profit taking


Definition of profit taking

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

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More Definitions for profit taking

profit taking


Financial Definition of 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.

Source: Investing Answers

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