{"id":5075,"date":"2017-06-22T10:32:20","date_gmt":"2017-06-22T14:32:20","guid":{"rendered":"http:\/\/www.morpheustrading.com\/blog\/?p=5075"},"modified":"2022-10-24T00:38:40","modified_gmt":"2022-10-24T04:38:40","slug":"hold-winning-stocks-longer","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/hold-winning-stocks-longer\/","title":{"rendered":"Learning From Mistakes: Hold Your Winning Stocks Longer!"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/hold-winning-stocks-longer\/#As_the_first_half_of_2017_rolls_to_a_close_we_recently_reviewed_our_year-to-date_trading_performance_Specifically_weve_looked_at_what_we_did_right_and_what_could_have_been_better\" >As the first half of 2017 rolls to a close, we recently reviewed our year-to-date trading performance. Specifically, we&#8217;ve looked at what we did right and what could have been better.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/hold-winning-stocks-longer\/#Report_Card\" >Report Card<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/hold-winning-stocks-longer\/#Give_And_Take\" >Give And Take<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/morpheustrading.com\/blog\/hold-winning-stocks-longer\/#Ring_Central_Rally_RNG\" >Ring Central Rally [$RNG]<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/morpheustrading.com\/blog\/hold-winning-stocks-longer\/#React_%E2%80%94_Dont_Predict\" >React &#8212; Don&#8217;t Predict!<\/a><\/li><\/ul><\/nav><\/div>\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"As_the_first_half_of_2017_rolls_to_a_close_we_recently_reviewed_our_year-to-date_trading_performance_Specifically_weve_looked_at_what_we_did_right_and_what_could_have_been_better\"><\/span>As the first half of 2017 rolls to a close, we recently reviewed our year-to-date trading performance. Specifically, we&#8217;ve looked at what we did right and what could have been better.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Regular and honest self-assessment of your trading performance is crucial to your long-term success.<\/p>\n\n\n\n<p>Our assessment of Morpheus is that stock trading has been fantastic overall; our model portfolio is on track for another year of big wins.<\/p>\n\n\n\n<p>However, we recently made the mistake of selling a winning stock way too early, and for the wrong reasons.<\/p>\n\n\n\n<p><strong>Continue reading<\/strong> for a humble walk-through of that trading mistake, and to pick up a valuable lesson that can help you avoid the same blunder in the future.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img loading=\"lazy\" decoding=\"async\" width=\"850\" height=\"400\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2017\/06\/pearsons-law-quote.jpg\" alt=\"\" class=\"wp-image-5079\" title=\"\" srcset=\"https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2017\/06\/pearsons-law-quote-110x52.jpg 110w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2017\/06\/pearsons-law-quote-300x141.jpg 300w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2017\/06\/pearsons-law-quote-768x361.jpg 768w\" sizes=\"auto, (max-width: 850px) 100vw, 850px\" \/><\/figure>\n<\/div>\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Report_Card\"><\/span><strong>Report Card<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The first half of 2017 has been great for our style of momentum trading because small and mid-cap growth stocks have been <a href=\"https:\/\/stockcharts.com\/articles\/tradingplaces\/2017\/05\/nasdaq-russell-2000-flexing-their-relative-muscles.html\" target=\"_blank\" rel=\"noopener\">flexing their muscles<\/a>.<\/p>\n\n\n\n<p>A few stock picks from the <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\">newsletter<\/a> and realtime trading room have produced big gains for subscribers this year:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>+80% in $MOMO<\/li><li>+60% in $AAOI<\/li><li>+20% moves in $CTRL, $MDSO, and $BZUN<\/li><\/ul>\n\n\n\n<p>Our current model portfolio remains in pretty good shape too:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>+39% in $SQ (open position)<\/li><li>+29% in $BABA (open position)<\/li><\/ul>\n\n\n\n<p>However, we have made our share of<strong> trading mistakes along the way.<\/strong><\/p>\n\n\n\n<p>Probably the biggest slip we made this year was letting a broad market selloff influence our decision making in an individual stock trade.<\/p>\n\n\n\n<p>Even for the most experienced trader, holding a winning position for a big gain when the rest of market is tumbling down is indeed challenging.<\/p>\n\n\n\n<p>But in our<strong> continual quest for trading perfection,<\/strong> we are always looking for ways to improve on the challenges.<\/p>\n\n\n\n<p>Here&#8217;s what we recently learned when Ring Central ($RNG) zoomed 40% higher after we made the mistake of selling it without a valid cause.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Give_And_Take\"><\/span><strong>Give And Take<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>When aiming for quick stock gains of 10-15% over a 1-2 week period, swing traders can often sell into strength, not be forced to sit through an ugly market selloff.<\/p>\n\n\n\n<p>However, the goal of our trading system is to produce<strong> super-sized stock gains of 40-100%<\/strong> with an average holding period of 2-6 months.<\/p>\n\n\n\n<p>In order to generate these types of returns (as we recently did in <a href=\"https:\/\/www.morpheustrading.com\/blog\/relative-strength-trading\/#momo\" target=\"_blank\" rel=\"noopener\">$MOMO<\/a>), we MUST be comfortable sitting through short-term pullbacks of 5-15% in a stock, or 1-3% in the S&amp;P 500\/NASDAQ while heavily long.