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Profit Taking 101: Profit taking on specific stocks can be very difficult to estimate. Short term, mid term, and long term stocks can be vastly different in terms of when to take profits. In this video, we discuss basic investing terminology, define short, mid, and long term stocks, discuss capital gain taxes on short term, mid term, and long term stocks, and profit taking strategies depending on the stocks currently being held.
0:00 Intro
0:47 Terminology
4:34 What Is Taking Profits?
6:50 Long Term Capital Gains
8:21 Short Term Capital Gains & Tax Harvesting
10:25 Long Term Stocks
13:48 Mid Term Stocks
19:00 Short Term Stocks
23:58 How Should I Allocate My Portfolio Across Short, Mid, Long Term Stocks
25:13 Which Stocks Are Short, Mid, Or Long Term?
26:11 Taking Profits
28:15 My Profit Taking Strategy
31:16 Outro
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What's popping everybody welcome back to uh trey's trades, we're giving you guys a little rundown here on taking profits. This has been a subject. That's been asked of me quite a few times trey. How do you know when to take profits? How do you differentiate? You know long-term stocks mid-term stock, short-term stocks, so i spent quite a bit of time throwing together a little bit of a slideshow, we're gon na walk.

You guys through exactly uh my personal investing strategies, and then you can take what you like you know and implement it and then take what you don't like and run with it, because basically, this is the fundamental core of investing versus trading right. So all it comes down to is once you understand the basics, you can create your own guidelines and your own way of investing that is gon na line up for your personal strategy, your personal time allotment and the whole nine yards. So let's get into the video. If you're, not mine, drop or like or sub, feel free to do so, if not, that is cool too so we're gon na start off here terminology.

I've got a couple different terms that i use throughout this uh throughout the slideshow that i want to run. You guys through that way, you know exactly what we're talking about. You can come back to this and reference it at any point that you'd like to we're starting off with security. So securities are investments that are purchased with the intention of holding out of the securities for the purpose of generating revenue.

These are just essentially stocks, dollar cost average, which is dca. That is what i'm referred to as uh throughout the slideshow here, that is, dollar cost average. This is the current average price of your total securities held after all purchases, so you can think of this. Essentially, as if you'd pot a stock, you know five times right.

One at ten dollars, one time and ten dollars, one time at 12, one time in nine one time at 11, you know so on and so forth. The dollar cost average is your average price across all of those different positions that you've taken throughout the stock. Throughout time, that is your dollar cost average averaging down or averaging up. This is the process of purchasing more security to increase the physical amount held, thus increasing or decreasing your dollar cost average.

So if you purchase 100 stock at uh, let's say five dollars and then you buy a hundred more at six dollars. That means you averaged up right. You increased your overall dollar cost average to five dollars and fifty cents on the flip side. If you bought it at six bucks, then you buy it again at five dollars.

One hundred shares each right. Your dollar cost average would go down. That is averaging down to five dollars and fifty cents for 200 total shares held blue chip stocks. These are stocks behind largest behind large industry-leading companies, with stable record of significant dividend payments or proven growth.

To me, this is like a tesla and apple and microsoft, etc. These are long-term stocks. These are stocks that are not very risky. They're stocks that have proven success for growth right, not necessarily high growth potential, but proven growth potential that will lock up a couple percent margin every single year volatility.

These are price movements of a stock or the stock market. High volatility has uh high, extremely daily up and down movements. Low volatility does not so low volatility. Stocks typically are going to be those those blue chip stocks right.

The long-term stocks that have proven growth because the volatility won't be there because everybody's going to continue to hold their long-term stocks highly volatile stocks might come with short-term midterm investments. So keep that in the back of your mind, occasionally you'll get over long-term stocks, but not very often all right, dd or due diligence well, give me one second to clear my throat so dd or due diligence. This is the process of researching the fundamental value of a company, and this is going to come down to you know a couple different factors. You want to look at the the current management team, previous financial situation, right.

Why do they not have earnings? Why do they have earnings right, where's, the potential for growth down the road that comes down to kind of a? I don't want to say an intuit intuitive right, but mostly an intuitive knowledge of you know where a company could grow. For instance, microvision is a company that has not had proven success in the past. We will talk about this in the future, but i have strong fundamental conviction on this company because of some different things that they have going for them, such as the automotive lidar. Some different tech that they're they're working on right.

So it's finding those different. You know uh aspects of the company that could push the stock price up higher, based on the the fundamental value of the company, technical analysis or ta, which is what i'll refer to. As in the future is reading charts of securities to find the best possible entry points and exit points, this is typically used the best for your short-term and midterm stocks. It can be used for long-term stocks as well, but is much more minimally required right.

You can't get into long-term stocks with not a very vast understanding of technical analysis, because at the end of the day, if the fundamental value is strong, your conviction is wrong. Your due diligence has been solid. The the value of the company should continue to grow right and you're gon na be looking at minimal margins of uh. You know, loss return or improved return with technical analysis, a spec.

This is a special purpose. Acquisition, company they're securities forms solely for the reason of merging or acquiring another company. We're gon na talk about this down the road, but these are mostly midterm stocks right, uh, we'll get into that more. But these are companies that have proven upcoming.

