Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”?
"Though it seems unintuitive, you should rationally ignore the past performance of this stock (including the fact that it's at its 52-week high) and focus exclusively on factors that you believe should affect it moving forward.  If you think it's going to go up even further,  more than the return on your other options for where to put the money, keep the stock.  If you think it's peaked and will be going down, now's a good time to sell. To put it another way: if you didn't already have this stock, would you buy it today? Your choice is just about the same: you can choose between a sum of cash equal to the present market value of the shares, OR the shares.   Which do you think is worth more? You also mentioned that you only have 10 stocks in the portfolio.  Some are probably a larger percentage than others, and this distribution may be different than what you want in your portfolio.  It may be time to do some rebalancing, which could involve selling some shares where your position is too large (as a % of your portfolio) and using the proceeds toward one or more categories you're not as invested in as you would like to be.  This might be a good opportunity to increase the diversity in your portfolio. If part of your reward and motivation for trading is emotional, not purely financial, you could sell now, mark it as a ""win,"" and move on to another opportunity.  Trading based on emotions is not likely to optimize your future balance, but not everybody is into trading or money for money's sake.  What's going to help you sleep better at night and help boost your quality of life?  If holding the stock will make you stress and regret a missed opportunity if it goes down, and selling it will make you feel happy and confident even if it still goes up more (e.g. you interpret that as further confirming that you made a good pick in the first place), you might decide that the risk of suboptimal financial returns (from emotion-based trading) is acceptable.  As CQM points out, you could also set a trailing sell order to activate only when the stock is a certain percentage or dollar amount below whatever it peaks at between the time you set the order and the time it fires/expires; the activation price will rise with the stock and hold as it falls." "I bought 1000 shares of Apple, when it was $5. And yet, while the purchase was smart, the sales were the dumbest of my life.  ""You can't go wrong taking a profit"" ""When a stock doubles sell half and let it ride"", etc.  It doubled, I sold half, a $5000 gain. Then it split, and kept going up. Long story short, I took gains of just under $50,000 as it rose, and had 100 shares left for the 7 to 1 split.  The 700 shares are worth $79,000. But, if I simply let it ride, 1000 shares split to 14,000. $1.4M. I suppose turning $5,000 into $130K is cause for celebration, but it will stay with me as the lost $1.3M opportunity.  Look at the chart and tell me the value of selling stocks at their 52 week high. Yet, if you chart stocks heading into the dotcom bubble, you'll see a history of $100 stocks crashing to single digits. But none of them sported a P/E of 12." Buy low, sell high. I think a lot of people apply that advice wrongly. Instead of using this as advice about when to buy and when to sell, you should use it as advice about when not to buy and when not to sell. Don't buy when P/Es cannot support the current stock price. Don't sell when stocks have already fallen due to a market panic. Don't follow the herd or you will get trampled when they reverse direction in a panic.  If you are smart enough to sell ahead of the panics, more power to you, but you should be using more than a 52-week high on a graph to make that decision. "Obviously a stock that's hit a high is profit waiting to be taken, be safe, take the money, Sell Sell Sell!! Ah.. but wait, they say ""run your winners, cut your losers"", so here this stock is a winner... keep on to it, Hold Hold Hold!!!!! Of course, if you're holding, then you think it's going to return even higher.... Buy Buy Buy!!!! So,  hope that's clears things up for you - Sell, Hold, or maybe Buy :-) A more serious answer is not ever to worry about past performance, if its gone past a reasonable valuation then consider selling, but never care about selling out just because its reached some arbitrary share price. If you are worried about losses, you might like to set a trailing stop and sell if it drops, but if you're a LTBH type person, just keep it until you feel it is overvalued compared to its fundamentals." "I primarily intend to add on to WBT's answer, which is good. It has been shown that ""momentum"" is a very real, tangible factor in stock returns. Stocks that have done well tend to keep doing well; stocks that are doing poorly tend to keep doing poorly. For a long-term value investor, of course fundamental valuation should be your first thing to look at - but as long as you're comfortable with the company's price as compared to its value, you should absolutely hang onto it if it's been going up. The old saying on Wall Street is ""Cut your losses, and let your winners ride."" As WBT said, there may be some tangible emotional benefit to marking your win while you're ahead and not risking that it tanks, but I'd say the odds are in your favor. If an undervalued company starts rising in stock price, maybe that means the market is starting to recognize it for the deal it is. Hang onto it and enjoy the fruits of your research." You should sell all your stock immediately and reinvest the money in index funds. As of right now you're competing against prop trading shops, multinational banks, and the like, who probably know a teensy bit more about that particular stock than you do. I'm sorry, any other advice is missing the point that you shouldn't be picking stocks in the first place. Here in Australia a stock price is usually highest just before a dividend and lowest just after a dividend. If you buy just after the dividend then you missed out until next time. There may be many other reasons why a stock may exhibit yearly, quarterly and monthly cycles. "You asked for advice, so I'll offer it.  