Investment Exit StrategyAre you a trader or an investor? The difference is frequently discerned by how closely you monitor the stock market and how quickly you move in and out of investments. Traders are often referred to as market timers because they actively seek to buy into positions when share prices drop, and sell out when those prices rise.

Many financial planners and professional money managers are not strong proponents of market timing. The reality is that no one can predict market movements accurately over the long term, so success is often a matter of luck and opportunity.

However, market timing is not the same as having a carefully structured and disciplined investment exit strategy. One reason this is important is that it can help prevent investors from panic selling. If you have considered the growth potential and market risks of a particular security or type of investment, and you put parameters in place that reflect your comfort level, then you can control your losses to a great extent. Without this analysis, you may be subject to emotional responses and sell for a significant loss because you can’t take the stress of watching your investment lose money day after day.

Exit Strategy

When share prices drop unexpectedly – and continue to fall – many investors let their emotions get the best of them and sell prematurely. Having a preconceived exit strategy is a good way to prevent this type of panic selling.

An exit strategy basically means that you set a target sell price, but it’s important that you have the discipline to sell at that price. Often when a stock’s share price is rising quickly, it is tempting to “let it ride” and ignore your exit strategy. However, that tide could change quickly in the other direction, turning a profitable trade into a loss. When this happens, you may stubbornly hang on to that declining stock knowing that you missed your opportunity to cash in – and hope that it will come around again.

An effective exit strategy should have two plans in place; a price point to sell for a gain and a price point to sell for a loss. This tactic can help keep your asset allocation strategy on target by not letting gains or losses in any one position throw your target asset allocation percentages out of whack. At the same time, you can manage risk by not allowing your portfolio to lose too much money. There are certain tactics that can help implement your exit strategy. For example:

  • Stop-Loss – an order to sell a security when its price is declining at the point when it reaches your assigned stop price (sell-stop).
  • Stop-Limit – a limit order gives instructions to sell a stock at a minimum price point. Stop-limit orders can be set to expire at the end of the current market session or carried over to future trading sessions (GTC – good ‘til canceled).
  • Trailing Stop – a modified stop order that can be set as either a percentage or dollar amount below or above the market price of a security.

Tax Considerations

An investor’s exit strategy should take into consideration potential taxes on capital gains. The amount you pay depends on how long you hold a position. If held for less than one year, the short-term capital gains tax rate is the same as your regular income tax. If held for one year or longer, the tax rate is 0 percent, 15 percent or 20 percent – depending on income tax bracket and filing status. When determining your exit strategy, it is prudent to set a long-term perspective with a plan to harvest gains on positions more than a year old.

Risk Management

Setting up an exit strategy is one component of a risk management plan. The following are other complementary strategies you can deploy to set boundaries on how much money you are willing lose.

  • Risk/reward ratio – Set a minimum ratio. For example, 1:3 means you are willing to risk $100 for a potential profit of $300.
  • 1 percent (or 2 percent) rule – Limit your risk to investing no more than 1 percent of your portfolio on any one trade.
  • By spreading your investments across a variety of assets, you can reduce portfolio losses through diversification.

Remember that investing is replete with uncertainty; not even the most experienced money managers can predict the direction of the markets. Developing an exit strategy for stock holdings is a way to minimize potential losses while strategically targeting specific returns to meet your goals.


Qzpjbz · March 14, 2024 at 8:35 am

cipro 1000mg for sale – cephalexin 125mg cheap cost augmentin 625mg

Ylxchs · March 14, 2024 at 3:39 pm

baycip oral – ethambutol online buy buy augmentin 1000mg online

Euqcua · March 17, 2024 at 11:14 am

flagyl for sale – cefaclor pills buy zithromax 500mg online

Wsnxic · March 17, 2024 at 1:04 pm

buy ciplox 500mg sale – ciprofloxacin 500mg pills erythromycin 500mg brand

alpilean · March 17, 2024 at 6:01 pm

Your positivity and enthusiasm are infectious I can’t help but feel uplifted and motivated after reading your posts

Uhokdm · March 19, 2024 at 4:56 pm

order stromectol online – cefuroxime 500mg cheap tetracycline 500mg drug

Sekret-Natury · March 20, 2024 at 2:13 am

Excellent write-up

Hetvvc · March 21, 2024 at 4:30 pm

purchase metronidazole for sale – buy azithromycin online cheap zithromax order

Gboocz · March 21, 2024 at 5:03 pm

order ampicillin online buy amoxicillin without a prescription where to buy amoxicillin without a prescription

Joksjk · March 23, 2024 at 8:56 am

buy furosemide without a prescription – prazosin drug buy captopril tablets

Coyfvx · March 25, 2024 at 1:18 pm

order glycomet 500mg pills – cefadroxil for sale buy generic lincocin over the counter

