What Is Profit Taking?
Profit Taking or Arbitrage is also called technical correction, also known as technical adjustment. It refers to the holder of a stock or futures contract or option contract that actively changes his position after the market value changes and a price that is beneficial to himself Position and a transaction that converts book profits into actual profits.
Profit-taking
- Chinese name
- Profit-taking
- Foreign name
- Profit Taking or Arbitrage
- Also called
- Technical correction
- Application
- Futures market
- Profit Taking or Arbitrage is also called technical correction, also known as technical adjustment. It refers to the holder of a stock or futures contract or option contract that actively changes his position after the market value changes and a price that is beneficial to himself Position and a transaction that converts book profits into actual profits.
- Profit-taking example
- For example, in the futures market, if a trader buys 100 lots of 96.01 corn futures at the price of 2600 yuan / ton on November 3, 2002, the price of the futures product will rise to 2700 yuan on December 11, 2002. At this time, a floating profit of 100 yuan / ton appeared on its fund account. If the trader continues to hold positions and the market price continues to be bullish, the level of his floating profit will rise further. However, if Xing Qian falls, the profit that he could already have is likely to disappear. At this time, the trader should adopt a strategy of taking profit and closing out.
- Profit taking often occurs during periods when market conditions have reversed. Generally speaking, when the market changes from a bull market to a bear market, it is often a multi-party profit-taking. When the market changes from a bear market to a bull market, it is often a short-market profit-taking. For example, when the market price of a short contract held by a short seller declines, in order to protect the book profit already obtained, it will adopt a strategy of closing the position as soon as possible to convert the book profit into actual profit. Conversely, for short-sellers, that is, multiple parties, the behavior is in the opposite direction. The occurrence of profit-taking in the futures market is often related to investors' uncertainty and uncertainty about the market prospects, so they hope to reclaim their accounts that have earned par or profit, and turn them into actual income .