Profit taking
Encyclopedia
In finance
, profit taking (or taking profits) is the practice of selling an asset
, mostly shares
, when the asset has risen in price. This allows investor
s to convert the increase of an asset's market value
into cash
.
Profit taking by a number of investors normally causes the price of the asset in question to fall temporarily. Nevertheless, the occasion of profit taking itself indicates an upward market trend
.
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
, profit taking (or taking profits) is the practice of selling an asset
Asset
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
, mostly shares
Share (finance)
A joint stock company divides its capital into units of equal denomination. Each unit is called a share. These units are offered for sale to raise capital. This is termed as issuing shares. A person who buys share/shares of the company is called a shareholder, and by acquiring share or shares in...
, when the asset has risen in price. This allows investor
Investor
An investor is a party that makes an investment into one or more categories of assets --- equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc...
s to convert the increase of an asset's market value
Market value
Market value is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some...
into cash
Cash
In common language cash refers to money in the physical form of currency, such as banknotes and coins.In bookkeeping and finance, cash refers to current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately...
.
Profit taking by a number of investors normally causes the price of the asset in question to fall temporarily. Nevertheless, the occasion of profit taking itself indicates an upward market trend
Market trend
A market trend is a putative tendency of a financial market to move in a particular direction over time. These trends are classified as secular for long time frames, primary for medium time frames, and secondary for short time frames...
.