General Stock Investment Strategies/Stock Selling
The following question is a hypothetical situation:
If an investor made two separate stock purchases of 100 shares each, is it better to sell all 200 shares at once at a profit rather than to break up the 200 shares and sell at different times, for example, sell 100 shares on one day and sell the remaining 100 shares at some other day?
I'm curious because it will cost him twice as much on commission fees to sell on two separate days than to sell all shares at once.
I thank you for your reply.
There's no right or wrong way to do it - obviously if you thought the stock was about to drop a lot in value, you'd sell it all right away, but you never really can know that. A reason to spread out the sale is just that it reduces your risk a bit - the stock might go up, might go down, and by splitting the sale in two you don't pin it all on a single sale date. It's similar to the concept of "dollar cost averaging" when you buy, just doing the same kind of thing when you sell too.
You mentioned commissions - it's not hard to find online brokers where those are so low that they're not much of a factor. The mid-day ups and downs in any stock's price are likely to produce greater differences. E.g. if you own 100 shares and pay $8 in commissions per trade, just a 17 cent increase in share price will make up for paying that second commission. Many if not most stocks fluctuate more than 17 cents in price just during a single day. But if you are trading small share quantities, or you pay high commissions for whatever reason, commissions could be a factor too in deciding whether to split a sale into two batches.