You usually buy a stock with high expectations, with the highest being that its price is going to increase. There's just one problem; you are buying that stock from someone who is equally convinced the price is about to drop. Right behind death and taxes, the third certainty in life is stock prices will fluctuate. You may need to switch stocks to keep your investment portfolio moving in the right direction. In today's electronic environment, you can switch stocks with the click of a mouse.
Develop a list of stocks that offer similar benefits to the ones you own. These may be stocks in either similar or different market sectors. Keep an eye on how the prices of these stocks are trending. If you do need to sell a weak stock, or if you want to take the profit on a stock that has performed well, you will already have a list of stocks that meet your investment criteria.
Monitor your stock investments on a daily basis. There's no need to get crazy about it and check stock prices every few minutes, but daily checks will tell you how each stock in your portfolio is performing. If the price of a stock in your portfolio drops below your acceptable loss level, it's time to switch to a stock on your watch list that you believe with perform better. You can set a stop-loss order at your acceptable loss price if you are concerned about a precipitous drop in the stock price.
Place a buy order with your broker to switch to the next stock on your watch list once you know the sell order has executed. You can place the order directly with your broker via telephone, or a face-to-face conversation if you have an account with a full-service broker. If you have an online brokerage account, you can enter the order yourself through the brokerage firm's Internet interface.
Items you will need
- Investments brokerage account
- Always include brokerage commissions with the price of your stock to determine if you have a gain or loss on your trade.
- Investments in stock involve risks and some stocks are riskier than others. You may lose some or all of your investment.
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