Friday, April 4, 2008

Dilemma with selling a stock - Price is right? Does it have any upward momentum left?

This is a personal post but it reflects the dilemma most of the investors or traders face while selling stocks. The question that needs to be answered while thinking of selling is whether the stock's price is right and if there is any significant upward movement left? I am talking more from a short-term view point.

I currently face the dilemma about Satyam computers. Charts say that it moves within ranges and I have seen it happen. So I had bought Satyam at 375 (low range) and now the price is around 425 (close to high). I had a target of 430 in my mind but from the charts it can go till 440 (short-term max). So my dilemma is whether to give it time to reach 440 or should I sell it off at 430. Greed makes to wait till it reaches 440 and maximize the gain and also since IT stocks are doing well of late there is this optimism that the price can go even higher.

On the other hand, I had seen the prices fall rapidly back to the lows. It happened twice already in the last 3-4 months where Satyam's price fell back to 400 or even less. Should I wait and watch the gains evaporate or monetize them?

The money involved is not huge so I can wait and I can afford mistakes. Since I am only in the learning phase I am alright with committing mistakes since mistakes teach you more than success. One thing I definitely learned is no matter what read in the books and no matter what advice you get from the experts it is finally up to you to make a decision and to follow a style of investing/trading that suits your character and maturity.

I think I will wait and give it a couple of day's time but I have not matured so much that I can control the urge to sell if the price starts to drop. If it moves upward then I might just hold on. Lets see!

RK

1 comment:

RK said...

Wait paid off as I could sell them at 440 today.

RK