Knowing how to buy stocks correctly is crucial to learning how to make money in stocks. But understanding when to sell stocks — and having the discipline to do it correctly — is equally, if not more, important. 

In the previous section, we covered stock charts and technical analysis for buying. Now we'll apply the same concepts—support and resistance, price and volume, and moving averages—to knowing when to sell.

For any experienced investor, one of the hardest parts of stock investing is knowing when to sell to lock in profits or cut losses. Just as with buying, emotions like hope, fear, and greed play a major role. Stock charts and technical analysis only work when you understand investor psychology and learn to control your own emotions.

Before diving into the technical details of when to sell, let's address common mistakes and misconceptions that affect both beginners and seasoned pros.

Topics we'll cover:

• 8 secrets of selling stocks
• Time-tested rules for when to sell
• Taking profits: when to sell for a gain
• The "Rule of 72" and selling
• When NOT to sell: the 8-week holding rule
• More rules for selling stocks

The 8 "Secrets" of Selling Stocks

Staying objective is easier before you buy. You can use stock lists, screeners, and ratings to identify the best stocks to buy and watch.

But once you own a stock and have real money at stake, your psychology changes. Greed for bigger gains and fear of large losses both kick in. These emotions make it much harder to stay objective about when to sell.

To keep your feet on the ground and your mindset right, remember these eight secrets.

1. Everyone makes mistakes. Cut your losses quickly.
Even the best investors have losing trades. But they don't sit and worry as losses grow. They sell quickly and move on. Leave your pride and ego behind. Don't let a loss affect you emotionally or financially.

2. If you don't sell early enough, you'll miss your chance.
To lock in solid gains, sell while a stock is still rising. As IBD founder William O'Neil said: "Your goal is to take and hold substantial gains, not to get excited, optimistic, greedy, or emotional as a stock goes up. Following a 20%-25% sell rule will help you do that."

3. Make a sell plan before you buy.
The real test comes at selling time. Without sell rules and an exit plan, it's easy to freeze when you need to act. If a stock soars, greed may take over and you'll ignore warning signs. If a stock drops, you may "hold and hope" as it keeps falling. Stay calm and in control by planning your exit in advance. Write down your target sell prices—both for taking profits and for cutting losses.

4. Don't let a big gain turn into a loss.
If you have a nice gain (10%, 15%, or more) but the stock starts to fall, don't let that profit disappear completely. Watching a 15%-20% gain shrink to 5%-10% is far better than watching it turn into a 10% loss. If the stock regains strength and forms a proper buy point, you can always buy it back.

5. Don't treat a stock like a marriage—treat it like a relationship!
"For better or worse, for richer or poorer" is noble for marriage, but it doesn't work for stocks. Most of the time, the smart move is to take profits when you have them and cut losses when you need to. If clear warning signs appear, don't hesitate to end a bad relationship and protect yourself.

6. Sell your losers first.
When building a winning basketball team, you don't trade away all your star players for benchwarmers. Yet many investors do the opposite: they sell their profitable stocks and hold their losers, hoping a big win is just around the corner. That's usually wishful thinking. Do the reverse. Sell your losers and use the cash (if the market trend is in your favor) to add to your winners or invest in other quality stocks you already own.

7. Use both fundamentals and charts when buying; focus on charts when selling.
The saying "the higher you climb, the farther you can see" applies to the stock market too. Warning signals usually appear on stock charts (technical analysis) before they show up in a company's fundamentals. So when buying, both technicals and fundamentals matter. But when deciding when to sell, focus on charts and technicals—price and volume action, and what's happening near key moving averages.

8. The most important sell rule is to buy right.
A very common mistake—especially for beginners—is buying at the wrong time. Some ignore market timing and buy during a correction when most stocks are falling. Others ignore technicals and buy too early or too late. Before buying any stock, make sure the three key factors are in place: a favorable market trend, strong earnings driven by something new, and institutional support. That will help ensure you buy at the right time and greatly improve your odds of success.

When to Sell Stocks: Follow Time-Tested Rules

To be both profitable and safe in the stock market, you need both offensive and defensive sell rules.

Defensive sell rules help ensure you avoid catastrophic losses. Investors who simply buy and hold risk seeing their portfolios crushed. By using stock charts and technical analysis, you can spot early warning signs and sell at the right time to limit your losses.

On the offensive side, we all know that nothing goes up forever. Even top stocks that delivered massive gains—like Apple, Nvidia, and Alphabet—have all experienced significant declines at various points.

To lock in as many of your gains as possible, you sometimes need to take the offensive and sell part or all of a position to take profits. Otherwise, a market correction or a decline in a former leader could wipe out your gains—or worse, turn them into losses.

Following our column can help you identify stocks that share the characteristics of top growth stocks—and also help you determine when to sell. Just as quality stocks show certain traits as they rise, they also flash common warning signs as they decline.

In the articles that follow, we will share time-tested stock sell rules designed to help you both lock in profits and avoid major losses.