When I trade a stock, should I trade my entire holdings on the stock or just a fraction?
Sometimes, I find investors that, for example, bought holdings on a stock then sold only a percentage of the holdings. Why not just buy then sell entirely, then buy again and repeat? Can someone explain why investors do this? And when I trade a stock, should I trade my entire holdings on the stock or just a fraction?
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Answer by Erik
imagine you own 1000 shares of a certain company. The price has gone up, but you think they'll go up more (but you can never be sure). When the stock price hits a certain value, you sell 25% to lock in gains, but leave in the remaining 75% for the expected further gain.
you'd sell your entire holdings if you believed the stock isn't a good investment anymore (possibly because something else looks better).
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