This is a very tough question to answer that what is the most suitable time to sale a stock. It is as difficult to answer as to the question that when to buy stocks? It is not simple because the answer varies within the individual cases. But when we talk about general factors that dictate the time of selling stocks, we have two main categories. These are personal reasons and market driven reasons.
You are in need of money: there are many time when you have to make sudden expenses, these may ruin your budget. For such times, you can liquidate your stocks. But the key point to remember is that you should look into the finances as it is never suggested to take money out of our investments except in extreme conditions
Fluctuations in growth rate: if your nerves are unable to bear the extreme fluctuations in the companies’ finances, you should look for some other company’s stock and sell the previous ones. A steady but stable growth is usually desirable by majority.
Conflict with company: if you have any disagreement or any conflict regarding moral, ethical or religious values, you can choose to sell out the stocks. People generally; want to be associated with those who match their expectations.
Going with better opportunities: if you see the possibility to earn more from the same capital, you can change the company. There is no harm in selling the stocks of your current company and buying ones of the better companies.
If the stock drops up to a certain percent: people who buy stocks for trading but not for investing, they see the market closely and more frequently. An imaginary line is set by the traders, if the stock price falls below that, traders choose to sell them out. It is because they want to avoid big losses at the cost of smaller loss. This limit is generally between 6% to 8%, depending on the stock’s instability.
If the company goes through a major change: if a company has gone through changes like change in company’s policy or its administration that you think is not in favor of the company, you should re-consider whether you should continue your association with that company.
If the stock is over-priced: don’t be happy if you find a continuous increase in the price of stocks. Remember that after every peak, there is a fall. The key is to sell the stocks when you find them over-priced and re-purchase them when you see a depression in their price.
Balancing your financial portfolio: You can sell out your stock, if you are in a position where you need to re-balance your financial portfolio. Traders usually divide their capital in stocks, bonds and cash to keep their selves at safer position. With time, you may have to change this division to obtain more profits. These are the times when you can sell out stocks. It is up to you to decide which stocks should be sold at first. You must also consider the consequences like taxes, cost of transaction etc.