profit taking

Profit Taking

The action of selling stock to cash in on a sharp rise. This action pushes prices down temporarily. When traders are profit taking, the implication is that there is an upward trend in the security.

Notes:

For example, in the media you might hear something like this: "Markets were down today as traders took some profits off the table." It's common for prices to retract to some extent even in bull markets.

See also: Day Trader, Security, Trend, Trend Analysis

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Profit taking

Action by short-term securities traders to cash in on gains created by a sharp market rise, which pushes prices down temporarily but implies an upward market trend. See: Ring the [cash] register.

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profit taking

The general widespread selling of securities or of a particular security after a significant price rise as investors realize, or take, their profits. Although profit taking depresses prices, it does so temporarily. The term usually implies that the market is trending upward. Also called taking profits.