When and how to set exit plan?

[UpQuark]

Does anyone use an exit plan? I see a button in Fidelity called 'Set Exit Plan', but I don't know if that is helpful for anything.

Someday (not in current market) I will want to rebalance my allocation and I don't know if people set sell limit orders at high prices so that it is automatic? I'd think I'd want to only sell the most advantageous shares (like maybe the ones with the highest basis, but I guess that just kicks the tax can down the road?), I don't know if sell limit orders allow specifying which particular shares to sell?

Do people just randomly pick a day of the year to rebalance and sell stock regardless of whether it is up or down? Do they set alerts to let them know when the price is up enough?

I read posts here sometimes where people say they sold while the price was high and kept the money in cash to put back in when the market goes down. How does a person decide the price is at a desirable sell price?

Also, in the Set Exit Plan/Trade Armor page on Fidelity there is a tab called Options that has mysterious 'Buy Call or Buy Put' stuff, is that useful to learn about or too far into the weeds?

[aja8888]

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Originally Posted by UpQuark Does anyone use an exit plan? I see a button in Fidelity called 'Set Exit Plan', but I don't know if that is helpful for anything. Someday (not in current market) I will want to rebalance my allocation and I don't know if people set sell limit orders at high prices so that it is automatic? I'd think I'd want to only sell the most advantageous shares (like maybe the ones with the highest basis, but I guess that just kicks the tax can down the road?), I don't know if sell limit orders allow specifying which particular shares to sell? Do people just randomly pick a day of the year to rebalance and sell stock regardless of whether it is up or down? Do they set alerts to let them know when the price is up enough? I read posts here sometimes where people say they sold while the price was high and kept the money in cash to put back in when the market goes down. How does a person decide the price is at a desirable sell price? Also, in the Set Exit Plan/Trade Armor page on Fidelity there is a tab called Options that has mysterious 'Buy Call or Buy Put' stuff, is that useful to learn about or too far into the weeds?

I believe the Set Exit Plan if for the options traders. Since it sounds like you are not that knowledgeable on equities or Put/Call option strategies, I would not worry about that stuff.

[OldShooter]

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Originally Posted by UpQuark ... I read posts here sometimes where people say they sold while the price was high and kept the money in cash to put back in when the market goes down.

That is called "market timing."

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Originally Posted by UpQuark ... How does a person decide the price is at a desirable sell price? ...

No one knows how to do this. See also: Taylor Larimore's market timing quotes https://www.bogleheads.org/wiki/Tayl..._timing_quotes

WADR I agree with @aja8888; you need to educate yourself more before trying to deal with questions like you're asking. Here are some good places to start:

"The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/ (This is Bill's first book; read it before reading his second one.)

"The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Gu.../dp/0470067365

"The Simple Path to Wealth" by JL Collins: https://www.amazon.com/Simple-Path-W.../dp/1533667926