You know growth right and upcoming news catalyst that could drive price action. Then the last thing is going to be a training stop loss. This is day trading order that lets you set a maximum value or percentage of loss you incur on a trade. You can set exactly the amount uh percentage, wise or dollar cost wise that you are willing to lose on a trade.

This is mostly used for short-term stocks or short-term trades right in order to minimize losses on a stock. That way you don't get caught bag holding. So we're gon na start off here with what is taking profits so profit taking is the act of selling a security which is fancy talk for a stock in order to lock in gains after it has risen appreciably. While the process benefits the investor taking the profits, it can hurt other investors by sending shares of their investment lower without notice, so profit taking essentially, is.

If you have 100 shares and you decide to sell all 100 of those shares when you are up a considerable amount, whether it be 5, 10, 20, 30 et cetera right, you sell those those shares that you hold in that stock and you secure the profits right. So there's unrealized gains and realized gains. Unrealized gains are essentially when you hold the stock, that is up 30, but you have not sold yet right. That is not your money until you sell out of that security and lock in those profits, so profit-taking is having realized, gains or selling those shares right, so you can lock in those profits, and that has become your money right.

So what is it talking about when it says it can hurt other investors right? Well, when you sell a stock, it does influence the price right. So when you sell a stock right um, what happens? Is the market? Making algorithm system will think? Okay, the sentiment of the stock is going down, so we're going to decrease the stock price right. So, at the end of the day, you can think of you know buying and selling stock as a transferring of wealth, because at the end of the day, somebody has to purchase your shares when you sell them and when you're buying them, somebody has to sell them To you, so you know there is some some really my new details in which uh you know. Sometimes the clearinghouses will have shares available to sell to you and which you're not actually taking from another person right.

But that is the premise and the basic understanding of what profit taking is and how it works. It can affect an individual stock, a specific sector or the broad financial market. So sometimes you'll have days where there's a lot of profit taking across the entire market. Right.

These are bearish days. Bearish days are days where there's a lot of selling pressure bullish days or days, there's a lot of buying pressure, and you can also have days where this just happens across one stock right. So you might have a bullish market right where there's a lot of buying happening on on one given day, but that doesn't necessarily mean it's gon na be across all stocks. You might have a stock.

That's that's down! You know 30 percent, even though the s p, 500 or the nasdaq is up one percent right. So keep that in the back of your mind, when you are thinking about profit taking and then short-term profit taking versus long-term profit taking. This is what we're going to talk about here down the road, but the picture looks entirely different for both of these situations. Right so we're going to add in more detail, but there's a significant difference and - and i think that it's very worth understanding what that is, that you can no one when to hold them when to fold them when to buy them, etc.

Uh rip and dips baby we're gon na get into this, so long-term profit-taking and taxes. This is this might be a little bit blurry, but i'll walk you through. Essentially, what this is so long-term profit-taking and taxes is a very important thing to keep in the back of your mind, long-term uh, profit-taking versus short-term profit, taking means you're gon na have to pay different amounts of money back to uncle sam or or the feds. At the end of every single year, when you have to file your taxes, so you can see here, you can pause this if you want, i won't.

I won't hold your hand through this process because i know you can read: you've got single filers head of household married filing separately and married filing jointly, and the picture looks entirely different for all these, but the most significant difference that you want to pay attention to Is if you hold a security for longer than one year right that will make it a long-term stock, a long-term investment? You will have to pay zero percent if uh, if you meet certain guidelines so for 2021, it's forty thousand four hundred dollars of gain. If you make forty thousand four hundred dollars on a stock uh - and you hold it for a year, anything under that, you don't actually have to pay any taxes on it, which is a positive side to holding a security for a long time. And why i'm going to talk about this down the road, it's important to have a diversification of different midterm, short-term long-term stocks in your portfolio for 2021, if you're a head of household, it's 54. 000.

100. You have to stay underneath that uh 40. 400. If you are married filing separately and then eighty thousand eight hundred dollars married filing jointly, so that is essentially just the you know the single filer's doubled.

So it's it's about the same number regardless, but that is important to pay attention to. The number has gone up. A little bit here from 2020, typically, it will match the rate of inflation right with inflation, since the the average dollar becomes worth less and less. You need to have more money to purchase more things, so, typically, we'll see that number go up throughout time.

Now short-term profit-taking and taxes and tax loss harvesting. So this is an important thing when you need to look, you need to look into when regarding uh, whether you want to do short-term, investing or not, the tax situation is much different. You pay uh taxes, regardless basically of how much money you make now this is uh. This is from my understanding, not 2021.

I looked very hard to find a 2021 number right. As you can see, the the long-term capital gains rate on this is different, but nonetheless, right at the end of the day, you have to pay up to. Let's just assume this is forty thousand uh, eight hundred dollars or whatever. That number was right uh.

That number is gon na look exponentially different, so you're, looking at a ten percent gain up to nine thousand five hundred twenty five dollars: uh twelve percent uh tax rate on a gain from nine thousand five hundred twenty six to thirty eight thousand six hundred dollars right. So you do have to pay taxes on all short-term gains, at least ten percent, depending on you know, it continues to go up, so you can see here. A five hundred thousand dollar gain you're, paying uncle sam 37 of that total gain. So keep that in the back of your mind, when you do decide whether to get into a stock long term midterm short term, you are going to pay different amounts, there's a way that you can offset this and it is through tax loss harvesting.

