Automatic stock market selling is a science, and it’s based on hair trigger systems geared to stock prices. It’s used widely by managed funds and day traders. These systems have been evolving since the 90s as a standard professional practice, and for those just starting to explore market behavior, they’re also a volume control, in which sellers lock in a price. A big volume of sales at a certain price isn’t some sort of mental aberration, it’s a considered process of profit making and loss prevention.

Automatic selling basics

Automatic selling is pretty simple. The buyer of stocks selects a price for sale, above and/or below the purchase price. The reason for these selections is to obtain a given profit margin, and to ensure loss minimization.

Making a profit

For example: A million units of stock is bought for $1.00. The seller sets a sale price of $1.23 as the trigger. The sale is conducted automatically, through the stock software. The seller doesn’t even need to look at stock prices. They’ll be notified when the sale is made.

The price is calculated on volume and on charges incurred for purchase and sale. The $1.23 includes 20% profit on the principle, and 3% to cover charges. That’s a simple $200,000 profit, clear.

Avoiding risk- Stop Loss orders

Traders don’t want to take any losses if they can help it. They prefer to maintain their working capital in one piece, and fast stock movements can happen at any time. There are various ways of hedging on investment risks, but automatic selling is by far the simplest and quickest way to avoid excessive losses, particularly in volatile markets.

This is one reason for sudden large volumes of sales on global markets.

For example:

The million units of stock above is bought by a managed fund for $1.00 is based on existing profit for a fund. The fund manager is developing their capital, and this $1 million dollars isn’t something they want to lose. The transaction is now based on risk management principles as much as a desire for further profits. The fund manager sets a Stop Loss sale price of 95 cents with the broker, (either directly or using supplied software), as a below the line sale price, to reduce risk from the outset, as well as an above the line sale price of $1.23 to get the margins described.

It’s a very good idea to consider the Stop Loss option in particular from the moment of purchase. Everyone takes some sort of loss on the stock market at some point, and minimizing the damage is definitely the best option for preventing damage to your capital base.

This methodology was developed by traders who were always at risk of a run on stocks even in the course of normal share trading . A trader holding any portfolio, including all blue chips, is always vulnerable to a major hit on a particular stock which can undermine an otherwise profitable trading portfolio quite easily.

Automatic selling is simple, quick and safe way of protecting your profits and your investments from loss.

Sports Car Manufacturer Porsche SE is close to reaching an agreement with Volkswagen AG with regards to a merger.  CEO Wendelin Wiedeking has sain recently in an interview “I think all the details, later on within the next days” will be resolved.  Wiedeking has said that the deal to sell Porsche to Volkswagen “its already on the table” meaning the sale is very close to agreements.

Qatar Investment Authority has put an offer to buy a stake in Porsche’s holding company and options in Volkswagen stock.  Porsche currently has a 51% stake in Volkswagen which has put them in 9 billion Euros worth of debt. 

Juergen Meyer a portfolio manager at SEB Asset Managment firm in Frankfurt has been quoted saying “The most reasonable solution would be that Porsche sells its call options on Volkswagen shares to Qatar and Volkswagen acquires a stake or 100% of Porsche’s car business”.

Cheif Executive Officer Wiedeking became CEO in 1993 and has transformed the company of the 911 and the Cayenne, which when he started the manufacturer was almost bankrupt.  He has turned the company around into the industry’s highest profit margin company.  In was’nt until 2005 he began using cash from the business to buy shares in Volkswagen, a company that builds more cars in a week than Porsche does in a year.

The family owners and Qatar have been asked to participate in a planned five billion euro share sale at Porsche, people familiar with the talks said this week.  Qatar may pay 2 billion euros for a stake, one of the peoples said.

If Persian Gulf were to invest this would leverage to negotiate a deal to merge with VW.  An agreement between the families earlier this year in May with VW to pursue a merger to create a 10 brand behmoth that would include Audi luxury division of VW as well as the Skoda and Seat mass market units.