When to take profits?

What do I do if a trade goes your way and u are in profit? How do You know when to sell and book the gains? Heres what I do.

Let’s start with what’s your time horiZion? If you plan to remain a share holder and compound the dividends and grow your wealth u need to learn to trim your positions. The idea is if price really rockets up and your position increased by large amount u can take some gains by selling a portion of you position. It could be as little as 1/10. 

If say u bought delta in $40s each time it got into $50s the indicators signaled overbought u booked gains. I did this exact transaction today. I bought 100 shares delta at $45.50 Today it hit $50.80. 11% return or $520. I sold 10 shares rasing $506. Taking the value my position in Delta back what I paid originally and I’m still long 90’shares into a surging up trend. 

Those 10 shares do decrease profits as price increases but price is more likely to stall in this area due to all indicators being over bought and for 2 yrs this area been overhead resistance for price movement. Why? I have no clue. In $50 range last years people sell this stock. Why not take your gains on the trade and have a bet it breaks through resistance and continues on. 

If it does your sitting in a nice trade. Be happy.  If price turns like it has in past, you locked in gains now you wait for price sell off maybe add those 10 shares at lower price point. 

You could also put that $500 to work in a new investment. If you have portfolio of stocks and you trade around these positions pulling off profits and adding to positions at lower prices you snow ball the gains. 

A portfolio of 10-12 blue chip dividend income stocks can quickly turn into 15-20. Or u could stick with the 10-12 and use profits from companies doing best to build positions in ones representing most value.

Obviously u need a timing model. I call mine the Money Flow.  Look next 2 charts 

Now look at this weekly chart. This is text book overhead resistance. I sold a portion of my position to take advantage of this overhead resistance.


I hope price continues higher but wise active management says otherwise.

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