When is a good time to sell?

Now that the market is open, SCUR is above its 50 day moving average. Should I revisit the $7.56 price target I have for the stock? I wonder if I should revise the target after this new information or leave it? I think I would have no problem revisiting a stock if the information turns negative. Or perhaps it’s best to buy a stock with an upper price target and a scenario in which I would exit the position if things get ugly. Prior to now I hadn’t given it much thought. I know that my discount brokerage will not let me put both a sell at limit order and I stop loss order in at the same time in case one gets executed and I forget to cancel the other order. Both could eventually get filled.

Perhaps I should step back and explain a few things first. I have a basic knowledge of orders and a basic and very simple knowledge about technical trading. I am assuming that anyone who reads this also has a basic understanding of how to place orders in a discount brokerage account and some basic understanding about reading stock charts. There are plenty of good places to find the basic information on stocks, charts, placing orders etc on the web that I won’t cover that kind of stuff here. I want to instead focus on the topic of this blog and that is to try and buy some stocks to put a superior return together and prove that it is possible for the average guy to make money in the market.

Now back to the topic at hand.

I have in my experience over the years seen people that buy a stock and watch it run up and as it runs up they keep raising the price of their sell orders to be just above where the stock is trading. Every time the stock closes up they raise their price until one day the price drops and then they end up selling at or below where their original price target is after the stock falls. My question is, “How do I participate in the upward movement of a stock without fear of missing out on any profit I have earned?”

My first thought was to go with a stop loss order. A stop loss order allows me to set a price where if the stock drops to that price, it will be then sold immediately at market. This will allow me to hold onto the stock as the price increases. Should the stock trade through my target price I will still be able to participate in additional gains. But as the price of the stock increases, it moves farther away from my stop loss trigger price. The only way around this problem is to watch the stock and adjust the trigger price upward as the stock increases. Let me give you an example:

Suppose I bought a stock at $10 and had a target price of $13 on it. I could immediately put an order to sell the stock at $13 so that when the stock hits $13, I can realize my profit. If the stock continues higher then I lose out on the profit. Or I could watch the stock cross $13 and then place a stop loss order on the stock to sell if it declines back to $13. Suppose the stock closed at $14, by placing the stop loss order I have now participated in the gain above $13. Now suppose the stock reaches $15, I can leave my stop loss at $13 or I can tighten it up and place it at another price like $14.50. If the stock declines my order will trigger at $14.50 and I will make $1.50 or so above what my original target was. As always if this doesn’t make sense or you want to add some input please feel to post a comment.

So this brings me back to my dilemma. Should I cancel my sell at $7.56 and put a stop loss order on the SCUR? Right now, since the stock is at $6.93, it is far enough below my target sell price that I can ponder on what to do for another day.

What happened to CLRK? My longer term hold, well it’s bounced back and is currently trading at $16.69. Granted it’s below the $16.97 I bought it for but it is a long term hold and my account is still on the plus side overall. So far things seem to be going well.