So you can essentially claim up to 3 000 of losses on any given stock and that will offset some of the taxes and the gains that you're paying on down the road. So keep that in the back of your mind, if you don't know what tax loss harvesting is, i have this written out for you. It's the selling of securities or stock at a loss to offset a capital gains tax liability. This strategy is typically employed to limit the recognition of short-term capital gains so by purposefully losing essentially three thousand dollars in the market that can help offset the amount of taxes that you have to pay and that might sound goofy.

It might be like dude dude. Why would i purposely lose three thousand dollars, but if you think about the math right, let's say that you, you uh, you made 500 000 on a single, short-term trade right and you're paying up 37 of that. Well, if you can offset the amount of taxes you pay by by losing 3 000 of that 500 000 on purpose right in the grand scheme of things, that's not a very big deal, you're, not losing that much money, that's like pennies to a dollar right, so It is a strategy that is employed and honestly uh recommended for people out there who are typically short-term to mid-term traders. So what are long-term stocks? How do you differentiate a long-term stock, midterm stock and short-term stock? We're gon na walk you through every single one of those i'm gon na give you examples of stocks that i personally have in my portfolio and view as those specific things right.

So a long-term stock, two positions that i have that i've used long-term are microvision and sensonics, so they are typically held for at least one year or more. You can hold the long-term stock for one year, five years, 10 years, 20 years 40 years. Right typically, an etf would be viewed as a long-term security right etf. If you're not familiar, is basically the the you know, the breakdown and portfolio of multiple stocks.

In order to you know, capitalize on less volatility and pretty much, i would say, guaranteed growth, but less risky growth, so uh you held them for you hold them for more than a year. They've got core fundamental value with high potential for continuous growth right. That doesn't necessarily mean that they have to have previous growth, but they have to have something coming up. That's that's going to drive price action for at least a year or longer right so, for instance, with joe biden in office, you could view green energy stocks as a long-term stock right.

So as long as he has an office which will be about four years, you can view companies such as fuel cell plug power, clean spark clne, which is clean energy. All this potential long-term stock candidates, as long as you've done your due diligence and have finally have fundamental value and and reason for continuous growth, so they've got that they've got extreme due diligence. These are the stocks that you want to do a lot of research on you want to understand the management side of things you want to understand why they've had you know continuous growth, why they haven't had continuous growth where's their meeting upside? How can they expand? How can they continue to push the company forward and make more money down the road, because that's essentially what it's going to take right so day to day fluctuations, don't require regular maintenance? What i mean by this is you don't really sweat when a stock is down? Five percent, if it's a long-term stock, because if you have true conviction in the stock right, you believe that it is going to grow because you've done enough research on it. You know where it's headed.

You know where it's going right, the news catalyst, the the traders sentiment on a day-to-day basis does not matter as long as the fundamental value and the reason you have strong conviction in the company has not changed. Dollar cost averaging is a highly beneficial thing to make more money on these stocks right. Some people, don't like dollar cost, averaging, which i don't i don't really understand. It - makes the margins.

Look less nice right. So if you dollar cost average up on a stock, that's continuously growing. Your margin will look as good, but in the long term, by having more money in the security you're going to make more money, even if the margin is not as nice. So that is a strong, strong strategy that is recommended for long-term stocks.

Is dollar cost averaging up or down? If you see it down like if it's a red week red month, the cost averaging down is a great method in order to increase your position and increase the gains you make on those stocks. Volatility volatility is typically low. This isn't always the case, but i would say more often than not. It is right think about apple uh, tesla's, probably a little bit of an asterisk tesla, tesla kind of breaks, all the rules across the market, but they're, typically low volatility stocks, which is what makes them long-term investments right most of the time they have proven methods of Success they've got proven methods of success, proven growth and they're going to continue to grow because they are what they are.

You hold until the fundamental value and conviction changes right. So we just talked about this before, but the the day-to-day sentiment and news that comes out right. The hit pieces, the good news - uh, those don't matter a lot, because at the end of the day, what it comes down to is. Are they gon na continue to grow? Are they gon na continue to have that generated revenue? Are they gon na continue to generate more revenue right? That's what it comes down to for those long-term investments.

Give the news inventor sentiment and technical analysis mattered next to none, as i've mentioned previously. Examples of this to me are mbis and sensonics. These are two stocks that i have in my portfolio that i use long term. I'm gon na be holding these for both longer than a year one year plus easily.

Another examples would be apple and tesla which have proven methods of success right, proven growth, and they will continue to grow as such midterm stocks, so they are held for one month to 12 months. According to me right that that is my personal definition that is not coming off of the internet. That is how i view a midterm stock right. You might see different numbers depending on where you look, but that is how i view a midterm investment, corpsman core fundamental value, with upcoming news catalysts that is expected to drive price action for a certain period.

