hey what's going on traders and investors thank you for checking out this video my name is Travis
from master the market and in this one we're going to be talking about when to sell your stocks
and i'm going to go over both when to sell them for a profit as well as when to sell them for a
loss and when to kind of move on from that trade or from that investment so first and foremost one
very important thing about any kind of trading or investing is that it's very important to have a
trade plan before you actually enter into that trade and this trade plan is going to consist
of a few things two of those things are going to have to do with when you actually sell your stock
and the first is going to be a price target also commonly called a profit target and this is going
to be the price that you plan on locking in your profits if the trade does move in your favor and
on the other hand we're going to have a risk level which is going to be the price that you
plan to cut your losses if the trade moves against you by doing this and by having these prices in
mind before you actually enter into that trade or that investment it's going to kind of take a lot
of the pressure and the uncertainty off of the trade because now you know exactly what's going
to happen you know how much you stand to make if the trade moves in your favor and you know
exactly how much you stand to lose if the trade moves against you now when it comes to actually
determining what these prices are going to be for your profit target and for your risk level most of
the time you're going to use some pretty basic technical analysis to come up with these prices
so for example if we take a look at this diagram here we can see that there is a pretty clear
level of resistance on this chart and if you know a thing or two about technical analysis
you most likely know that a level of resistance is a level that the stock is going to have a very
difficult time breaking above and because of that most of the time a stock is going
to actually pull back or reverse to the downside from that level of resistance
now because of that it makes a lot of sense for us to sell and lock in our profits just below a level
of resistance so that way we can lock in profits at the high before it does have that reversal
back to the downside so in this case if we were buying the stock down here at this green dot at
that point we can see that there is already a bit of resistance forming on this stock so it makes a
lot of sense for us to set our profit target for this trade just below that level of resistance
now one thing to keep in mind is that sometimes you may only want to lock in a portion of your
profits when the stock does reach your initial price target and that's because
obviously support and resistance are not going to work 100 of the time there's going to be occasions
where a stock is going to blast right through this level of resistance and continue to the upside
and if you decide to sell your entire position just below that resistance level
then you're going to miss out on a large part of the run that happens in the stock
so what i recommend doing a lot of the times is locking in maybe half of your profits
at your initial profit target and then waiting a bit to see how the stock
actually reacts to that resistance level because if it does end up breaking out above resistance
that's a very bullish sign for the stock and then you can hold on to the remaining part
of your position which is of course going to help you maximize your profits on that trade
now on the other hand the goal of a risk level is going to be to place it
where it most likely is not going to be reached however if the stock does reach that level
you're going to want to cut losses on that trade anyway so if you think about it if we have a stock
that has a level of support that is forming one thing we know about support levels is that a stock
tends to bounce off of its support level however if it does end up breaking down below support
that is a bearish sign for the stock and it tends to continue downward then until a new level of
support is formed so one very common way that people will come up with a risk level is to set
it just below a level of support so that way if the stock does end up breaking down below support
you're going to quickly get out of that position cut your losses and you don't necessarily have
to worry about when a new level of support is going to form you can simply kind of wait
from the sidelines and look to re-enter into a new position when that new support does end up forming
now again having these profit targets in these risk levels in mind before you get into the trade
is really going to kind of help you take the emotions out of your trading
and is going to allow you to be very strategic however it is very important to understand that
with any kind of trading or investing things are not always going to go 100
according to plan so with that being said it is very important to be able to think on your feet
so i wanted to kind of share with you a few common reversal indicators that i see all the time in the
market that may be a really good indication that now is a good time to sell out of this
stock even if it hasn't necessarily reached your profit target and even if it hasn't necessarily
reached your risk level and the first of those is going to be what is known as an rsi divergence
so the rsi is an indicator that goes below your chart showing you when a stock is both overbought
and oversold and this can also be used for other things such as rsi divergences and what we're
looking for in this case is going to be a bearish rsi divergence telling us that the price action is
going to become bearish so now is a good time to sell out of our position and lock in our profits
or cut losses on the trade and what this is going to look like is a higher high in the stock as well
as a lower high in the rsi so if we take a look at this chart here we are looking at the five minute
chart for the stock lg vn so because this is the five minute chart this would probably be an rsi
divergence that you would use for a shorter term trade such as a day trade however you can also
spot these on longer term time frames like the four hour chart or the daily chart if you're doing
longer term trading or longer term investing okay and like i said what we see with this bearish rsi
divergence is that the stock is making a higher high and we can see that here is the initial high
this high is going to be slightly higher and at the exact same time that that is happening we see
that there is a lower high in the rsi that is what this rsi divergence is going to look like and once
you see this start to form so you know after the second high is formed over here and the stock is
starting to pull back that's when you can kind of determine that this is a good indication to
sell the stock so that way you don't have to hold through this big pullback that happens afterwards
and you know let's say that this is in between your profit target and your risk level
the nice thing about this is at this point you can lock in some profit still
without having to kind of watch the stock and wait for it to come all the way back down to
your risk level before you end up having to sell out of the position for a loss
and another reversal indicator that we see all the time in the market that can be a really good
indication to sell out of your position is going to be when there is a breakdown below the view app
the view app is another indicator that we can put on our charts and this stands for the volume
weighted average price and more specifically than just a breakdown below the view app what
i personally like to look for is going to be when a stock closes a candle below the v web as opposed
to a stock that is just very quickly breaking below the v web and then bouncing back above it
so again if we take a look at this example this is one here for apple the v web is going to be this
purple line that goes through the middle of the chart and other than some choppiness that kind of
goes on at the market open for this example uh the first candlestick that actually closes below the v
web for the day is going to be right about here so this is going to be our reversal indicator
this is telling us that the trend in the stock is kind of shifting from an uptrend into a downtrend
and that's going to be a good indicator to sell lock in your profits or cut your losses if you
need to and as you can see after that breakdown below the v whap happened the selling really kind
of started to pick up and we started to see a pretty big move to the downside happen which of
course we obviously would want to avoid holding through if we did have a position in the stock
okay so with all of that being said hopefully this gave you a good idea of when you can sell out of
your positions in the stock market obviously there are of course a ton of different ways that you can
kind of take this uh you don't have to necessarily just use levels of support and resistance for your
profit target and your risk level and there are of course plenty of other different reversal
indicators in the market that can also be a good signal to sell out of a position
however hopefully you found this video helpful and if you did please make sure to give it a
like and subscribe to the channel so you don't miss out on future videos and if you want to
learn more about day trading swing trading and investing make sure to check out the programs
on my website mask the market which is going to be linked down below in the description but
anyway thank you again for watching i hope you enjoyed and good luck with your trading
you