<\/p>\n\n\n\n<p>How we react under pressure during these brief, but often sharp, declines determines how well our <a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\"><em>Wagner Daily<\/em><\/a> portfolio performs during any quarter or year.<\/p>\n\n\n\n<p>Jumbo returns do not come easy, but they are possible when <strong>sticking to our trading plan<\/strong> and ignoring outside influences.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Ring_Central_Rally_RNG\"><\/span><strong>Ring Central Rally [$RNG]<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Our biggest mistake this year was caused by a lack of comfort in holding our winning position in $RNG through an ugly, one-day selloff in the market.<\/p>\n\n\n\n<p>But before we get into where we made the mistake, let&#8217;s first take a look at our initial buy entry into $RNG:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/%7Erick\/\/charts\/2016\/170621SPY1.png\" alt=\"$RNG 1 \" title=\"\"><\/figure>\n\n\n\n<p>As annotated by the blue horizontal line, Ring Central broke out to new all-time highs from a <a href=\"https:\/\/new.morpheustrading.com\/blog\/best-stock-breakouts\/\" target=\"_blank\" rel=\"noopener\">valid basing pattern<\/a> in mid-February.<\/p>\n\n\n\n<p>We missed the first breakout, but patiently waited for the price action to tighten up and produce a low-risk entry point.<\/p>\n\n\n\n<p>That happened on March 10, when we alerted subscribers of our entry into&nbsp;$RNG over the prior day&#8217;s high, with a stop loss a few percent below the 20-day moving average.<\/p>\n\n\n\n<p>After buying $RNG, the position immediately fell under a bit of pressure because the price closed well below the intraday day, and on increasing volume (on March 10).<\/p>\n\n\n\n<p>$RNG bounced off support (at $26) to a fresh high less than two weeks later, but on lighter volume.<\/p>\n\n\n\n<p>Lacking institutional accumulation, the breakout failed and $RNG tumbled 4% lower on higher volume on March 21.<\/p>\n\n\n\n<p>Notably, that day&#8217;s selloff&nbsp;coincided with a decline of 1.4% in the S&amp;P 500 ETF ($SPY).<\/p>\n\n\n\n<p>The combination of the failed breakout in $RNG and ugly breakdown in the S&amp;P 500 prompted us to ditch the stock to cut long exposure in case of continued market selloff &#8212; big time mistake!<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"React_%E2%80%94_Dont_Predict\"><\/span><strong>React &#8212; Don&#8217;t Predict!<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>We should have carefully analyzed the price and volume action of $RNG then, or even its relative strength vs the S&amp;P 500.<\/p>\n\n\n\n<p>Instead, we unfortunately decided to sell, in trying to prevent what we expected (predicted) would become a loss.<\/p>\n\n\n\n<p><strong>And this is precisely where we went wrong.<\/strong><\/p>\n\n\n\n<p>Following our sale of $RNG on March 22, the stock cruised another 40% higher over the next two months.<\/p>\n\n\n\n<p>It did not even close below support of its 20-day exponential moving average a single day during the rally.<\/p>\n\n\n\n<p>Check it out:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/morpheustrading.com\/~rick\/charts\/2016\/170621SPY2.png\" alt=\"$RNG 2 \" title=\"\"><\/figure>\n\n\n\n<p>Even now, a few months after our mistake, the chart above is still tough to look at.<\/p>\n\n\n\n<p>Yet, it provides us with an excellent reminder and valuable lesson.<\/p>\n\n\n\n<p>Here&#8217;s the part you&#8217;ve been waiting for, so grab your smartphone or notebook and jot down these two tasty tips:<\/p>\n\n\n\n<p><strong>1. Always REACT to price action &#8212; Don&#8217;t PREDICT it!<\/strong><\/p>\n\n\n\n<p><strong>2. Trade what you see, NOT what you think.<\/strong><\/p>\n\n\n\n<p>Although $RNG sold off with the market, its volume on the 4% down day (March 21) was not even above average.<\/p>\n\n\n\n<p>Nor did the stock even break below near-term support of its 20-day exponential moving average or prior low.<\/p>\n\n\n\n<p>Finally, our original stop was not even close to being triggered.<\/p>\n\n\n\n<p>This means we violated one the most basic rules of trading:&nbsp;<em>Plan the trade, and trade the plan.<\/em><\/p>\n\n\n\n<p>It&#8217;s never comfortable to review a scenario and admit your mistakes, but doing so leads to massive personal growth as a trader &#8212; and in life too.<\/p>\n\n\n\n<p><em>The Wagner Daily<\/em>&nbsp;scored plenty of big wins in the first half of 2017, and we&#8217;re focused on profiting from the top stocks in the second half.<\/p>\n\n\n\n<p><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener\"><strong>Subscribe now<\/strong><\/a> and come along for the ride!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As the first half of 2017 rolls to a close, we recently reviewed our year-to-date trading performance. Specifically, we&#8217;ve looked at what we did right and what could have been better. Regular and honest self-assessment of your trading performance is crucial to your long-term success. Our assessment of Morpheus is that stock trading has been [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-5075","post","type-post","status-publish","format-standard","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/5075","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=5075"}],"version-history":[{"count":2,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/5075\/revisions"}],"predecessor-version":[{"id":14202,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/5075\/revisions\/14202"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=5075"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=5075"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=5075"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}