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Let's say I have some securities (stock/bond/index/etc..) that I want to sell in the near future, but it's not urgent to me, and I can wait for a few weeks if it will help me to maximize the profit.

What strategy should I use?

As I see it, the rational solution is to just sell everything with market order, since few weeks is short time, and the stock price would be random, so there is no benefit to wait.

But on the other hand, if a stock price fluctuate on a daily basis, I could make a limit order on a higher price (maybe +1%) and hope that the price will hit my limit.

what would be a good strategy in that case?

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You can try a trailing stop limit order. There is a trigger price at which your sale will attempt to be executed; like any limit order, it will never execute below the trigger price. Rather than a fixed trigger price, though, your trigger price trails the current price by some amount you set. Say the current price is $50 and you set a trail of $0.50. Initially, your trigger price is $50 - 0.50 = $49.50. If the stock price increases, the trigger price will increase so that it is never more than $0.50 less than the current price. The trigger price never decreases though; if the stock price hits the trigger price, the trailing limit order becomes an ordinary limit order, and your sale will execute at or above the now-fixed trigger price.

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The question is always, if you didn't own the security, would you buy it today at the current price? If not, sell ot and move on to a better opportunity.

If you're comfortable with holding the it at current price then do you have significant gains or is this a somewhat flat position? Do you have a target sale price or are you just trying to nab a few more dollars?

IMO, if you have significant gains and you're near your target price, again, sell it. Why risk large gains for a few dollars?

Alternatives? If it's a stock, it offers options and you have account approval for them, sell a covered call in order to collect some income while waiting. If you want to lock in a P&L range around the stock, consider collaring it (sell an OTM covered call at your target sale price and use the proceeds to buy an OTM put that will protective you should the stock collapse unexpectedly.

All of this simply involves how much you are willing to risk to make a few more dollars. If the security cooperates, you win. If not, you lose.

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  • "Why risk large gains for a few dollars?" The current risk does not depend on your purchase price or whether your position has a gain. Exposure to the stock going forward has the same impact whether it was bought high or low (neglecting tax differences of incomplete offsetting between gains and losses). The exception would be if a gain has made this stock an undesirably high percentage of the portfolio and it needs rebalancing.
    – nanoman
    Commented Aug 8, 2018 at 17:57
  • I think that psychologically, it bothers people more to lose hard earned gains over time (a bird in the hand?) then to incur an equivalent loss on a newly purchased purchased position. But you are absolutely correct, the loss has the same financial impact.
    – Bob Baerker
    Commented Aug 8, 2018 at 19:17
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You can sell the time with covered calls.

Write covered calls very close to the current price (either in the money or just outside the money) at a strike price you would sell at, and if you get assigned, you got your price plus time value - you win. If the call expires unassigned, you have the time value as intermediate profit and can do it again or sell at market.

See some of the answers here: Why would someone want to sell call options?

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Sort of related, you should also consider when NOT to sell or buy based on tax strategy. For example (USA), if you haven't held the stock for a year, wait a bit longer to get the long-term capital gains rate.

Likewise, be careful when buying mutual funds near the end of the calendar year -- you might be buying it just before the distribution date and will pay taxes as if you had realized those gains all year.

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For a liquid stock, you are right that the rational approach is to sell now at the market (or if you have a gain and happen to be very close to holding for a year and a day, wait until then as Rocky suggests). Since you say you need the money within a few weeks (a very short horizon), it should not be in stocks anymore. Selling now avoids all the risks that could happen to the stock in the interim. (A stop order per chepner does not guarantee selling at the desired price if the stock proceeds to gap down or crash.)

Setting a +1% limit sounds nice if the limit is hit, but it means you cap your gain and remain exposed to loss.

If the stock is highly illiquid, you might gain from placing limit orders within the bid-ask to await demand, and/or spreading your selling over time. But as an individual you should still be able to sell fairly expeditiously.

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