Section 4 · Momentum Basics
Profit Targets
Measured moves, R-multiples, and the art of the partial exit
Knowing When — and How — to Take Profits
Entering a trade is exciting; exiting it profitably is the actual skill. Most beginners either take profits too early (scalping pennies when a dollar is available) or hold too long (turning a winner into a loser). Professional momentum traders use three frameworks to plan exits before they enter. First: measured moves. If a stock breaks out of a consolidation pattern that is $1 wide, the initial target is $1 above the breakout level. The height of the base projects the move. Second: R-multiples. If your stop is $0.50 away from entry, your first target should be at least $1.00 away (2R) and your stretch target at $1.50 (3R). Anything less than 2R on a momentum trade is not worth the risk. Third: partial exits. Rather than selling everything at one price, sell half at 2R to lock in profit, move your stop to breakeven, and let the remaining half ride toward 3R or beyond with a trailing stop. This strategy removes pressure and allows winners to run without risking the gain you've already earned.
3 things to know
Measured move targets project the height of a base or consolidation pattern above the breakout point.
Partial exits — selling half at 2R — lock in profit and reduce stress while letting winners run.
Never take a trade with a target less than 2x the distance to your stop. Minimum R:R is 1:2.
Dive Deeper
Key vocabulary — tap each card
Practice
Profit Target Calculator
Minimum 2R Target
100 cents from entry
Your first profit target must be at least 2x your stop distance. Move stop to breakeven after hitting it.
Did you know?
Professional traders often use a rule called 'scale out, not out.' They never sell 100% of a position at the first target — they sell enough to cover risk and let the rest run free. This is how large gains are captured without greed driving the hold.