Trying to time the market is not a great strategy unless you're sitting in front of a Bloomberg terminal all the time. Another person answering your question suggests the use of index funds; he's likely to be right. Look up ""asset allocation.""  What you want to do is decide that you want your portfolio to contain, for example: If one of your stock holdings goes up far enough that you're out of your target asset allocation ranges, sell some of it and buy something  in another asset class,s so you're back in balance.  That way you lock in some profit when things go up, without losing access to potential future profits.  The same applies if something goes down; you buy more of that asset class by selling others. This has worked really well for me for 30+ years." "Insofar as a 52 week high indicates a peak, yes.  However, the truth is that ""buying low and selling high"" means ""Act a Fool!"" You see, when you buy low, you are perceived to be buying total garbage - throwing your money away and conversely when selling high you are perceived to be a total idiot - selling a winner.  That's how people will see you when you are in fact buying low and/or selling high, right?  It's those people that (mis)value the asset, right?  An asset is worth what the people will pay for it, right? ...And don't forget that holding a loser is MUCH easier than holding a winner. Good luck!" "Selling as well as buying a stock are part science and part art form.  I remember once selling a stock at its 52 week high too. That particular stock ""quadrupled"" in value over the next 52 weeks.  Mind you I made 50% ROI on the stock but my point is that none of us have a crystal ball on whether a particular stock will ever stop or start going up or stop or start going down. If someone had those answers they wouldn't be telling you they would be practicing them to make more money! Make up your mind what you want to make and stick by your decisions.  Bulls make money when stocks go up and Bears make money when they go down but pigs don't make money. -RobF" One possibility is to lock in gains by selling, where a selling price can attempt to be optimized by initiating a trailing stop loss order. You'll have to look at the pros and cons of that kind of order to see if it is right for you. Another possibility is to begin hedging with options contracts, if that security is optionable. Puts with the appropriate delta will cost over time against future gains in the stock's price, but will protect your wealth if the stock price falls from this high point. These possibilities depend on what your investment goals are. For instance, if you are buying no matter what price because you like the forward guidance of the company, then it changes your capital growth and preservation decisions. As per the chart pattern when ever a stock breaks its 52 week high. This information may differ for penny stocks,small caps and mid cap stocks
Buy low, sell high - the problem, of course, finding a crystal ball that will tell you when the highs and lows are going to happen :-) You could, for instance, save your money in cash and wait for the occasional sharp drop, but then you've lost profits & dividends from having that cash under the mattress all those years you were waiting. About the closest I've ever gotten to market timing, and I think the closest anyone can get in real life, is that I cut personal spending to the bone from 2008 to 2011, and invested every spare cent.  But such opportunities only come along a few times in a lifetime. The other thing is to avoid what a lot of people do, which you might call anti-timing.  When the market is high, they jump on the bandwagon, then when it drops they panic-sell, and lose money. Rebalancing your portfolio doesn't have to include selling.  You could simply adjust your buying to keep your portfolio in balance.  If you portfolio has shifted from 50% stocks and 50% bonds to 75% stocks and 25% bonds, you can just only use new savings to buy bonds, until you are back at 50-50. Remember to take into account taxes if you are thinking of selling to rebalance in taxable accounts. The goal of rebalancing is to keep your exposures the way that you want them.  Assuming that you had a good reason to have a portfolio of 50% stocks and 50% bonds, you probably want to keep your portfolio similar in the future.  If you end up with a portfolio of 75% stocks and 25% bonds due to stock market fluctuations, the exposure and the risk / return profile of your portfolio will have changed, and it's probably not something that you want. You don't want to rebalance just for the sake of rebalancing either.  There can be costs to rebalancing (taxes, transaction fees, etc...) and these aren't always worth the effort.  That's why you don't need to rebalance every month or if your portfolio has shifted from 50/50 to 51/49. I take a look at my portfolio once a year, and adjust my automated investments so that by the end of the next year I'm back to the ratio I want. There is an approach which suggests that each weekend you should review your positions as if they were stocks to be considered for purchase on Monday. I can't offer advice on picking stocks, but it's fair to say that you need to determine if the criteria you used to buy it the first time is still valid. I own a stock trading at over $300, purchased for $5. Its P/E is still reasonable as the darn E just keeps rising.  