End of Week Recap: Mar 8th-12th
The best part of trading: Taking gains! 🤑
Let’s take a look at two picture perfect trades that we took gains in this week:
$WWE (World Wrestling Entertainment)
First up is WWE. This trade was a textbook example of a swing trade. Here were the stats when I found this setup:
- CURRENT PRICE: $49.96
- 1st TAR: $58.25
- S/L: $48.00
As you can see from the chart above, it had some Ups and Downs on some days but overall kept moving up. This is why we set our Target and Stop Loss once we get into the trade with an OCO (One Cancels Other) order — so we don’t get nervous when we see a down day and panic sell. You gotta let the system do its thing. Trust your trading plan, it’s why you have one.
When I posted the update on WWE, I mentioned that we needed to break above around $54.75 to then fill that gap and really take off. Which as you can see above, it did on Monday 3/8, and just like I said, price took off from there. Now, I’m not psychic, I just read the chart and listened to what it was telling me. You can see that big gap down in February and infer that it’ll need to break through that Resistance to keep running.
Yesterday morning, price hit the Target and sold before I even woke up. This is why it’s great to set your orders in advance. I try to make this process as automated as I can to ensure that I don’t miss an entry or exit when not near the phone, computer, or even awake.
Now for this trade I didn’t have a 2nd Target, as the 1st Target was near the ATH (All Time High) so I just set it to sell all my shares (but we’ll see in the next chart why you usually don’t want to do that). But it turns out this worked out to my benefit because right after it hit the Target, the RSI went above 70, which signals it’s overbought and price will be coming back down soon (which is why I take profits whenever it goes above 70 RSI) and sure enough it did. On top of that, the TMO flipped to Red so that’s a good reason to close out the trade and move that money into a new setup so we can start this allllll over again!
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$GPRO (GoPro Inc)
And on to GoPro. Another example of a swing trade that couldn’t have gone better. Let’s take a look at the stats from last Sunday 3/7:
- Current Price: $8.08
- 1st TAR: $9.20
- 2nd TAR: $10.50
- S/L: $7.00
Now the first day out of the gate was scary, price opened higher, but eventually closed down and the trend bar switched to red. But again, no need to panic as we have a trading plan for a reason and trust our system. That’s why we keep our S/L just below support because price moving up and down within “the box” is totally normal. The indicator were still good and that’s all the sign we need to stay in the trade and not panic sell. If anything, you should look at this as an opportunity to get in at a lower price or add to the position to cost average down.
You can see that after that, it just kept running! It hit the 1st Target of $9.20 quicker than expected, so you take some profits but don’t fully close the position. How much you close out at each exit point is totally up to to set for your trading, could be 1/3, or 1/4, or 1/2 depending on the size of your position. Let’s go with 1/4 of the position at 1st Target. So we let the rest of it keep riding up. Now you’ll notice the day it hit the 1st Target it actually went higher and you might be thinking, “Damn, I shoulda set my target higher to maximize my gains!” I tend to be conservative with my Targets because I’d rather go with one I know will hit rather than trying to squeeze every penny. One of the main rules of trading: Don’t be angry about leaving money on the table, be happy with the profits you made.
Today we hit our 2nd Target, and again it went even higher! So we then sell off another 1/4 of the position. We’re now down to half of where we started.
Now normally, my exit points are either a) hitting a Target, b) reaching 70 RSI, or c) signs of a reversal aka downtrend. But today it hit the Target AND 72 RSI, so it’s up to you if you want to sell another 1/4 or maybe even more/less. BUT looking at the TMO, this trend is still looking very strong for the time being so it might be wise to just let that other half ride. Going over 70 RSI doesn’t mean it’s gonna fall back down immediately, some stocks go way above 70 and hang around up there for a bit, but trust me, it’s overbought and will drop back down eventually. But for the time being, the charts are showing us that we’re still in a strong uptrend. This is why I mentioned above in the WWE analysis, that normally I do not sell ALL of my shares when hitting a Target. I wait until the charts show confirmation of a reversal (lately I’ve been favoring the TMO for this, it’s almost never wrong!).
One thing you need to be sure to do is always move your Stop Losses up as the trade moves in your favor. Right now, I’d set my S/L at $9.20 that way if it drops, you at least protect the gains at our 1st Target price. Now why not our 2nd Target you might ask? Because that’s way too close to the current price (the current ATR is about $0.71). Look how large the moves are on a given day. If you set it too close you can get shaken out of the trade too early from normal price movement. Be smart, not greedy.
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