This is the worst mistake I see investors make with take profit

Added: 2026-06-01

[00:00:01]This is the worst mistake I see investors make with taking profits, and it is costing them a fortune. I quit my job as a hedge fund manager so I can show you the pro tricks to make more money in your investments. And knowing when to take profits on a winning position is one of the hardest skills in investing. Nobody talks about it honestly. So, here is the framework we actually used at the hedge fund. Rule number one, never sell just because a stock went up. That is the most expensive mistake retail investors make.

[00:00:30]A stock doubling does not mean it is expensive. It means that the market is starting to agree with you. The question is never what the stock has done. The question is what the business will do next. Rule number two, take profit in thirds. When a position is up 30% sell 1/3. Lock in the gain, let the rest run.

[00:00:50]When it is up 60% sell another third.

[00:00:53]Now your remaining position is essentially free. Whatever happens next is pure upside. Rule number three, re-evaluate the original thesis. You bought the stock for a reason. Is the reason still intact? If Micron is up 50% because of EPS is growing 327% and the AI demand is still accelerating, the thesis is stronger than when you bought it. Do not sell. If the thesis has changed, the valuation is stretched, earning revisions are turning negative, the catalyst has played out, this is when you exit regardless of gain or loss. Rule number four, use covered calls to create your own exit. Instead of selling the stock outright on the way up, sell a covered call at your target price. You collect a premium today. If the stock hits your target, you get called out at the price you wanted anyway. If it does not, you keep the premium and still own the stock. Pros do not just sell winners. They engineer their exits. Follow because this is exactly how the institutional money manages winning positions.