Unless your criteria is to simply grab small gains, which in my opinion is a losing strategy, an 8% move up would never be a reason to sell, in and of itself. Doing so strikes me as day trading, which I advise againgst. You should definately have a stop loss in place to manage your risk. For a time frame of 5 to 10 years I would be looking at a trailing stop loss of 20% to 25% off the recent high.  Another type of stop you could use is a volatility stop. Here the more volatile the stock the larger the stop whilst the less volatile the stock the smaller the stop. You could use 3 or 4 x Weekly ATR (Average True Range) to achieve this. The reason you should always use a stop loss is because of what can happen and what did happen in 2008. Some stock markets have yet to fully recover from their peaks at the end of 2007, almost 9 years later. What would you do if you were planning to hold your positions for 5 years and then withdrawal your funds at the end of June 2021 for a particular purpose, and suddenly in February 2021 the market starts to fall. By the time June comes the market has fallen by over 50%, and you don't have enough funds available for the purpose you planned for. Instead if you were using a trailing stop loss you would manage to keep at least 75% of the peak of your portfolio. You could even spend 10 minutes each week to monitor your portfolio for warning signs that a downtrend may be around the corner and adjust your trailing stop to maybe 10% in these situations, protecting 90% of the peak of your portfolio. If the downtrend does not eventuate you can adjust your trailing back to a higher percentage. If you do get stopped out and shortly after the market recovers, then you can always buy back in or look for other stocks and ETFs to replace them. Sure you might lose a bit of profits if this happens, but it should always be part of your investment plan and risk management how you will handle these situation. If you are not using stop losses, risk management and money management you are essentially gambling. If you say I am going to buy these stocks and ETFs hold them for 10 years and then sell them, then you are just hoping to make gains - which is essentially gambling. What you are suggesting would be the correct strategy, if you knew exactly when the market was going to go back up. This is called market timing.  Since it has been shown that no one can do this consistently, the best strategy is to just keep your money where it is.  The market tends to make large jumps, especially lately.  Missing just a few of these in a year can greatly impact your returns.  It doesn't really matter what the market does while you hold investments.  The important part is how much you bought for and how much you sold for.  This assumes that the reasons that you selected those particular investments are still valid.  If this is not the case, by all means sell them and pick something that does meet your needs. Personally, I have been in that situation too often that now I am selling at the first tick down! (not exactly but you get the idea..) I have learned over the years to not fall in love with any stock, and this is a very hard thing to do. Limit your losses and take profit when you are satisfied with them. Nothing prevents you from buying back in this stock but why buying when it is going down?   Just my 2 cents. If you feel comfortable taking an 8% gain on your stocks, then yes, you should sell. It is generally a good idea to know when you want to sell (either a price or %) before you ever actually buy the stocks. That helps from getting emotional and making poor decisions. The time when you might want to do this is if you think BBY is undervalued already.  If you'd be happy buying the stock now, you'd be happy buying it lower (at the strike price of the put option you sold).  If the stock doesn't go down, you win.  If it does, you still win, because you get the stock at the strike price. If I recall correctly Warren Buffett did this with Coca-Cola.  But that's Warren Buffett. If the stock starts to go down DO NOT SELL!! My reasoning for this is because, when you talk about the stock market, you haven't actually lost any money until you sell the stock. So if you sell it lower than you bought it, you loose money. BUT if you wait for the stock to go back up again, you will have made money. "If you're asking this question, you probably aren't ready to be buying individual stock shares, and may not be ready to be investing in the market at all.  Short-term in the stock market is GAMBLING, pure and simple, and gambling against professionals at that. You can reduce your risk if you spend the amount of time and effort the pros do on it, but if you aren't ready to accept losses you shouldn't be playing and if you aren't willing to bet it all on a single throw of the dice you should diversify and accept lower potential gain in exchange for lower risk. (Standard advice: Index funds.)  The way an investor, as opposed to a gambler, deals with a stock price dropping -- or surging upward, or not doing anything! -- is to say ""That's interesting. Given where it is NOW, do I expect it to go up or down from here, and do I think I have someplace to put the money that will do better?"" If you believe the stock will gain value from here, holding it may make more sense than taking your losses.  