This is how a midterm stock is viewed right. So, typically, if you're gon na hold the stock for only 12 months right, you don't want to hold it beyond that, because maybe necessarily that the growth won't continue. Um, that might be because of um news, catalyst or upcoming events. Presentations, product releases, commercialization of a product right, let's say, fda, drug approval.

All these things could drive price action for only a certain period of time, but not necessarily continuously grow the stock. A good example of this would be like a medical technology company or a biopharmaceutical company. They typically have very, very strong price action, leading into fda approval. So if you know that you've got a a stock, that's got you know three products in the pipeline.

The pipeline essentially meaning you know, drugs - that they're working on that they're planning on releasing getting after the approval on commercializing, sending out to the public right uh. You might want to stay in that stock for six months, eight months, 12 months, so that you can ride up those gains right when it does, you know ladder up essentially when those products are fda approved. So that is a a method of success. You want a moderate amount of due diligence on these right.

You want to understand the basics of the fundamental value of the company, but it's not necessarily as important as a long-term stock, because you're not needing to hold that for one year, two years, three years, four years etc. Day-To-Day fluctuations may require moderate maintenance, so uh. Let's say that all of a sudden you've got a stock like uh golden nugget online gaming right golden nugget was previously lca. That was a spat company which we'll get into here in a second, but that was a stock that ended up hitting like 27 before their merger was affected.

Well, at that point it hit 27 and then before it ended up, you know reaching its high, which is, i think, 28 dollars. It came back down to 21 bucks. Well, let's say that you decided just to hold that security. You didn't decide to take profits on it, which we'll talk about here in a little bit, but you didn't decide to take profits on.

You would have missed out on the opportunity to ride that back up to 28 again right. So there's a little more volatility included in these midterm stocks, there's opportunities to rinse and repeat essentially, which means taking profits at the 28 dollar mark buying back in the bottoms out of 21 and riding it back up to 28 again. So there are situations with these midterm stocks. Where you can, you may need a little more moderate maintenance, not necessarily required right, but it is a way that you can maximize the overall gains that you're having on these stocks and your holdings, dollar cost averaging or training.

Stop losses may both be applied depending on individual financial situation, so i don't necessarily think there's one that's better than the other. It's depending on how much money you have sitting on the side. How much dry powder dry powder is essentially how much free money you have available to trade or buy a security with right, so i've seen people. Do it both ways personally i'll dollar cost average.

I typically only set a trillion: stop loss for short term straighting right. So that i can get the best possible entry point, not become a bag holder because those are volatile stocks and we'll get into that in a second. But both of these strategies are uh, i would say accepted across midterm. Investing volatility can be moderately strong, so stocks such as gold, nugget online gaming right i'd mentioned that they went up to 28 dollars and then came back down to 21 or 22 bucks right um.

So there are situations where the volatility is pretty high and that can induce a little more risk, which is why a trolling stop-loss, maybe isn't the the worst case scenario with these different stocks. If you are going to get into midterm stock, but dollar cost averaging also does work sufficiently. You want to hold this until desired news catalyst that is expected to drive price action has come through fruition or has fundamentally changed. So not not necessarily all the time is this going to work out out of 10 trades if you make off on seven or eight of them, you're doing pretty well you're gon na be net profitable as long as you minimize those losses right.

So if the fundamental value has changed, the fundamental situation has changed like let's say the spec deal was pushed off for two years or the spec deal was actually canceled right, uh or the upcoming news catalyst that that fda approval and the pipeline product has all of A sudden been cancelled, it did not get. You know, acceptance you're going to want to take losses or gains on that stock and cut it. At that point, uh or let's say that you know the desired outcome has come to fruition. You you you've gotten that fda approval on the product, you've gotten the merger affected.

You don't believe the fundamental value of the company long enough to hold it long-term right. At that point, you want to take profits as well. Technical analysis, investor sentiment, fundamental value news - have about equal importance across these midterm stocks right. So technical analysis is good because it helps you set up the best possible entry point and the best possible exit point on a stock so that you can get in and out with the most gains possible.

Investor sentiment is going to drive the price action more so on a day-to-day basis. Right so you're going to see ups and downs, which is going to imply that volatility right on midterm investments. You are going to see some people, you know come in and scalp a stock scalping a stock is essentially you know, making small gains on minor fluctuations in price action. Uh fundamental value does matter, i would say, they're pretty even spread right, so keep that in the back of your mind, with these midterm investments, examples to me are going to be spacks special purpose acquisition companies such as genog apxt or torchlight trch right.

These are all stocks that we know have upcoming mergers, which should in in effect, drive price action up until the lead into that merger, because typically, a lot of hype that follows in with these these stocks that have the merger companies uh. You know coming up. Another example would be ag acgt right. This is a company agtc as i was.

This is a company that has upcoming. You know pipeline approval over the next year right. So if you want to hold that for six months, let's say you have to approve on a couple different drugs. That would be an example of another midterm stock investment.

Short-Term stocks are, are the riskiest of all three of these. They are typically held for one day to one month. According to my personal definition, depending on who you ask this, might you know it's different you've got day trading and swing trading day trading is buying and selling a security on the same day. Swing trading would be buying a security on on one day and then selling it maybe up to one month later to me that would still be considered a short-term stock, essentially we're trying to ride momentum.

