Successful Trading ? Taking Profits - Part 2

Suppose your position has made a big move and you moved your stop to your purchase price as recommended. Then let's say your stock continues to make a big move and now we're asking again the questions we asked back in the first paragraph. The first profit taking technique you can use is a trailing stop. If you moved your stop to your purchase price, then you've already used a trailing stop. Now you can continue to move your stop up as the price rises until the market "stops" you out of the position. So in essence, what you're doing is letting the market decide when to take profits.

Bear in mind that you don't have to use the same price gap that was used when you first set your stop. That initial move was done to protect your account ? once you've taken the threat of a losing trade away from your account, you can do most anything with your stop after that. One approach that some traders use is to place their stop at the half way point between their purchase price and the present price. This approach is giving half of your profits back to the markets, but it'll keep you in the market longer giving the stock plenty of room to move. A variation of this approach is to move up your stop to the 75% profit level after a period of time has elapsed.

Another profit taking technique for traders is to use a reward/risk ratio. This is a sound approach that is used more often in short term trading. The way it works is that you determine what amount you are going to risk on a given trade and then set a profit objective expressed a multiple of that risk amount. For instance, suppose you've bought 100 shares of IBM at $50 per share and you've determined that your stop will be placed at $47.50. This position has a total risk level of $250 to your account. If you've set your reward/risk ratio at 4:1, then this means that when the price reaches $60 and your profit is $1000 (4 x $250), you will take profits. Note that using this approach with a 4:1 ratio would only require you to hit one trade in five to break even ? a 20% winning percentage.

One last profit taking approach you may want to consider is taking partial profits on that first strong move. In other words, when you get that first move in your favor and you move your stop up to your purchase price, you may want to sell half of your position and take some profits early. You then let the remaining position run using trailing stops until the market stops you out. This approach is used by many swing traders and will result in more winners, but the profits will be smaller. But remember, smaller profits mean that you need more winners.

Chuck Cox is a Technical Writer and Industrial Scientist by professional with a background in statistics. He has used mathematical and statistical methods to invest and trade in the stock, futures, and options markets. Chuck has owned various businesses and presently operates several websites. To learn more about trading the markets, visit his website, http://www.earncashathometoday.com/trading-stocks.htm

Wood Dale Chicago prom limo .. Lockport Chicago limo O’Hare
In The News:

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents
Internet browsers are useful, but they can be dangerous. Clicking on malicious links can direct you to dangerous websites that steal information or infect your device.
Apple's latest iOS update introduces advanced artificial intelligence capabilities, which may be capturing and analyzing sensitive information.
Breach site confirmed 56,904,909 Hot Topic users' data leaked online. Tech expert Kurt “CyberGuy" Knutsson says the company's silence makes matters even worse.
Tech expert Kurt “CyberGuy" Knutsson discusses how an innovative Easy-Way kit turns standard strollers electric, simplifying navigation for parents.
Tech expert Kurt “CyberGuy" Knutsson talks about T-Mobile being hacked in broad cyberattack on global phone and internet companies.
Tech expert Kurt “CyberGuy" Knutsson shows you how to add, customize and manage widgets for quick access to apps and info from your iPhone home screen.
Wrong Google searches can not only compromise your device and personal data. They can also bring law enforcement to your doorstep. Hackers are targeting Google searches.
China's Shanghai Kepler Robotics has developed a new humanoid robot that can carry up to 35 pounds per hand for commercial applications across various industries
Checking your hearing has gotten easier with the new hearing test feature in AirPods Pro 2. You can take reliable hearing tests using your iPhone or iPad.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
Kurt "CyberGuy" Knutsson explains how a VPN — virtual private network — works and how running it can slow down the operation of your device.
The WalkON Suit F1, an exoskeleton developed to help people with disabilities, can actually walk over to a person in a wheelchair, solving a major problem.
ClickFix, a new scam targeting computer users, is on the rise in the U.S. The scam prompts its targets to click on a link to fix a problem.
Skydweller is the world's largest unmanned solar-powered aircraft that can stay airborne for weeks, and even months, without refueling.
The U.S. government said it is investigating after People's Republic of China hackers targeted commercial telecommunications service providers in the U.S.
Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.
Scammers are using increasingly sophisticated ways to lure unsuspecting victims, and some are impersonating an email help desk or support team.
You can unsend or edit your iMessages with the latest iOS updates. Kurt the CyberGuy explains how you can save yourself some potential embarrassment.
Kurt “CyberGuy" Knutsson says there’s been a rise in cybercriminal services using hacked police and government emails to send subpoenas and data requests to U.S. companies.
Kurt “CyberGuy" Knutsson discusses how Axiom Space and luxury designer Prada are collaborating on NASA's Artemis III spacesuit design.
Voice assistants may cause confusion across devices. Tech expert Kurt “CyberGuy" Knutsson offers some solutions to fix it.
Shameless scammers trick veterans into giving personal info or cash. Tech expert Kurt “CyberGuy" Knutsson explores five common scams.
Tech expert Kurt “CyberGuy" Knutsson helps you honor our heroes with these powerful podcasts, audiobooks and documentaries this Veterans Day.

The Surgeon General

The Surgeon General of the United States says that smoking... Read More

I Love You, Warren Buffet

Sometime around 1980, can't remember exactly, there was a flight... Read More

Investing in the Stock Market - When To!

Is really not as important as to how you invest... Read More

Trading Tips No 8: Picking the Best Stock Market Price

Carefully thinking through your goal as a trader is of... Read More

Market Psychology

Today we are inundated with tons of information about the... Read More

Dont Lose All Your Money

That sounds like good advice doesn't it? Don't lose all... Read More

Trading Systems

To become a successful trader you must have some kind... Read More

Advantages and Disadvantages of Mutual Funds

Outlined below are some of the advantages and disadvantages of... Read More

Stocks Options Trading

Let's assume that you want to make some serious money... Read More

Mousetrap

The spring-loaded rat catcher is the ultimate low-tech device invented... Read More

How Much Information Do You Need?

You have decided to buy some stock or mutual funds,... Read More

Successful Trading ? Taking Profits - Part 1

So you're started trading, you bought some positions with your... Read More

Jack and Jill

Jack and Jill went up the hill to fetch a... Read More

Advisory Service for You?

It depends on your level of understanding of the market... Read More

Using Sector Funds to Construct Diversified Mutual Fund Portfolios

'Sector funds are too risky.' 'I doubled my money with... Read More

Swing Trading Strategies

Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More

Making Outsized Returns in the Stock Market - Using the Dow Theory

The Dow Theorycharles h. dowcharles h.... Read More

Market Timing?

The recent criminal fiasco in the mutual fund industry is... Read More

Stocks & Oil, Sat Jun 18th, 2005

Both the stock market and oil prices rallied recently, which... Read More

Attitude Is [Almost] Everything

I often play a little game with myself when I... Read More

I Love To Lose Money

Well, not really. What I mean is I don't mind... Read More

How To Make, And Keep, Money Trading Stocks

If you are serious about making and keeping money by... Read More

Roller Coaster

I love roller coasters. The steeper the better. High and... Read More

Risk Control

Everything you invest in has risk so you want to... Read More

What is a Mutual Fund?

Ever wondered what is a mutual fund? A mutual fund... Read More

Antigo wedding limo ..