profit taking

noun
Updated on: 13 Oct 2017

Definition of profit taking

:the selling of commodities or securities at prices in excess of cost to realize profits

There's more!

Love words? You must — there are over 200,000 words in our free online dictionary, but you are looking for one that’s only in the Merriam-Webster Unabridged Dictionary.

Start your free trial today and get unlimited access to America's largest dictionary, with:

  • More than 250,000 words that aren't in our free dictionary
  • Expanded definitions, etymologies, and usage notes
  • Advanced search features
  • Ad free!
Already a subscriber? Log in.

Financial Definition of PROFIT TAKING

profit taking

What It Is

Profit taking is the act of selling stock to take advantage of a sharp rise in the stock price.

How It Works

Occasionally, investors will sell off their shares in a stock after the stock rises sharply.  It may occur as a result of an event that triggers a rise in the stock or when a stock just follows the broad currents of a bull market.  It may also occur when traders are looking for the opportunity to sell and even a small surge in the market brings new buyers willing to pay sellers' prices.

Why It Matters

Selling off shares, however, causes the price of a stock to fall, at least temporarily. Generally, though, profit taking is seen when there is an upward trend in the overall market.


Seen and Heard

What made you want to look up profit taking? Please tell us where you read or heard it (including the quote, if possible).

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!