Vnzsfi · March 26, 2024 at 3:00 pm

retrovir over the counter – roxithromycin 150mg brand cheap allopurinol

Pcjmtu · March 27, 2024 at 10:37 pm

clozapine 100mg uk – glimepiride 4mg ca buy famotidine 20mg sale

Jouapa · March 29, 2024 at 4:35 pm

buy quetiapine without a prescription – purchase quetiapine pills cheap eskalith for sale

Zpzelc · March 30, 2024 at 2:50 pm

buy generic anafranil over the counter – mirtazapine 30mg uk buy doxepin sale

Hqgkln · March 31, 2024 at 2:55 pm

atarax 25mg for sale – pamelor 25 mg generic amitriptyline 25mg sale

Homohl · April 3, 2024 at 5:19 pm

augmentin pills – buy bactrim 480mg pill cipro 1000mg oral

Szczegóły tutaj · April 8, 2024 at 12:41 pm

Insightful piece

Lgvusc · April 9, 2024 at 3:15 pm

buy cleocin without a prescription – buy cefixime 100mg online how to get chloromycetin without a prescription

Bypknh · April 9, 2024 at 3:49 pm

order zithromax 250mg pills – buy floxin tablets order ciprofloxacin 500mg pill

Ortvjw · April 12, 2024 at 8:52 am

ivermectin 12 mg stromectol – doxycycline without prescription purchase cefaclor online cheap

Baeeyn · April 13, 2024 at 6:34 am

albuterol 4mg pills – ventolin online order theophylline 400mg canada

Tqpxlp · April 15, 2024 at 8:55 am

medrol 8 mg over the counter – purchase loratadine online cheap buy astelin nasal spray

Tyfibb · April 15, 2024 at 3:57 pm

order clarinex online cheap – buy flixotide online buy albuterol inhalator

Wduubk · April 17, 2024 at 3:09 pm

cost micronase 2.5mg – forxiga 10 mg ca brand dapagliflozin 10mg

Yfdyuy · April 19, 2024 at 11:08 am

buy generic glucophage for sale – brand losartan 50mg precose where to buy

Pbckii · April 19, 2024 at 4:10 pm

buy prandin 2mg pills – buy generic empagliflozin 25mg empagliflozin sale

Gezddl · April 22, 2024 at 9:16 am

buy lamisil 250mg generic – buy forcan paypal purchase griseofulvin pill

Tsqhaz · April 22, 2024 at 12:08 pm

buy rybelsus 14 mg generic – glucovance medication order DDAVP online

Sbkiyc · April 24, 2024 at 12:46 pm

order ketoconazole pills – buy nizoral cheap buy itraconazole paypal

Fpveyn · April 25, 2024 at 1:43 pm

buy famvir 500mg generic – valaciclovir sale valaciclovir 500mg uk

Dwkuwe · April 26, 2024 at 2:56 pm

digoxin 250 mg oral – where can i buy digoxin order lasix 40mg generic

Dvorii · April 28, 2024 at 4:59 pm

order microzide 25 mg generic – order zebeta 5mg online cheap buy bisoprolol paypal

Vcagts · April 28, 2024 at 5:17 pm

cost lopressor – metoprolol for sale adalat 10mg over the counter

Yfjcbq · April 30, 2024 at 4:12 pm

buy generic nitroglycerin for sale – indapamide 1.5mg usa order valsartan 80mg pill

Jaxjpc · May 2, 2024 at 9:58 am

simvastatin quest – simvastatin disguise atorvastatin pipe

Wkedab · May 3, 2024 at 7:58 am

rosuvastatin online veil – caduet pills curiosity caduet buy energy

Uknlxf · May 5, 2024 at 2:30 pm

viagra professional online big – viagra professional potter levitra oral jelly online pin

Shknxk · May 6, 2024 at 4:22 pm

dapoxetine lock – viagra plus dublin cialis with dapoxetine birthday

Jmwxsq · May 8, 2024 at 5:04 am

cenforce online picture – kamagra pills panel brand viagra pills unknown

Uzlnez · May 9, 2024 at 7:27 am

brand cialis gather – forzest downward penisole flesh

Ozasae · May 11, 2024 at 4:30 pm

cialis soft tabs online somehow – viagra super active online nowhere viagra oral jelly online praise

Uyckox · May 11, 2024 at 8:10 pm

brand cialis bird – zhewitra good penisole wave

Cvvyta · May 14, 2024 at 10:42 am

cialis soft tabs feather – cialis soft tabs pills desire viagra oral jelly online raise

Zjyoyb · May 18, 2024 at 12:29 pm

cenforce exclaim – cheap cialis brand viagra stomach

Gocyrg · May 18, 2024 at 4:12 pm

priligy lift – cialis with dapoxetine street cialis with dapoxetine frequent

Erswfs · May 20, 2024 at 2:51 am

acne treatment statue – acne treatment wound acne medication grim

Qsfvww · May 20, 2024 at 6:35 am

asthma treatment fat – asthma treatment curse asthma medication serpent

Kvdedq · May 21, 2024 at 11:14 pm

uti treatment true – uti treatment owner treatment for uti tiny

Czdlcd · May 22, 2024 at 3:37 am

pills for treat prostatitis seldom – prostatitis pills wild prostatitis medications train

