How to Sell StockKnowing how to sell stock is just as important as how to buy stock. In the heyday of many American corporations in the two generations after World War II buy and hold investing was touted as the path to riches. A famous investment advisor was asked how to sell stock in IBM. His reply was that gyou never sell stock in IBM.h That was shortly before Wasniak and Jobes cobbled together the first Apple computer in their garage and brought about the world of the personal computer. It was shortly before IBM, as an afterthought, gave away the development of their personal computer operating system to a couple of unknowns, Bill Gates and Paul Allen. Certainly how to sell stock in Microsoft was not an issue as Microsoft stock price grew a hundred fold and more. Today Microsoft is one of the large cap stocks but has been passed in capitalization by Apple, which Gates helped save from collapse years ago. Investors and traders use both fundamental and technical analysis to decide on whether buying stock or selling stock is the better choice. How to sell stock profitably commonly includes the use of technical analysis tools such as Candlestick charting in order to anticipate market trends and market reversal.
Those interested in long term investing look for both intrinsic stock value and a margin of safety when buying stocks. How to sell stock is to look for the same indicators. Intrinsic stock value is the forwarding looking income stream of a company, discounted for expected inflation. Intrinsic stock value is diminished by already high stock prices. If a stock has a very high price to earnings ratio it has been bid up by the market in anticipation of future gains. There comes a point when the stock is frankly overpriced. Fundamental analysis tells us that as will astute technical analysis. With the use of Candlestick analysis both long term investors and day traders can profitably anticipate stock price declines. The long term investor will use this information to remove a stock from his stock portfolio. The day trader may sell short or profit from buying puts on the stock.
A long term investor can also make use of options trading to sell stocks. How to sell stock and still hold on to it is to buy puts on a rapidly advancing stock. The investor uses the puts as insurance against a market correction. For the price of the stock premium the investor obtains the right to sell the stock at the contract price, the strike price, even if it should fall dramatically. Should the stock price fall the investor can execute his options contracts and sell. Then he can buy stock again at the post correction price. He can also simply exit the options contract by making the opposite trade. He gains a profit from the options trade which mostly compensates for the loss in share price. If the stock recovers he eventually owns the same stock at the same price but is richer by the profit from trading options on his stock.
Market Direction: There are very powerful implications built into candlestick signals and patterns. Candlestick analysis is not merely the identification of reversal signals. The information Incorporated into each signal in pattern is a graphic depiction of identifiable reoccurring investor sentiment processes. This is what creates the signals and patterns! Once investors realize that consistent profits are made from the markets, by not being an analyst or listening to analysts projecting which stocks or sectors should do well in the future, but analyzing what the overall market is projecting.
Having the ability to recognize a signal or pattern set up allows for profitable positioning in any trading market. Please take the time to study the high profit patterns that occur constantly. Having the knowledge of why a pattern is developing allows an investor to participate in high profit moves with extremely high probability ratio. There is nothing magical about candlestick signals or patterns. All they do is identify the same price movements that occur over and over due to normal investor thinking. This information alone will dramatically improve an investors profitability.
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The Candlestick Forum Team