Making Sell Decisions

What steps should you follow before you decide to sell a stock?

Research the Stock

When you own a stock, you should follow the stock price and read news about the company. How often you check on the stock is up to you but if you have a large number of shares or the stock represents a significant portion of your portfolio, regularly conduct your due diligence.
Use PDI and CTM

Use the Price Direction Indicator (PDI) and the Compete Trading Model (CTM) to check to see if price has moved from the upside to the downside. When you conclude prices are on the downside, think seriously about selling the stock. If you think the downside will be prolonged and you need the money before a new upside occurs, definitely sell. If prices are on the upside, check for inflated values.
Check for Inflated Prices

Study the price chart and p/e of the stocks to see if the current price is inflated. If you conclude it is, sell the stock.

Study the price pattern. If the price is well above its long-term trendline, you should consider selling it.
Check the stock's price-to-earnings (P/E) ratio. If the current P/E exceeds its historical P/E and the P/E of stocks in the same industry, the stock is pricey and you should consider selling it.

For more questions to ask before you sell a stock, see the Seller's Checklist.