So you found a cheap penny stock, you bought some and it went up. The question now is whether to cash in your chips or stay on the ride. Here are a few different approaches you could take:
- Take the money and run. You bought cheap and you have the option of selling high. You have earned the money and the bragging rights which go with making a great stock market profit, what more do you want? Well, you need to consider whether the stock price is going to keep climbing. Buying at $1 and selling at $3 is fantastic but buying at $1 and selling at $5 gives you twice the profit. You should pay as much attention to the company´s situation and the analyst’s comments now as you did when you bought the stock. Has the price reached the maximum limit or is it building even more momentum? You should also consider what you plan to do with the money if you do cash in. If you have identified more undervalued penny stocks then you could do the while thing over again, if not is the money going to be sitting there waiting for the next good investment to come along?
- Keep a good thing going. If you think that more profit can come out of it then you could choose to hold tight and keep the investment. You need to keep a close eye on the price and have a minimum and maximum sell price in your head, if it goes past either of those then it’s time to cash in.
- Take the profits and maintain the original investment. This is a great choice if you are unsure how the price is going to react following the recent rise, or if you have identified other undervalued penny stocks to invest in. If you bought 500 shares at $1 and they are now worth $5 then you could cash in 400 stocks and the 100 remaining would be worth the same as the 500 you initially bought. This way you still have a chance of profiting from any further rises without risking losing your hard-earned profit.
Related posts: