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Investing in the stock market - virtual Watch

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    I am currently participating in an online simulation of the stock market, aiming to increase my overall total portfolio value to the highest possible.

    Some stocks I have invested in have increased in share price/have paid dividends, so at the moment I would make a profit from them if they were sold now. This may change and I would make a loss if I sold them tomorrow.

    My question is, when a stock reaches the point where you would gain a profit from selling those shares, are you supposed to sell it to gain that profit? Apart from obviously adding to my available virtual cash, does that have any effect on total portfolio value?

    I thought that if profitable shares were sold I'm only left with loss-making ones thus the value of my portfolio would decrease.

    Please help
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    (Original post by Ketchup!)
    I am currently participating in an online simulation of the stock market, aiming to increase my overall total portfolio value to the highest possible.

    Some stocks I have invested in have increased in share price/have paid dividends, so at the moment I would make a profit from them if they were sold now. This may change and I would make a loss if I sold them tomorrow.

    My question is, when a stock reaches the point where you would gain a profit from selling those shares, are you supposed to sell it to gain that profit? Apart from obviously adding to my available virtual cash, does that have any effect on total portfolio value?

    I thought that if profitable shares were sold I'm only left with loss-making ones thus the value of my portfolio would decrease.

    Please help
    It depends on whether you include your cash holdings in your portfolio. Obviously if you don't, then the value of your portfolio will decrease as you are selling some shares, but if cash is included in your total portfolio value then there shouldn't be a material change. There may be some transaction costs but these will be relatively minor.

    The decision to liquidate a position shouldn't really be made based on how much profit/loss you have made so far, but on how much you expect to make in the future. However, you may want to lock the gains in ("realise" the gains) by selling the profitable shares, if you have doubts about their future profitability or if you want to invest in different shares.

    Same goes with ones that have lost you money. If you think the price won't recover, it would be best to realise your losses now and move the money to somewhere else which will make you money. It may be "bad" to realise losses, but it's far worse to continually increase your unrealised losses because one day those shares will have to be sold.
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    (Original post by Ketchup!)
    I am currently participating in an online simulation of the stock market, aiming to increase my overall total portfolio value to the highest possible.

    Some stocks I have invested in have increased in share price/have paid dividends, so at the moment I would make a profit from them if they were sold now. This may change and I would make a loss if I sold them tomorrow.

    My question is, when a stock reaches the point where you would gain a profit from selling those shares, are you supposed to sell it to gain that profit? Apart from obviously adding to my available virtual cash, does that have any effect on total portfolio value?

    I thought that if profitable shares were sold I'm only left with loss-making ones thus the value of my portfolio would decrease.

    Please help
    Well you would know when to sell if you done your research ? are you on investopedia btw ?
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    (Original post by thegaffer91)
    It depends on whether you include your cash holdings in your portfolio. Obviously if you don't, then the value of your portfolio will decrease as you are selling some shares, but if cash is included in your total portfolio value then there shouldn't be a material change. There may be some transaction costs but these will be relatively minor.

    The decision to liquidate a position shouldn't really be made based on how much profit/loss you have made so far, but on how much you expect to make in the future. However, you may want to lock the gains in ("realise" the gains) by selling the profitable shares, if you have doubts about their future profitability or if you want to invest in different shares.

    Same goes with ones that have lost you money. If you think the price won't recover, it would be best to realise your losses now and move the money to somewhere else which will make you money. It may be "bad" to realise losses, but it's far worse to continually increase your unrealised losses because one day those shares will have to be sold.
    Thanks
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    When you buy a share of stock , you are taking a share of ownership in a company . collectively the company is owned by all the shareholders and each share represents a claim on assets and earnings.

    Best Regard
    Vishal Chadha
    Tips.Biz
 
 
 
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