So short-term stocks typically have a strong technical setup with upcoming news catalyst that is expected to drive price action. When i'm looking for a short-term trade, i look for typically three different things. I look for a strong technical setup. I look for an unusual trading pattern in volume right and i look for an upcoming news, catalyst and if we've got all three of those, you know boxes that i'm looking to check at that point, i will look for a good entry point i'll, take my position And then i'll look for what i want to take profits.

We're gon na get to that here in just a little bit. Fundamental value or analysis is nearly unimportant. You ride momentum and trader sentiment, so this is a situation where you're not necessarily really caring about the earnings reports, or you know the fundamental value of a company right or the potential for growth in two years, because that's not going to affect your your security over That you know one month period of time, right, you're, looking to ride momentum, you're looking to ride trader sentiment, you're looking to ride volume right. So this is really where technical analysis and technical setups matter a lot.

It's what's going to affect, and it's not going to how you're going to make money. What makes it so risky is the the the news that comes out right hit pieces can affect day-to-day fluctuations and really really kill your short-term investments or on the flip side, you can have a great news. Catalyst come out right, a great news release. That's gon na drive the price action exponentially, so that is that's that's kind of how short-term investments sit.

Uh, there's minor due diligence required. I would say the most due diligence that you want to do is looking for a company, as i'd mentioned, for upcoming news catalyst right. So maybe you have you know a biopharmaceutical company that has expected fda approval on a drug in one week. At that point, you're.

Looking for a good technical setup, you're looking for unusual trading volume, because the volume drives volatility volatility is gon na drive that higher price valuation right, the gains, the margin of return um, that's what you're looking for in terms of due diligence, i don't necessarily pay to The fundamentals of the company at that point, i'm paying attention to what is going to drive this price, the price action over the next. You know um one two three one week, one month so uh day to day fluctuations require extreme maintenance. This is a this. Is these are stocks that you do want to pay pretty close attention to whether it be setting price alerts, whether this means you know having a full-time job you're, not necessarily able to do this um.

You want to be very careful with these sort of investments and that's why i think a trailing stop. Loss is a good thing to have with these stocks, which is what we're going to talk about next training. Stop losses are preferred to uh dollar cost averaging in order to find the best technical setup fluctuations in volatility can be harsh. You can see stocks with a lot of volume and a lot of volatility and a lot of good trader sentiment go up 60 in a single day right in a single hour and sometimes 30 minutes.

But at the same time you can see those stocks drop. 60 percent or 30 or 40 within the next 10 minutes. 15 minutes 20 minutes right stocks go up. Stocks go down, so they require a lot of maintenance right.

You want to really pay close attention to what is driving the price action when to take profits right. Having those set rules, knowing how strong the momentum is knowing the trader sentiment these require, i would say, not a ton of um. You know expertise, but you know maintenance and time to learn so that these typically to me require the most. You know knowledge the most uh practice and sometimes have the most, i would say, always have the most risk, not even sometimes, but they've got high volatility.

As i mentioned, you hold until reaching a margin of gain that is satisfactory to each individual investor. We'll talk about my personal strategy and what i do right down the road here in this presentation, but this is a rule that i think you need to set if you do have short-term stocks, those who fail to plan plan to fail. So you need to come into these investments with an idea of what you are looking to get for a gain right. If you step into this and you're like yolo and you've, got no idea of when you want to sell when you want to buy when you want to take profits, are you going to take profits on all of your all of your shares, they're going to take Profits on some or you let the profits ride right.

This is something you want to come into with a game plan. Otherwise, when the moment comes when you're up 30 40 on a day trade or a swing trade, you don't take profits, you might get stuck holding the bed just like that. So having a plan is very, very important. Technical analysis and trade sentiment are the most important factors followed by upcoming news catalyst, with fundamental value being of no significance.

So an example of these would be stocks with high volume, high volatility stocks pumping dumps right, so a pump and dump is essentially a stock. That will that will have a crazy gain of like 60, sometimes 100. 200. 300.

400. 500. That does happen in single days, but then we'll come back down crashing and the dump is essentially when a stock comes back down to previous levels or maybe slightly higher than that previously leading gappers, which essentially are stocks that have you know insane amounts of margin for Growth uh exciting amounts of volume compared to the rest of the market. These are typically stocks which you can use a screener for that will give you the idea of uh hey.

This is a stock that would be a good candidate of a short-term stock trade and then stocks with recent news, releasement uh, that that could drive the price action right. So typically, you want to sell the hype. Buy the hype sell the news with these kinds of stocks, so you know buying in when you hear a rumor of an upcoming catalyst or when you know, there's gon na be something coming up. The news catalyst is announced and then it reaches the peak you sell based on that news and you move on to the next trade.

How should i allocate these investment strategies in my portfolio? This is gon na look different for every individual person right so for myself. Personally, this is gon na look different compared to the next guy or the next guy or the next guy or the next gal uh time. Allotment is very important, as i've mentioned. So if you've got a lot of free time - and you can closely manage your portfolio and watch the specific stocks that you have - that's gon na look a lot different than someone who's working.

