- 1). Decide which stock to change by carefully evaluating all the stocks in your portfolio, paying close attention to the overall return on each individual security, plus the current share price compared to the price at which you purchased it. Choose the worst-performing stock, or the one with the most significant decline in share price, to replace with a different security.
- 2). Examine the consequences by considering the total cost of replacing the stock, which may result in realized monetary losses, tax implications and two broker trading fees. Make sure your total net cash value is acceptable after expenses and fees.
- 3). Find another security you want to purchase. Consider the potential risk associated with this new purchase and make sure you are comfortable with the new company's industry sector, market capitalization, price history and corporate management.
- 4). Initiate the sell order by instructing your stockbroker to sell all shares of your chosen stock. Specify any limitations on your order regarding price, volume and time restrictions.
- 5). Enter a contingent buy order telling your stockbroker to purchase shares of the new stock, but only after the completion of your initial sell order. This will prevent your purchase from being made with a margin account if your sell order is not completed earlier.
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