Specific example: the mortgage-crisis market crash of a few years ago. People who sold because stock prices were dropping and they were scared -- or whose finances forced them to sell during the down period -- were hurt badly. Those of us who were invested for the long term and could afford to leave the money in the market -- or who were brave/contrarian enough to see it as an opportunity to buy at a better price -- came out relatively unscathed; all I have ""lost"" was two years of growth. So: You made your bet. Now you have to decide: Do you really want to ""buy high, sell low"" and take the loss as a learning experience, or do you want to wait and see whether you can sell not-so-low. If you don't know enough about the company to make a fairly rational decision on that front, you probably shouldn't have bought its stock." Never. Isn't that the whole idea of the limit order. You want a bargain, not the price the seller wants. And when the market opens it is volatile at the most, just an observation mayn't be correct. Let it stabilize a bit. The other thing is you might miss the opportunity. But as an investor you should stick to your guns and say I wouldn't buy any higher than this or sell any lower than this. As you are going long, buying at the right price is essential. You aren't going to run away tomorrow, so be smart.  Probably this is what Warren Buffet said, it is important to buy a good stock at the right price rather than buying a good stock at the wrong price. There is no fixed answer to your question. It can be anything. You can check what analysts, someone with reputation of predicting correctly(not always), say would be the increase/decrease in the price of a stock in the projected future. They do quite a lot of data crunching to reach a price. Don't take their values as sacrosanct but collate from a number of sources and take an average or some sorts of it. You can then take an educated guess of how much you would be willing to pay depending the gain or loss predicted. Else if you don't believe the analysts(almost all don't have a stellar reputation) you can do all the data crunching yourself if you have the time and right tools. "If the stock is below its purchase price, there is no way to exit the position immediately without taking losses. Since presumably you had Good Reasons for buying that stock that haven't changed overnight, what you should probably do is just hold it and wait for the stock to come back up. Otherwise you're putting yourself into an ongoing pattern of ""buy high, sell low"", which is precisely what you don't want to do. If you actually agree with the market that you made a mistake and believe that the stock will not recover any part of the loss quickly (and indeed will continue going down), you could sell immediately and take your losses rather than waiting and possibly taking more losses. Of course if the stock DOES recover you've made the wrong bet. There are conditions under which the pros will use futures to buffer a swing. But that's essentially a side bet, and what it saves you has to be balanced against what it costs you and how certain you are that you NOW can predict the stock's motion. This whole thing is one of many reasons individuals are encouraged to work with index funds, and to buy-and-hold, rather than playing with individual stocks. It is essentially impossible to reliably ""time the market"", so all you can do is research a stock to death before making a bet on it. Much easier, and safer, to have your money riding on the market as a whole so the behavior of any one stock doesn't throw you into a panic. If you can't deal with the fact that stocks go down as well as up, you probably shouldn't be in the market." "Eventually, you'll end up buying a stock at or near a high-water mark.  You might end up waiting a few years before you see your ""guaranteed"" $100 profit, and you now have $5K to $10K tied up in the wait.  The more frequently you trade, the faster your money gets trapped. There are two ways to avoid this problem: 1) Do it during strong bull markets.    If everything keeps going up you don't need to worry about peaks...but then why would you keep cashing out for $1 gains? 2) Accurately predict the peaks.    If you can see the future, why would you keep cashing out for $1 gains? Either way, this strategy will only make your broker happy, $8 at a time." You should know when to sell your shares before you buy them. This is most easily done by placing a stop loss conditional order at the same time you place your buy order. There are many ways to determine at what level to place your stop losses at. The easiest is to place a trailing stop loss at a percentage below the highest close price, so as the price reaches new highs the trailing stop will rise. If looking for short to medium term gains you might place your trailing stop at 10% below the highest close, whilst if you were looking for more longer term gains you should probably place a 20% trailing stop. Another way to place your stops for short to medium term gains is to keep moving your trailing stop up to just below the last trough in an existing uptrend. Powers makes a good point: trading costs may eat up a significant portion of your ROI. A fee as little as 2% can consume more than 50% of your long-term ROI! A rule of thumb is keep your fees to less than 1%. One way to do that is to buy stock in companies that have a DRIP with a Share Purchase Plan (SPP). Often the SPP allows investors to purchase shares for low fees or free. Once you have the ability to purchase shares for (virtually) free, you can  use InvestMete. Roughly, you send more money to the companies whose share prices are near their 52-week low, and less money to those who are near their 52-week high. Getting back to your original question...