A 40 50 60 hour work week and they can't necessarily watch these short term or midterm stocks than the day to day fluctuations. My personal strategy, as you can see right here, i drew up a little bit of a graph man. I am so talented, oh god, dang, i'm really proud of myself. My long-term stocks typically make up 40 of my portfolio.

Midterm stocks make up 40 and my short-term stocks make up about 20.. So i don't typically day trade. I will swing trade, which is writing a stock for anywhere between. I would say two days in a month writing that momentum right in the sentiment looking for the news catalyst looking for the usual trading volume right um, but this is gon na look different for every individual person.

I work a full-time job. You know the last couple weeks i have had you know: quarantine fort sill, which i'm stationed at right now was shut down because of that crazy snowstorm. But most of the time i work you know a nine to five, so i'm not able to manage my portfolio. The entire day during the market open, so this is gon na look different depending on each and every individual person.

I would recommend if you work a lot. You can't watch. You know your portfolio regularly to to. You know lean more towards those those long-term investments which stocks are long versus mid versus short term i'll, just briefly run through these.

I know this has been long long-term securities with long-term potential for growth and fundamental value. Midterm are securities and midterm potential for growth. Due to upcoming no news catalyst with fair fundamental value, trader sentiment and technical setup and then uh, this is supposed to stay short term, but short-term securities are are those with short-term potential for growth due to a strong technical setup and known daily or upcoming news catalyst. So this is completely investor or trader, dependent uh.

How you want to allocate which stocks are long-term or short-term and midterm. Some people might think that a stock is long-term and then some people might think that same stock is short-term right. So i know some people will day trade microvision, whereas i believe that is going to be a stock that one two three four years down the road is going to continue to grow. So this really does come down to doing your own due diligence.

Doing your own research, which is why it is so important that you don't just listen to what i say you dig into this. Like you, take this information, then you go find your own information, find your own strategies that you want to employ. This is just my consensus and what i typically do right, but this looks different for every individual person, so just keep that in the back of your mind, taking profits the end game here right so for long-term stocks. This is what i personally will do.

You take profits when the fundamental value of the company changes desired. Amount of capital has been reached or you retire. This avoids paying additional taxes and acts as the core pillar of personal investment strategies with minimal risk right. So if the fundamental value of the company has changed right all that research, you did all the conviction that you reach, based on the potential for growth.

If there's a core aspect of that has changed, which is going to change the perspective of that being a long-term investment stock, that is at the point in which you want to take profits on that investment and maybe look into another stock right uh. Whereas you know, if that doesn't happen, let's say you reach the desired amount of capital. You you feel like you're happy and you want to retire. At that point, you can take your profits and move on with your life and go go, buy an rv and travel across the country or whatever you like to do.

My friends midterm. You take profits when the news catalyst has come and gone fundamental value or news catalyst has changed or desired. Margin of return has been reached. Additional taxes, uh are something you need to pay attention to, and this can act as a safer core pillar of personal investment strategies with lower risk.

There is risk involved in mid-term investments right. There is more volatility implied than with a long-term investment. However, it's less so than in short-term stock, which is a day trade or a swing trade opportunity right. So you know if the fundamental value of the company has changed like, for instance, the ceo all of a sudden got caught in an affair with another lady.

You know he's a married man, that's gon na obviously trump the overall. You know news callus that you're expecting on the stock, which is why fundamental value matters some right, but not as much as you know that news catalyst that you're expecting to come or whatever is going to drive that price action over the next one month to 12 Months short term would be you take profits when news catalyst and technical setup requirements have been met or desired. Margin of return has been reached, have a set of rules. This is so important with short-term stocks.

You cannot go into a stock with no plan. Failing to plan is planning to fail, you do pay additional taxes and it is riskiest investment, investing uh strategy with more time allotment required, so we're gon na get into the overall set of rules that i personally follow. Right and what i think is a solid way to go about this situation, but um you want to look for a set re uh. You know a desired margin of return so that you can walk away.

Sometimes you're gon na miss additional gains, but i'm gon na show you why that's not the end of the world here in just a second, my short-term strategy right, so something, i think, is very important with short-term investing which i already mentioned, but i want to double Down on this is trailing stop-loss. So for me personally, i set a 10 training stop-loss, which means, if i paid 10, i'm willing to lose 10 of that investment down from ten dollars right, so that'd be nine dollars. If it drops to nine dollars. It'll sell me out of my position: i'm going to lose 10 percent of my investment um and then at that point it's gon na sell me out.

So i don't end up bag holding because, let's say if it drops ten percent, maybe it continues down to twenty. Thirty, forty fifty right, you don't wan na - be caught bag holding on a short term investment, because at that point, you're just losing money that could be put somewhere else. That's growing right, so uh keep that. In the back of your mind, this number looks different for every individual person.

Some people said it at five percent, some at 10, 15. 20. right. You want to look at the volatility of a stock and the typical trading pattern, and that to you is going to indicate you know how low you want to set that showing stop loss or how high you want to set it right.

