Suppose your position has made a big move and you moved your stop to your purchase price as recommended. Then lets say your stock continues to build a big move and now we are asking again the questions we asked back in the first paragraph. The first profit grasping technique you might utilize is a trailing stop. If you moved your stop to your purchase price, then youve already used a trailing stop. Now you may continue to move your stop up as the price rises until the advertise stops you out of the position. So in essence, what youre doing is letting the advertise decide when to take profits.

Bear in mind that you dont have to utilize the identical price gap that was used when you first set your stop. That initial move was done to protect your account once youve taken the threat of a losing trade away from your account, you might do most anything with your stop after that. One approach that some traders utilize is to place their stop at the half way point between their purchase price and the present price. This approach is giving half of your profits back to the markets, but itll keep you in the sell longer giving the stock plenty of room to move. A variation of this approach is to move up your stop to the 75% profit level after a period of instant has elapsed.

Another profit getting technique for traders is to utilize a reward/risk ratio. This is a sound approach that is used more fairly often in short term trading. The way it works is that you determine what amount you are going to risk on a given trade and then set a profit objective expressed a multiple of that risk amount. For instance, suppose youve bought 100 shares of IBM at $50 per share and youve determined that your stop will be placed at $47.50. This position has a total risk level of $250 to your account. If youve set your reward/risk ratio at 4:1, then this means that when the price reaches $60 and your profit is $1000 (4 x $250), you will take profits. Note that using this approach with a 4:1 ratio would only require you to hit one trade in five to break even a 20% winning percentage.

One last profit getting approach you might want to think about is grasping partial profits on that first strong move. In other words, when you get that first move in your favor and you move your stop up to your purchase price, you might want to sell half of your position and take some profits early. You then let the remaining position run using trailing stops until the sell stops you out. This approach is used by many swing traders and will result in more winners, but the profits will be smaller. But remember, smaller profits mean that you absolutely need more winners.