Nsxqmb · May 23, 2024 at 10:31 pm

valacyclovir pills produce – valacyclovir online storm valacyclovir pills unit

Shsbyc · May 24, 2024 at 1:58 am

loratadine medication distinct – claritin pills petunia claritin pills endless

Vnyjtz · May 27, 2024 at 5:12 am

dapoxetine knight – dapoxetine potion priligy bag

Uuotkm · May 27, 2024 at 7:47 pm

loratadine league – loratadine medication tremendous claritin pills confidence

Ghcsop · May 30, 2024 at 3:45 pm

ascorbic acid wing – ascorbic acid cellar ascorbic acid some

Djmgdg · May 30, 2024 at 6:39 pm

promethazine pillar – promethazine too promethazine tower

Rqdpes · June 1, 2024 at 3:34 pm

biaxin serve – albendazole water cytotec pills shoe

Fypwyr · June 2, 2024 at 1:56 pm

fludrocortisone pills american – omeprazole sam lansoprazole pills surround

Biaues · June 6, 2024 at 12:47 pm

purchase rabeprazole generic – reglan pills where to buy domperidone without a prescription

Tjtawn · June 6, 2024 at 3:39 pm

pill bisacodyl 5 mg – order loperamide 2 mg generic liv52 20mg generic

Nxzjcn · June 9, 2024 at 5:39 am

order bactrim 480mg online cheap – buy levetiracetam 500mg cost tobra 5mg

Lnailp · June 9, 2024 at 10:54 am

hydroquinone us – buy cheap hydroquinone dydrogesterone 10mg over the counter

Xogswj · June 11, 2024 at 7:16 am

dapagliflozin 10 mg cheap – buy acarbose medication how to buy precose

Nepvlg · June 11, 2024 at 11:15 am

griseofulvin pills – cost dipyridamole 25mg lopid 300 mg usa

Vmjabp · June 13, 2024 at 11:05 am

dimenhydrinate 50mg drug – actonel 35mg pill purchase actonel online

Xkitrh · June 13, 2024 at 6:42 pm

enalapril online buy – enalapril online buy xalatan online cheap

Qdnobv · June 15, 2024 at 10:16 am

buy monograph – buy generic cilostazol online buy cilostazol medication

Zkzsar · June 16, 2024 at 5:05 am

purchase piroxicam online – feldene 20mg oral rivastigmine 6mg ca

Ujbkpf · June 25, 2024 at 1:09 pm

nootropil for sale online – cheap levofloxacin sinemet 20mg ca

Xjagye · June 27, 2024 at 3:22 am

how to get hydroxyurea without a prescription – oral hydrea buy methocarbamol

Ssarjk · June 29, 2024 at 2:38 pm

order divalproex 250mg without prescription – generic cordarone 200mg order topamax sale

Vylsip · June 30, 2024 at 4:15 pm

cost disopyramide phosphate – cheap lamivudine 100 mg thorazine ca

Pdtgqb · July 2, 2024 at 6:26 pm

cytoxan tablet – zerit sale buy trimetazidine generic

Quxgxq · July 2, 2024 at 9:01 pm

spironolactone 25mg cost – order dosulepin sale cost naltrexone

Tartql · July 6, 2024 at 10:00 am

flexeril generic – cheap donepezil generic enalapril generic

Opuaqt · July 7, 2024 at 4:59 pm

zofran for sale – tolterodine drug order ropinirole 1mg online

Kfqion · July 8, 2024 at 6:23 pm

buy ascorbic acid 500mg without prescription – isordil oral prochlorperazine medication

Frayoc · July 10, 2024 at 5:57 pm

durex gel online purchase – durex gel online buy buy latanoprost

Ntweda · July 13, 2024 at 7:20 pm

cheap minoxidil sale – buy proscar 5mg for sale finasteride price

Xcslkl · July 14, 2024 at 5:22 pm

brand leflunomide 10mg – buy actonel 35mg online cartidin price

Hmoehu · July 16, 2024 at 10:45 am

buy verapamil without prescription – tenoretic online buy buy tenoretic tablets

Tdyrco · July 16, 2024 at 3:48 pm

order tenormin – buy tenormin 100mg for sale carvedilol pill

Hfuzva · July 18, 2024 at 4:56 pm

cheap atorvastatin generic – where can i buy zestril cost nebivolol 5mg

Kiaofa · July 19, 2024 at 4:49 pm

buy gasex online – diabecon online buy diabecon where to buy

Leave a Reply

Avatar placeholder

Your email address will not be published. Required fields are marked *