So for some stocks, i'll set it a 10 more volatile stocks that i think are going to grow right i'll, set it for 15, 20, less volatile, less volatile stocks, maybe five so pay attention to. You know the volatility and the trading pattern of a stock on a short-term investment. You want to ride momentum as well, so when stocks push through resistance levels, which essentially, are you know, levels in which the stock was previously price rejected with little choppiness, i continue to ride when there is heavy selling pressure, meaning that the price action is not coming Smoothly you're seeing a lot of hard pullbacks right, i take profits. The situation and sentiment is completely dependent on on when you take profits in these situations right.

So if there's a lot of strong buying pressure, right, you're, seeing a stock open at 10 bucks - and it's just pushing it's going - 11. 12. 13. 14.

15. 16 17, with almost no selling pressure at all you're gon na know, because the charts will show you that right, you're gon na see that it's not a lot of harsh pullbacks, there's not a lot of uh. You know people taking profits. You want to keep riding that momentum, because otherwise you're just missing on the gains you sold out early for absolutely no reason right, but if you're in a stock that has some choppiness right, it's having some pretty hard pullbacks before it gets that next run.

Maybe an hour or two hours or three hours later, there's more risk involved with that you might end up becoming a bag holder much much sooner so um. I have a personal rule, and this is something that i think are very very. This is very important to talk about. Is the 10 gain rule so check this out? I've got this spreadsheet right here on on the screen, for you to check out 10 gains compound and add up very fast.

So if you get an 8, you get 8 10 returns on your portfolio. You almost double your account, so i'll just show you this here really quick you'll turn ten thousand dollars into nineteen thousand five hundred dollars off of eight ten percent returns. Twelve of these will almost triple your account. You'll be at twenty eight thousand five hundred thirty one dollars.

I think it'd, be thirteen you'd, be over triple your initial investment, so those nickel and dimes versus the home runs right. It's really really important to differentiate when a stock is a home run stock like the jags or the bngo, and when you just want to take that nickel or you want to take that dime right, so nickel and dime over time. My friends is not very exciting, but it is the surefire way to grow your portfolio with no risk right, because this is how real real good day, traders and uh you know swing traders will make the most of their money. You know swing trading, you're, typically looking for that home run, but day trading, especially um.

It can be very, very important just to collect those nickels and dimes right and it's not exciting. It's not sexy. It's not going to be that thing that you're talking about at the dinner table right, but it is a surefire way that you know you're going to grow your overall investment and continue to add to your portfolio and add value over time. That is what i have today for the presentation on taking profits.

I try to present as much good information as i could here. Hopefully, you found some value in that. If you enjoyed the video, please drop a like. It really does help support the channel and consider subscribing if you'd like to see more content like this.

Lastly, i have an affiliate link in the description box down below for weeble uh. This is version. You guys can't see it right now, but i've got version four on the desktop. It's a great platform that allows you to start trading at 4am in the pre-market.

If you use my link to get two free stocks with the 100 deposit, i received some free stocks. Great for the channel, my friends and, if you're not interested that it's totally fine. I just appreciate your support by taking the time to watch my videos. I've got arigatou gozaimasu here in the uh.

Oh, i spelled it wrong, but it's supposed to say go my arigato gozaimasu, but i spelled the wrong anyways. That's japanese, for thank you and i'll see you all in the next video, my friends. Take it easy and peace.

By Trey

25 thoughts on “Profit taking 101: short, mid, long term stocks, capital gain taxes, profit taking strategies”
  1. Avataaar/Circle Created with python_avatars Charlie Hale says:

    This is going to sound retarded as I am new. If I sell my 100 stocks and move that money into a new stock, do I still have to pay a tax? Or is it literally paying taxes as soon as it hits your bank account

  2. Avataaar/Circle Created with python_avatars lovelife says:

    If you make profits on a stock . do your profits on that stock began making you more money on that stock ? I’m super new don’t laugh if I ask a dumb question lol

  3. Avataaar/Circle Created with python_avatars lovelife says:

    What about taking just your gains from your stocks ? Any info (like how often you can and so on )

  4. Avataaar/Circle Created with python_avatars PhantomSavage says:

    New to the investing world, so I've got a question about taxes with unrealized gains/losses:

    Let's say I'm suddenly an AMC millionaire a few months from now. I'm currently brokering with a standard Charles Schwab brokerage account, so if I sell my shares all my gains go into my Schwab brokerage account, yes? But I assume that you can't actually spend money out of a brokerage account like a regular old banking checking account (like buying a TV or paying bills ect. ect.), I assume its JUST for trading stocks and such. So does a brokerage account's settlement fund (cash) count as realized gains or unrealized gains?

    What I'm trying to get at here… if I sold all 50 of my several thousand dollar AMC shares and received all that money in my brokerage accounts settlement fund and then chose to reinvest it into different stocks instead of sending it to my checking account, would I not have to pay taxes on those gains because they were never in my main checking? Or would I still have to pay those taxes the moment those shares are sold irregardless what kind of account that money winds up in?

