Selling Losses

When buying shares of a company, you are eager to make profit. After share prices go up, you rapidly sell with a modest net profit. If share prices decline, you will do the opposite: you will most likely hope they will rise again. Don’t, you will lose more money. That’s why I think that, on every stock you have you should place a stop-loss. For example, if a stock is currently valued at 100 euro, set a stop-loss order at 90 euro. This will sell your shares after the price goes below the stop price and reduces the chance of making an even greater loss.

Dimi

After 13 transactions

From February until May 2008 I made 13 transactions, buying and selling shares of six different companies: Umicore, CMB, Nyrstar, Fortis, EDF and Metris (all Euronext). When making so many transactions, costs pile up and net profit decreases. I tend to sell share when I make a few percent profit, to be sure not to loose. But when I do loose, I have the tendency to hold the shares, hoping to make profit after all. Fortunately, the shares I bought rose during this period of time. Now, I've learned not to sell shares as quickly as i did before, giving them the opportunity to raise more. When share prices fall 10%, I usually sell them. Selling with a loss is not easy, but a stop-loss could help you make the decision. Don’t look at it as a defeat, but as a new opportunity to buy shares of more promising company!

Dimi

Why I created this blog

I'm a twenty-two year old student from Brussels, Belgium. It has been five years ago since I bought my first shares, Omega Pharma (Euronext Brussels). My bank gave me less than 4% interest on my bank account and I wanted to get more out of my money. That's why I thought buying shares on a stock exchange was a logical choice. The first problem I encounter was that my costs of transactions were exceeding my profits. Now, I have a bank account at a smaller, online bank, which permits me to reduce my total costs.
I created this Blog to show beginning traders, as I still am, the mistakes I made so they could learn from them. I will write about shares in my portfolio and tell you why I sell, buy or hold them. Please tell me if I’m wrong!

Dimi