Question
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when to take out the profits?
11 Answers
<p>You’d better off lock in your gains to avoid watching your profits disappear as currency pairs/stock corrects. And you can potentially compound those gains by shifting that money into other stocks that are just starting a price run.</p>
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<p>When you find the stock consistently losing momentum at higher price levels, it is a classic signal for you to take profits off the table.</p>
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<p>In finance parlance the Rule of 72 is used to calculate how many years it takes for your money to double. For example if you earned 12% on equities last year then it will take you 6 years (72/12) to double your money. This is an approximation and gives a fairly accurate picture. Now assume that you got into a trading position and made20% profits in a month. As per the rule of 72, you will double your money in 3.6 months (72/20). But then real markets do not work purely on mathematics! So, how you apply this rule is …</p>
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<p><br>Watch out for factors that can constrain liquidity. If FII flows and DFI flows are slowing, it is a sign of tightening liquidity in the markets. If the banks are increasing rates, then it is a sign that liquidity in the system could reduce. Keep an eye on the call money rates. If these rates are shooting up due to poor liquidity, then it is time to take profits off the table. As a trader, tightness in liquidity is bad for your trading positions, irrespective of whether you long or short in the market.</p>
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<p>When your stock breaks out, take most of your profits when they reach 20% to 25%. The entire position could be exited if market conditions are choppy and decent gains are difficult to come by.</p>
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