When to book profits in volatile markets?
Here is an interesting article that I came across in Economic Times today. The Article discusses about why, how and when to book profits from your stocks when the stock markets are volatile. Profit Booking has always been a tricky business for normal retail investors. We tend to hook on to our stocks sometimes that we miss out opportunities to sell and make profits. These are some strategies for investors to book profits and avoid missing out on opportunities: Set target and phase exit Booking profits at regular stages is one of the most basic strategies. Wealth managers suggest maintaining a ‘book profits’ and ‘cut loss’ target on investments and keeping track of them. However, many investors do not follow it or lose track of the targets.
It is therefore advisable to keep booking profits regularly, whenever the price moves significantly. Smaller milestones can be set in steps of 10 to 20 percent price movements.
Regular selling and booking profits enables investors to average out the opportunities and use them in a systematic manner.
Some strategies that are discussed in this article are:
- Identify sell signals
- Market trends
- Sharp run-up
- Being objective
Here is the full article: click here
