What does it mean to “Take profit on the stock exchange”?
Most people without an economic or financial education confuse the concepts of profit and income, assuming that they are quite similar things.
In fact, Revenue is all funds received from the sale of goods or services, and Profit is income minus the cost price and expenses associated with its receipt.
That is, if we consider the concept of profit in relation to stock trading, then income can be considered the amount received as a result of a successful transaction.
But profit should only be called the remaining funds after you subtract all additional commissions and expenses that were spent on carrying out this transaction.
At the same time, many beginners are wondering what it means to lock in profits on the exchange?
The easiest way to understand the meaning of this expression is by using the example of an open transaction in a trader's trading platform:
The "Trade" tab displays all open trades, and the "Profit" column displays the profit resulting from these trades.
But the profit value in this column is not constant, but dynamic; it changes depending on where the price is moving, meaning the indicator can increase or decrease.
To lock in a profit on the exchange, simply close a profitable trade. After that, the result will no longer change. Only then will the profit be considered locked in.
Accordingly, if you close a losing trade, you can say that you have locked in your losses.
Closing a deal and taking profits can be done not only in the manner described above, but also by telephone or automatically using a stop order. The essence of this does not change, and the take-home order will occur in any case.
It should be noted that there can be multiple open transactions at the same time, and if you need to secure the entire financial result achieved, you should close all existing transactions.
