Know When to Take Profit & Set a Target

Finding a momentum stock is the easy part. Knowing when to sell is where most traders struggle. This guide covers practical strategies for taking profits on breakout trades without leaving too much on the table or holding too long.

The Problem With "Let It Run"

Momentum trades are exciting when they're working. A stock is up 12%, volume is surging, and it feels like it'll never stop. The temptation is to hold for more. But momentum by definition is temporary — and the reversal often comes faster than the run-up.

Without a plan, most traders either sell too early (leaving 70% of the move on the table) or sell too late (watching their gains evaporate). Having a predefined target solves both problems.

Strategy 1: Scale Out in Thirds

One of the most reliable approaches is to sell in portions rather than all at once:

• First third — Sell when you're up 5–8%. This locks in a base profit and removes the emotional pressure of "what if it drops."
• Second third — Sell at your target (e.g., 12–15%). This captures the bulk of the move.
• Final third — Let it ride with a trailing stop. This gives you exposure to the rare "runner" that goes 30%+ without risking your locked profits.

Strategy 2: Use the Day's Range

StockJelli shows you where price sits within the day's range. If a stock is already at the top of its range (90%+ position) and volume is declining, the move may be exhausting. That's often a good time to take partial profits.

Conversely, if a stock is at 60–70% of its range with volume still rising, there may be more room to run. The range position is a quick visual gauge of remaining potential.

Strategy 3: Set a Risk-Reward Ratio

Before entering any trade, define your stop loss and target. A common framework:

• Stop loss: 3–5% below entry
• Target: 2x to 3x your risk (so 6–15% above entry)

If you're risking 4% to make 12%, you only need to be right 1 out of 3 times to break even. Momentum screeners like StockJelli improve your hit rate, but risk management is what keeps you in the game.

Strategy 4: Watch Volume at Resistance

When a stock approaches a key level (previous high, round number, pre-market high) and volume spikes but price stalls — that's often distribution. Large players are selling into the strength. This is typically a good exit signal, especially for the final portion of your position.

What NOT to Do

• Don't move your stop loss down — If your original thesis was wrong, take the loss. Widening stops turns small losses into large ones.
• Don't average down on a momentum trade — Momentum trades should work immediately. If it's going against you, the thesis is broken.
• Don't hold overnight without a plan — Gaps against you can be brutal. If you're holding a momentum play overnight, size down.

The Bottom Line

Profit-taking is a skill, not a feeling. Have a plan before you enter, scale out to manage emotion, and use the range position and volume as real-time guides. No strategy captures every penny, but a disciplined approach captures the most over time.

StockJelli is an educational tool. This is not financial advice. Always do your own research.