## Profit Taking Strategy for Stock Market

Strategy for stock market: Taking profits is extremely important when trading. After all, you only make money when you actually close the position and take money off the table. The key question is: when exactly do you take profits?

So, right now, I want to talk about my favorite profit taking strategy for trading stocks.

**Strategy for Stock Market**

Let's say that you have a stock, and the stock is trading right now at $100. So you're buying the stock for $100, and let's say that you want to limit your risk to $200 based on a $10,000 account. You know me; I like to limit my risks to 2% of your account.

So if the stock goes down to $98, you're getting out. This is your stop loss. This means that you risk $2, right?

Let's say you're trading 100 shares. If you're trading 100 shares, this means that your risk would be $200. When you risk $200, you want to make at least $400.

**Here’s an Example **

Right now I'm trading SLCA. My profit target is that I want to make $10, meaning I want to risk $2 trying to make $10. So if it goes up to $110, that's where my profit target is.

The profit target here is $10 per share. And if you are trading 100 shares, this means the profit target is $1,000. Now, for me, that is a good practice.

So, the idea here is obviously that this stock here is going up. But here's the deal.

**What happens if it doesn't go all the way up?**

Here is what I personally like to do. If I'm risking $2, as soon as I make $4 I take half of the position off the table. If I’m trading 100 shares, as soon as I see $4, I sell 50 shares and make $4 per share.

This means that I'm making $200. So now there’s $200 I’ve taken off the table and noone can take these $200 away from me.

Now that I’ve sold 50 shares, I have only 50 shares left.

**Here’s what I do with the remaining 50 shares. **

I cut my risk in half. So, for the remaining 50 shares, I now only risk $1 per share. Previously, I risked $2.

So I’d move my stop loss to $99 and only risk a dollar. And this is only on the remaining fifty shares. I already took $200 off the table and now the remaining risk here is $50.

What does this mean?

I now have another 50 shares where I'm trying to make $10. So on the remaining 50 shares, I'm trying to make $10, meaning that I want to make $500, but you see, right now I cannot lose on this trade anymore.

And this is extremely important, right? Because I already took $200 off the table and now, I reduced my risk to only $50.

**Worst-case & Best-case scenarios**

I know this is a lot of math, but trust me, money is math.

So, if I’ve already taken $200 off the table, and I reduce my risk to $50... If this trade turns around, I still make at least $150.

I cannot lose on this trade anymore.

If everything goes right, this is where I’m making an additional $500 in addition to the $200 that I already made.

So I’m now trying to make $700 risking only $50. And you see...

**This is the key to making money with trading**

When you see profits, you've got to take it off the table, and then you start reducing the risk.

This is exactly what I did with my trades. I take half of the position off as soon as I see twice my stop loss.

If I'm risking $2, as soon as I see $4, I'm taking half of the position off the table. Now I am reducing my stop loss from $2 to $1, and at this point, I cannot lose any more on this trade.

Now I can relax, sit back, and don't have to worry about this trade anymore. If everything works out, I'm making $700 on this trade. If it doesn't work out, I still make $150.

**Keep in mind**

This example is for an account of $10,000. $10,000 means that on one trade, you make anywhere between one and a half to 7 percent of your account.

For me personally, this is smart trade management. It's a very relaxed way to trade because now you don't have to worry about it anymore and you still know exactly when to exit.

To see exactly what I trade, when I enter and when I exit, visit My Daily Trading Routine now! This 35-minute video is completely free for you to view.

This is my favorite profit taking strategy. Multiple profit targets. That's what I like to use. Taking money off the table and reducing my risk.

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