Why Take Partial Profits?
Now for all those who don’t know what partial profits are they are when you have a position that has given off a big win. You believe it can go higher and are not ready to sell it yet. You do want to see some of the money that you have made so you sell a portion of your position. This may be 20% or 50% or whatever percentage of your total position you want to take off the table. Remember the less you sell the more aggressive you are being. There are many reasons why taking partial profits can help you. 1. It can help to make sure a trade was an overall win. If you have a winning position you can always sell some of your shares for a profit and tighten up your stop for the remaining shares (while still giving it room to move). This could insure that even if the trade goes against you now it will still be profitable overall. 2. It can let you stay in a position at least somewhat. By only selling a percentage of your position not only can you make sure the trade was profitable but you can also ride the trade out with the remaining shares. This way you may benefit from any future price movement in the stock. 3. It can satisfy your urge to take a profit. If this is the only reason you have for taking partial profits it is well worth it. As traders we all sometimes get the feeling that we should take profits on our positions, even if we do not have a good reason to do so. We just don’t want to turn the profitable trade into a losing trade. So taking some shares off the table when you have won can help to lighten our fear and help up to not worry as much about that position. 4. It lets you put the money elsewhere. Whether it is in your bank account or your next trade it is always a helpful to have some extra cash.
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