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How to know when to sell your penny stocks

by , 09 October 2015

When you invest in penny stocks, there will come a time when you need to sell them.

This may be for a profit or for a loss.

So how do you know when it's time to sell?

Read on to find out…

The right price to sell your penny stocks at

When it comes to selling your penny stocks, you should give some thought to the price you’d like to sell them for.

You can set a limit order for selling your penny stocks, so you only part with them at the price you think they deserve. Of course, there is no guarantee the market will trade at the price you specify, but don’t let your shares go for any price.

Should you use stop losses with your penny stocks?

With penny stocks, it may be wise to stay away from using sop losses. This is due to their volatile nature.

A penny stock may hit your stop loss just due to volatile movements.

If you’re confident in your reason for buying your penny stocks in the first place, a stop loss can undermine this.

But if the reasons for buying a penny stock in the first place change, then you may want to sell because you simply got your choice wrong.

Skimming some profits off your penny stocks

When some of your penny stocks perform well and get close to your target price, it may be wise to take some profits. For example, you buy a stock at 80c with a target price of R2.50. Once it trades through R2, you could take some of your profits.

This makes sense as you don’t know what lies ahead on the stock market and the shares aren’t as cheap as they were when you bought them.

So there you have it. How to know when to sell your penny stocks.

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How to know when to sell your penny stocks
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