When to buy and sell a stock are two decisions that drive your stock market journey. Deciding the correct time to sell is tougher. Sell too late, and you might lose out on profits; sell too soon, and you risk making less than you deserve on your purchases.

In the sections below, we uncover the six reasons for selling your stocks.

• Deciding when to sell a stock can be trickier than determining when to buy it.
• Six reasons to sell your stocks include correcting mistaken stock purchases, locking in profits, personal financial emergencies, results of stock price analysis, and asset-related news.
• Emotional trading or a non-plan-orientated approach can often cloud your judgements about retaining or selling your stocks.

Here are six reasons to sell your stocks and declutter your portfolio.

1. Forget the failures

Stocks often fall and go back up unexpectedly. However, if a stock is not recovering and weighing your portfolio down, it might be time to eliminate it. These failure stocks should be sold before they become more of a liability. Consider reinvesting the capital in other profitable ventures instead.

2. No retakes for mistakes

One of the most common investment mistakes is jumping on 'hot' stocks simply because they are popular. These assets have been growing for a long time and give the traders a false impression of success and profit opportunity. However, just this reason is not enough to trust these investments. There could be other momentary reasons for their growth, or you might hop on while other investors are bailing out. One should sell these stocks as soon as one realises their mistake to avoid any more losses.

3. Lock-in profits

Track the reasons for stocks building up and performing well. If there is a good explanation for it, consider locking in profits and selling your stocks—at least some if not all. Investors can also put a stop order to sell the remaining stocks below a certain price to prevent losses.

4. Cashing in for personal reasons

Sometimes, for personal reasons such as emergencies or general life enhancement, one can consider withdrawing some profitable investments and selling their stocks. This need to improve one’s lifestyle is meaningful, and the stock market can be a good way to multiply capital and use that money to better one’s life.

For instance, parents might consider selling stocks when their child's education fund needs to be established. Younger investors could use these savings for the downpayment of a house or a new car, and older investors might consider withdrawing in preparation for retirement.

5. Bad news

When bad company news, such as corporate losses or sceptic future reports, occurs, the stock market reacts quickly and strongly. This doesn't just affect one company's stock but also other companies in the same industry.

As an investor, you need to decide if the problems are temporary or long-lasting. Sometimes, bad news can affect a whole industry or the entire economy. The first companies to be hurt are usually the ones that owe a lot of money or are not in a strong financial position. It is important to be prepared to sell your stocks in response to such situations before things get worse.

6. Stock price analysis

Two types of analysis can help decide and sell the stocks. First is technical analysis, where the price and volume trends of stocks are studied to track patterns of stock movements. These indicators and data give the right time to sell stocks.

Second is fundamental analysis, where the company's competitive environment and financial reports are examined to identify the correct value of the stocks. Once overvalued assets are pinpointed or they reach their fair value, investors can sell these stocks. Both methods are great ways to determine the right time and right assets to sell.

The decision to finally sell a stock is tough. There are multiple things to consider here. Will the stock accelerate, or should you take the call to avoid any losses? A good plan is to sell when a stock goes up to secure your profits over time. However, it is not that simple. Keeping these six scenarios in mind, investors should keep reevaluating their portfolios every few months to determine the growth and contribution of these assets to their financial goals.