  5. Avataaar/Circle Created with python_avatars YourDealishere says:

    I heard BNGO is a long term stock but their volatility is so high. I literally am 65% down any thoughts

  6. Avataaar/Circle Created with python_avatars Jerry Kane says:

    I never knew stock market could be this lucrative until I invested with Mr Phillip Bolton.he keeps saving me from financial hurdles

  7. Avataaar/Circle Created with python_avatars Marcela Damico says:

    the video is very good, the content and terachings are perfect but please speak slowly

  8. Avataaar/Circle Created with python_avatars Marcela Damico says:

    you need to speak slow pleaseeeee becaus the ones that are not english natives is difficult to catch you
    thank you

  9. Avataaar/Circle Created with python_avatars charlie gris says:

    Trey, been watching you for about a month. You rock dude! Keep up the good work and the high energy. From an older officer to a younger one, Bravo Zulu!

  10. Avataaar/Circle Created with python_avatars William Black says:

    Trey: how do you approach profit taking for the short to mid-term holds? Like, you want to cover your initial investment and then ride on "free shares" for a few more weeks to try and capitalize on momentum? I've read some that take half when the security doubles, but wondering if you have a systematic ladder of rules that you follow (e.g., every 20% sell 10%?). Or something like that?

  11. Avataaar/Circle Created with python_avatars Matthew Currie says:

    It's important to not dump this stock, only sell off what you need and it will sit at the moon. I want no less than 2700 a share and considering gamma into short squeezes, and inflation, if Volkswagen can go to 1000 and GME to 500, with being halted, this next one could easily go to the moon if they want people to not lose faith in the markets and stop using the market by the millions.

  12. Avataaar/Circle Created with python_avatars Travis Albright says:

    Holding a stock for year can save on taxes. But my question is does the year start when you first purchase the stock? Or when the last purchase was made? Example. Say I purchased SENS in February 2021. But next month continue to acquire more shares. Is the year mark still February or now March goin off your latest purchase?

  13. Avataaar/Circle Created with python_avatars Derek Fitch says:

    This Video is very well done and detailed and I appreciate it. Please keep up the awesome work.

  14. Avataaar/Circle Created with python_avatars Lmnop. says:

    This was so useful! For the sake of my portfolio, more like this would be greatly appreciated

  15. Avataaar/Circle Created with python_avatars Sebastian Ramirez says:

    Great stuff, man! I don't enable notifications for many channels, but you made the list.

  16. Avataaar/Circle Created with python_avatars Philip Sultana says:

    Great Job Trey, excellent video you continue to provide easy to understand content.
    Keep up the great work.
    Thank you

  17. Avataaar/Circle Created with python_avatars Rachael Conlon says:

    Most people don't understand the concept of "buying the dip" buying the dip is all about buying digital assets when their prices are down and selling off when the price rises. Holding is profitable, although trading is far more profitable. I was able to grasp the knowledge of trading crypto assets early enough, but i was still limited due to my lack of technical understanding of how to analyse the digital market, all that changed when i encountered Jayson Brian services., although i have been into numerous services but Ivan wright stands out with experience and expertise playing in his favour. I must confess it wasn't an easy task to learning the routes on trading but with the assistance of Jayson it was more easier to understand, Here are his details on Tel- gram ( @jayson_trade7) for his assistance on strictly crypto related concerns.

  18. Avataaar/Circle Created with python_avatars Rachael Conlon says:

    Fantastic video 📉😎Looking at the bullish moves top crypto assets has been having since last year, I'd call it a very big win for hodlers of btc. Though 2021 is set for much bigger gains as predicted by analysts, personally holding is still a very odd way of making gains which isn't really my thing, considering the Dynamics and low bucks one gains within the time. I prefer trading assets which has provided me a far bigger pay gain than I initially imagined, although am still far from being an expert trader. Trading is serious business that is both technical and demanding, major reason I just employ the use of signals from trade expert Jayson Brian, I will admit his signals and trade guide has been top notch and core to my trading successes, trading experience and good mastery of the market really sets him apart from other pro trader. He can be reached on Telegram (jayson_trade7) and WhatsApp (+18053034263) for all crypto related inquiries…

  19. Avataaar/Circle Created with python_avatars Jeffson Winger says:

    Well said! I made my first million from trading stocks , so thankful I met Nancy Jane Gluck who helped me with her world-class trading techniques . I earn from stocks till date

  20. Avataaar/Circle Created with python_avatars Bison Burger says:

    Dude this video is seriously awesome I’ve watched it 3 times! I do if your gonna make it a regular thing but I’d love to see more

  21. Avataaar/Circle Created with python_avatars Carlos Gonzalez says:

    Thank you for this video. I enjoy learning more and minimizing my losses.
    37% of taxes 👀

  22. Avataaar/Circle Created with python_avatars Bison Burger says:

    I’m addicted to this channel LOL man I watch all the uploads and catch every stream unless I’m working early

  23. Avataaar/Circle Created with python_avatars Surya [Jared Dietz] says:

    We want a video with the technical analysis tools you use explained please!
    Teach us to read

  24. Avataaar/Circle Created with python_avatars Party Puppy says:

    Haha, AMC will most likely fall into a long term investment for alot of us……..& that could be a good thing tax-wise

  25. Avataaar/Circle Created with python_avatars Luis says:

    This is what I’ve been waiting for! This is incredible Trey. This is gonna help a lot of people. I’m in the process of trying to do trading/investing full time and this is what I’ve been searching for. Thanks for all you do and I look forward to watching your content for years to come!

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