Also there are many investors who suffer from fear of loss instead of rational decisions and so they are very much confused as to when they should sell their shares. An investor should think about selling even before he even buys stocks.
Consider what your motive is and within what time frame you want to hold the stocks. You should monitor your investment regularly and then finalize your decision to sell which will be based on your original goal. If your stocks reach the magical figure before the time frame set by you then you can happily sell your stocks and earn good profits.
However if the time frame has passed and you are too far from your goal, then you should consider selling your stock to avoid further losses.
Next on the list is the decision as to how much you can afford to lose. Prices of some stocks will go down much against your wishes. In this situation you should be able to decide ahead of time how much you can afford the stock prices to go down.
Once the stock price goes down to the price decided by you to sell the stock, you should go ahead with your decision. As a result you will be able to absorb a certain percentage of your loss if not all of it. The price at which you decide to sell of your stock in case of decreasing prices is known as the stop loss point.
