Locking in profits

Howdy all,

I’m wondering what people’s strategies are for locking in profit ?

Does it vary share to share or is there a standard method. Where say up 10% sell 10% of shares, 20% etc. I imagine it can’t be as simple as that but was just wondering how you approach it.

Even this question makes me wonder if I’m after instant gratification and should just hold long term and sell nothing for 20 years…

Thank you

There are people who will tell you to hold long and sell nothing (for fear of being labelled a “trader” :open_mouth:)
But, I would avoid setting hard rules for things. Even the greatest companies can fall from grace and end up worth basically nothing in comparison to their highs (yahoo, AOL, kodak, etc).

Personally, I usually start selling when share price increase has exceeded logic.
Eg. if I think share is worth $100 and I buy it for $80, by the time it’s at say $120 and the earnings don’t warrant a 20% rise, then I’d be expecting a pull back and would start selling chunks. However, if the earnings do warrant such a rise, then I’ll happily hold for another quater.

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I’m mostly buy and hold these days, I rarely sell anything. however I do sell to rebalance if a position grows massively. for example 3D systems spiked earlier this year and I ended up +600%. this made what was initially a fairly speculative bet into my largest position. I sold a bunch of shares to reduce it to a more reasonable size and put the money into something else. It has now dropped back a lot so it seem that was the right decision

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My strategy is to buy and hold, however in my month using Freetrade, I’ve already sold a number of times. And whilst I have made a profit each time, I’d have made much more by holding.

I should preface this my saying I’m probably doing what most people would do monthly, but on a compressed schedule, so trading daily rather than monthly. I transferred a big chunk in to use last years ISA allowance, but I’m worried about a possible imminent crash, so I’m dollar cost averaging in each day. I also know that this is likely to be a bad strategy if the market doesn’t crash in the time frame I’m doing this over, “time in the market > timing the market”, yada yada.

Some examples: I have ESTC as one of my buy-and-holds, but the price can often fluctuate by 5% in a day. So, if it’s dropped a lot on one day, I’ll buy quite a bit more and then offload it when it’s higher. But actually, all that then means is I end up rebuying a week or so later for more than I sold it at, when I need to buy more to maintain my target %age in my portfolio. I also spotted TSLA at a really low price a couple of weeks ago, but I don’t want to keep TSLA because I think it’s massively overpriced (even at what I bought it at, so I don’t want to keep it, but I also believed the price would go up short term as it’d dropped by over 10% that day).

Those shares of ESTC, I’ve e.g. bought at 108 and sold at 113, bought at 115 and sold at 120, bought at 120 and sold at 128. It’s now sitting at 124, so I’ve still made profit overall by doing that (i.e. the shares I sold at 128 earned more than if I sold now), but actually I’ve lost out by selling other shares at 113, 120 that are now worth 124. So, I think holding is the best strategy if it’s a stock you like.

On the TSLA, I bought at 598 and got rid of it at 640 and was pretty pleased with myself. However, now it’s at 744 that move doesn’t seem quite so smart.

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Just curious but are you not losing money by constantly buying and selling considering the 0.45% FX fees, or are you managing to break even?

If the stock goes up 5% in a day and I lose 0.45% of FX fees each way, I’ve still made 4% profit.

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Most of my stock purchases are for long term holds, however I do have a £2k fun float, where I have punts on meme stocks and mining penny stocks. If I lose it all, I won’t lose sleep. With this money, when I’ve hit 50% profit on an individual stock, I take out my initial stake, and let the remaining shares ride.

Currently I have these shares riding which have essentially cost me nothing. £KOD, £SLP and $AG

But of course DYOR.

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Yes however you’re also contending with the exchange rate too so it’s lower than 4%

Well that depends when you sell.

I subscribe to the Peter Lynch ideology, buy a stock when there’s a story of why it will go up, i.e. why is the current P/E not justified, based on historic values or growth potential. You then sell if the story is no longer true, which can be because the price has gone to a justifiable level or something in the story has changed e.g. information about the company/market.

I’ve only been buying stocks about 2.5 years, up over 100% in Freetrade though across about 20 different stocks. I generally haven’t sold anything, I aim to buy stocks to hold forever though.

Selling at an arbitrary figure, e.g. 10%, doesn’t really make any sense. You may lock in gains, but you’re not taking into account any information in the market.

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If its up 100% in a year no, but if I have a stock that flies up beyond expectations then absolutely.

Two recent ones for me were MOS which shot up 100% in a day and I let it ride and it went back to zero (learnt my lesson), then 88Energy which went up 600% in a couple of days, and I took 20% out each day as it flew up. I’m now still waiting to reenter if it keeps falling. I guess if there was some totally solid news about a new valuation like a merger it might stay up but in general everyone will sell the news and it will dip.

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I’ve tried ‘timing the market’, if it’s an instinct then I don’t have it, i suck at it, I once cashed in for £2,000 profit but if I had waited a few more months I’d have made £20,000+ profit, after that fiasco I decided I don’t like trying to time stocks.

Now I just pump most of my money into a global accumulator fund and dip into a few interesting companies when the urge takes me (no more than 5% of the value of my fund in any one company). My intention is to pick companies that could last the long term rather than set myself a limit.

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ETF 's

Which stock was it @stephen

Good old ggp back at the beginning of 2020

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There’s an even stranger one that I tried to find info on which went up 25000%. CPP Group.

No info no buy