What does lock in profits mean?

Locking in profits refers to the realization of previously unrealized gains accrued in a security by closing all or a portion of the holdings. When an investor holds an open position, they may accrue unrealized or paper gains or losses that aren't realized until the position is closed.

What is a profit taking strategy?

A profit taking strategy defines when exactly you sell your stock (or option) to realize a profit. Many traders don’t have a profit taking strategy in place when trading. Often they say: “I’ll sell the stock when I made enough money.” The problem: There’s never “enough money.”

What is the best way to lock in profits?

Locking-in profits. In my opinion, one of the simplest, oldest methods, and most effective ways to help lock in profits and let your winners ride, especially with lower-priced, smaller-cap stocks, is to sell half on a double. This way you take your initial investment off the table and you let your winnings ride.

When do you take profits in the stock market?

When exactly do you take profits? Most traders take profits either too early and leave money on the table. Or they take profits too late – after a stock has already made a high and is now turning around. In this article, I will show you my favorite profit taking strategy for stock market trading.