{"id":4057,"date":"2014-07-01T09:41:06","date_gmt":"2014-07-01T13:41:06","guid":{"rendered":"http:\/\/www.morpheustrading.com\/blog\/?p=4057"},"modified":"2023-01-30T00:07:31","modified_gmt":"2023-01-30T05:07:31","slug":"scale-out-winning-trades","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/scale-out-winning-trades\/","title":{"rendered":"How To Scale Out Of Winning Breakout Stock Trades For Maximum Profits"},"content":{"rendered":"

\"HowTraders frequently tell me that knowing when to<\/em> sell a winning breakout trade <\/em>is one of the more challenging aspects of having a consistently profitable trading strategy.<\/p>\n

Sell too soon and you fight the feeling of regret while the stock continues cruising higher.<\/strong><\/p>\n

Get too greedy and try (typically in vein) to catch the absolute top and you give back too much profit when the stock unexpectedly corrects sharply off the highs.<\/p>\n

With my swing trading system (overview here<\/a>), the goal is always to let the winners ride, while cutting losing trades quickly.<\/strong><\/p>\n

Nevertheless, since my profit target of most breakout swing trades is a 25-30% price gain from the time of entry,<\/em> I start raising stops when winning stock trades reach that general target price area.<\/p>\n

One of most successful ways I have found to lock in profits on winning trades is through using a “split stop” strategy.<\/strong><\/p>\n

This means that my protective stop price gets split into two, with a tightened stop being used on a partial share size, and a looser stop deployed on the remaining shares.<\/p>\n

A current example of exactly how I do this can be found in…<\/p>\n

Biodelivery Sciences ($BDSI) – Protecting a 33% gain<\/h2>\n

Since my May 23 buy entry in The Wagner Daily<\/em><\/a> newsletter, Biodelivery Sciences ($BDSI) is presently showing an unrealized share price gain of 33.1%<\/strong>.<\/p>\n

This was aided by a recent breakout to a new all-time high in this hot stock pick, which is shown on the monthly chart below:<\/p>\n

\"$BDSI<\/p>\n

Since $BDSI has already surpassed my general swing trade breakout goal of a 25-30% gain (when it broke out to a new all-time high a few weeks ago), I am now going with a split stop (a tighter stop on 1\/3 of the position, with a looser stop on the remaining 2\/3 shares).<\/p>\n

Overall, my goal is to stick with the $BDSI position as long as it holds above near-term support<\/strong> of its 20-day exponential moving average (highlighted beige line on the daily chart below):<\/p>\n

\"$BDSI<\/p>\n

Specifically, I have just informed subscribers in today’s newsletter that I have raised my stop on 1\/3 share size of $BDSI to just below yesterday’s (June 30) low.<\/p>\n

If triggered, such a stop price would still secure a gain of 30% for traders who followed my buy entry<\/strong> five weeks ago.<\/p>\n

The stop price on the remaining 2\/3 position of $BDSI has now been raised to just below the 20-day EMA (presently at $11.48).<\/p>\n\n\n