Today I'm going to show you how to take profits when the momentum stock you are trading is at all-time highs.
This is a surprisingly difficult spot to be in.
Don't get me wrong, you want to be in this spot considering your stock is on fire and likely a relative strength leader. However, because there is no upside resistance, it's hard to judge when to take profits. A question that often plays tricks on a trader's mind when sitting on a profit at highs is "Do I get out here and risk giving up on bigger gains or stay in and potentially give up my big profits?"
In today's video we analyze how to solve the problem in this situation using a five stop process.
Step 1: Analyze the past history of the stock when it's at all-time highs.
Step 2: Analyze the character of the move to highs.
Step 3: Ask yourself how the market and sectors impact the stock.
Step 4: Know why the stock is moving to highs. Is the catalyst earnings, a major fundamental event, or rumor based?
Step 5: Focus the most on how the above 4 steps impact your reward-to-risk ratio (RR).
So watch, learn, and let me know what you think!
Remember members of the swing service get all of these trade alerts intraday in real time.
This swing trading service is great for those that work and can't monitor the computer all day. We have in-depth nightly reports on the game plan for the day/week and all stock picks that I trade will be alerted and emailed to you.