You can opt to use a stop loss and a take profit level on your investments
The sophisticated computer systems responsible for the trading that happens on stock markets don’t just make the jobs of stock brokers easier. They can do the same for you.
You can use these computerised systems to your advantage, especially when it comes to stop losses and taking profits.
Whether you manage your share investments
through an online platform or over the phone with your broker, you should be able to load these types of instructions.
This means you can relax, knowing that if one of your stocks hits its stop loss or take profit level, your broker will sell your shares.
Let’s see how this works with the help of an example…
How to load a stop loss and a take profit level
You decide to buy 1,000 shares of Company ABC when it’s trading at R5 a share.
You’re going on a long overseas trip, which will take you out of South Africa for a month. You don’t want to have the stress of having to check your portfolio on a daily basis to see how it’s performing.
Instead you decide to load stop loss and take profit levels.
You can do this by either speaking to your broker or you may be able to load these online, depending on your online stock broking account.
The day before you go on holiday, you phone your broker. You tell him that you want to load a stop loss of 425c, which is 15% below the price you bought Company ABC at. You also tell him you want to load a take profit level of 600c.
What this means is if Company ABC’s shares trade down to 425c or up to over 600c, your broker will sell your shares for you.
Just check with your broker how long your instructions will stand for.
So there you have it. How to make use of the technology on hand to manage your investments.
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