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Selling stocks at different prices for risk management?
Today was my first day paper trading. I am currently even after a few trades which is fine by me. One thing I wanted to try was buying stock at a lower price than I already had and then sell that lower priced stock at a slightly higher price manage a little risk but I don't know if this is possible or if the logic doesn't actually work.
For instance, I buy 100 shares at $50 for a total of $5,000. I see the the price falling and buy another 100 shares at $49 for a total of $4,900. With this $49 set, I want to sell it at maybe $49.50 so I can make some money while waiting for the price to go above $50 to profit off the original buy. So when the price gets to $49.50, how can I make sure I sell the 100 shares of $49 stock so that I gain instead of selling 100 shares of the $50 stock at a loss?
Is this possible or am I missing a bigger picture where this doesn't really work in the end?
Thanks.
Can you help answer these questions from other members on NexusFi?
It is possible, you have to change your settings with your broker though to Last In First Out (LIFO).
Usually, the default is First In First Out (FIFO)
This could have some minor impact on your tax declaration at the end of the year, but I am not that familiar with US regulations as I've never lived in the US...
Successful people will do what unsuccessful people won't or can't do!