2. One can effectively deal with this type of situation if one can control the element of greed. One has to book profit and if one does not than one is just a paper tiger as profits are only on the paper.
3. One has to keep the greed element under control and one has to develop a strategy where he or she has to be prepared to sell shares which is the toughest call to make in a day trading career. When a market is rising; that is the time selling call becomes difficult to make and book profit as mind says that stock will go more up.
4. Thus to overcome this hinderance of not being able to make a call for sellig the stock one can use either of the following strategy i.e. either goes for targeted return which can be 30 per cent or 40 per cent and can be time based and a risk factor being incorporated in the same.
5. Alternatively one can use the concept of stop-loss trigger or stop loss profit where one is trailing the profit every day.
6. One must understand the concept of stop loss and thus the point to note here is that by having a stop loss trigger one sells a stock, not to book profits, but to minimise the losses. A stop-loss sell order is a contingent order that will get triggered only if the stock does fall to a particular price. For instance, the stock you have decided to sell is quoting at Rs 100. You have reason to believe that the stock will go up but you need to protect your profits. So you may place a stop-loss order for the stock at Rs 80 as trigger i.e. in case it goes below Rs 80 you will compulsorily sell it.
7. One may even use the concept of stipulated time or event and can sell accordingly. The concept can be illustrated with this example that one may be targeting a specific sum for a particular event like a child's education, marriage or vacation. In case you have an opportunity to realise this sum before the time period is over, you can do so and park it in a safer avenue such as fixed deposits, bonds. Thus bu following this strategy one is avoiding exposing the investments to the volatility in the stock market closer to your goal.
8. Asset allocation: Sometimes, because of a relentless rise in a particular stock or stocks, the weight of that stock or stocks in your portfolio could rise substantially, making your portfolio lopsided.Prudence demands that you reduce exposure to the stock to rebalance your portfolio. The change in asset allocation could also be due to change in preference with growing age.As you grow older, try to increase the percentage of fixed income instruments in your investment portfolio.
9. Changes in fundamentals of the stock: There could be fundamental reasons why one should think of selling the stock that you have long owned. It could be a sudden about turn in the company's financials or prospects - the loss of market share, declining margins, or liquidity problems that peg up the risk of holding the stock. By selling out now, you may get a chance to buy later at a lower price.
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