Schaeffer’s Investment Research Experts Discuss Common Stock Sell Signals

Schaeffer's Investment Research

September 15, 2020

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Schaeffer’s Investment Research experts recently discussed common signals that it’s time to sell a stock.

Buy low and sell high. The movies make stock trading appear as simple as that. However, trading experts, like those at Schaeffer’s Investment Research, know it’s not that easy. Traders may need to sell at a loss before that loss gets any bigger, and sometimes selling can feel like an impossible decision. The Schaeffer’s Investment Research team recently discussed common signs that it’s time to sell.

“A major drop of 10 to 15 percent can be a telltale sign,” Schaeffer’s Investment Research experts said.”This is a common indication that the stock has already peaked, and it can be a good time to sell before things get worse.”

Schaeffer’s Investment Research experts added that traders can set up a “stop loss order” at about 10 percent below the high. The position is liquidated if the share falls more than that 10 percent. This lets traders enjoy a little peace of mind, knowing the stock will be sold before the loss gets any greater.

“You don’t always want to follow what the executives are doing, but if the executives of a company are selling their stocks, it usually means their indicating a serious share price drop,” Schaeffer’s Investment Research experts said. “They know if their sales are plummeting, it’s a characteristically bad quarter, if there’s new competition on the market.”

Schaeffer’s Investment Research explained that another telltale sign it’s time to sell is when a company begins to suspend or cut dividends. Companies tend to cut dividend payments when they are undergoing tough financial times. Schaeffer’s Investment Research suggested always keeping an eye on any regular dividends you’re receiving from a company, because if those are suddenly stopped or reduced, it’s a bad sign for the stock.

“Stock analysts hold the position they have for a reason. They don’t always make correct decisions, but if multiple analysts recommend a sell, we generally suggest paying attention,” the Schaeffer’s Investment Research  team said.

The final telltale sign it’s time to sell outlined by Schaeffer’s Investment Research is when a stock is being shorted. Shorting a stock is a process used by experts, which involves “betting” that the share price is going to fall. If a stock increases greatly in a short amount of time, an experienced trader may short the stock, anticipating that the share price was overvalued and will fall greatly in the near future.

“Stock trading is a complicated process, and if there was a way to hack it, everyone would be doing so,” Schaeffer’s Investment Research experts finished. “However, these telltale signs serve as general guidelines to help you make the most of your trading experience.”