Profit taking is the selling of stocks or other investments after sharp rise in prices. Investors are say that they ‘took profit’ when they sold their stocks after good rise when they seceded with stock selection. However, profit taking is not possible without strong price rise.
Often a sharp rise in stock price if followed by some price correction, and when it happens, the reason of it is most often described as taking of profits by investors. There is no exact definition how much stock has to increase to take the profit from it, but many investors/speculators think that stock is ready to be sold after 20%-50% increase in price.
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