices about how much to “let it ride” and how much profit to take. The most popular strategies beyond just a “sell it all on a stop loss”, I’d say, are “buy slow, sell slow” where you might sell your position in tranches of 10-30%, just like you probably built those positions slowly… and “take your costs off the table” in taking profits that equal your original investment (so if your holdings are up by 100%, sell 50% and let it ride with “the house’s money”).

Probably the most effective strategy is letting the winners ride with a very wide stop loss, but if you’re managing a portfolio, like me, you’ll also probably adjust and rebalance sometimes as high-risk growth stocks become very large parts of your portfolio.

👍 16195
September 15, 2020 1:40 pm

Im really happy with that answer. You made me more knowledgeable in buying and selling stocks. Thanks again

September 16, 2020 6:02 pm

I like the wide stop loss. But how wide is that percentage wise? I remember setting a stop loss about 30% down on a tech stock years ago in a market disruption event, they drove the price in a sharp V down to my stop loss and sold me there, then the price went right back up! Burned!

Travis Johnson, Stock Gumshoe
September 16, 2020 7:27 pm
Reply to  rams77

That happens very regularly with stop losses of any size — you have to be able to handle that if you want to stick to a stop loss discipline.

👍 16195

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