{"id":4338,"date":"2015-04-15T07:09:40","date_gmt":"2015-04-15T11:09:40","guid":{"rendered":"http:\/\/www.morpheustrading.com\/blog\/?p=4338"},"modified":"2022-04-06T15:05:02","modified_gmt":"2022-04-06T19:05:02","slug":"3-tips-winning-stocks","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/3-tips-winning-stocks\/","title":{"rendered":"3 Top Tips From A 20%+ Winning Stock Trade"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-4340 size-medium\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2015\/04\/tips-300x296.jpg\" alt=\"tips\" width=\"300\" height=\"296\" title=\"\">Recently, we locked in\u00a0an average share price gain of 23% through buying and selling shares of NXP Semiconductors ($NXPI), and we are still long\u00a0one-third of the initial position as well.<\/p>\n<p>As always, a few\u00a0valuable lessons and tips from this trade can be added to your trading arsenal, so let&#8217;s take a simple, objective look at why we bought\u00a0$NXPI in our <a title=\"Sign up for The Wagner Daily newsletter\" href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"nofollow noopener\">nightly stock picking newsletter<\/a>, and what was learned from it as well. Read on&#8230;<\/p>\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\/3-tips-winning-stocks\/#The_Setup\" >The Setup<\/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\/3-tips-winning-stocks\/#The_Buy_Entry\" >The Buy Entry<\/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\/3-tips-winning-stocks\/#The_First_Exit_27_Gain\" >The First Exit (27% Gain)<\/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\/3-tips-winning-stocks\/#The_Second_Exit_18_Gain\" >The Second Exit (18% Gain)<\/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\/3-tips-winning-stocks\/#Top_3_Takeaways\" >Top 3 Takeaways<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"The_Setup\"><\/span><strong>The Setup<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>At the beginning of the year, $NXPI first caught our attention after following up an impressive 40% rally (from late 2014) with a period of price consolidation above its 50-day moving average.<\/p>\n<p>As January progressed, the price action tightened up a bit more, causing the semiconductor stock to oscillate in an 8% price range, while still holding above key support of its 50-day MA.<\/p>\n<p>On February 6, $NXPI tested the high of its band of consolidation by probing above the $82 level on heavier than average volume.<\/p>\n<p>Two days later, the stock formed a tight <a title=\"Inside day defined\" href=\"https:\/\/www.investopedia.com\/terms\/i\/inside_day.asp\" target=\"_blank\" rel=\"noopener\">inside day<\/a>\u00a0on lighter volume, giving us a pretty low-risk entry point based on the bullish price and volume action of\u00a0February 6.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"The_Buy_Entry\"><\/span><strong>The Buy Entry<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>After forming the inside day, we listed $NXPI as a potential buy entry in the <em>Watchlist<\/em> section of the February 11 issue of <em><a title=\"Test drive the newsletter\" href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"nofollow noopener\">The Wagner Daily.<\/a><\/em><\/p>\n<p>Specifically, we told subscribers we were placing a buy stop to enter the trade on a move above the high of the February 10 inside day.<\/p>\n<p>The daily chart below shows the actual trade setup at that time:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2014\/150415NXPI1.png\" alt=\"$NXPI BUY SETUP \" title=\"\"><\/p>\n<p>As anticipated,\u00a0$NXPI triggered our buy entry that day and subsequently cruised 6% higher before stalling and waiting for near-term support of the 10-day moving average to catch up to the price (which it did on February 23).<\/p>\n<p>As shown on the following chart, $NXPI gapped sharply higher on a news-driven move that occurred on March 2, then again traded in a tight, sideways range while waiting for the 10-day MA to catch up (which occurred on March 12).<\/p>\n<h3><span class=\"ez-toc-section\" id=\"The_First_Exit_27_Gain\"><\/span><strong>The First Exit (27% Gain)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>On March 23, the stock showed its first sign that a potential short-term pullback may be around the corner by forming a bearish engulfing candlestick pattern.<\/p>\n<p>As such, we made a judgement call to lock in some profits by selling about 1\/3 of the position size the following day (March 24).<\/p>\n<p>On that first exit at $104.83, subscribers who followed the trade setup netted approximately a 27% gain.<\/p>\n<p>On the chart below, notice how a touch of the 10-day MA (dashed blue line) perfectly acted as\u00a0near-term price support several times after the initial February 11 breakout:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2014\/150415NXPI2.png\" alt=\"$NXPI first sell \" title=\"\"><\/p>\n<h3><span class=\"ez-toc-section\" id=\"The_Second_Exit_18_Gain\"><\/span><strong>The Second Exit (18% Gain)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>After locking in profits on partial share size, we tightened the protective stop to protect gains on another 1\/3 of the position size.<\/p>\n<p>On April 6, $NXPI gapped down on the open and clipped that\u00a0stop (beneath the April 1 low), enabling us to lock in an 18% price gain on the second third of the position (sold at $97.65).<\/p>\n<p>The second exit is shown below:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.morpheustrading.com\/\/~rick\/\/charts\/2014\/150415NXPI3.png\" alt=\"$NXPI second sell \" title=\"\"><\/p>\n<p>As of today (April 15), we\u00a0remain long the final third of the position with an unrealized gain of about 20%.<\/p>\n<p>From here, the plan is to buy more shares with another low-risk entry of a\u00a0pullback to the area of the rising 50-day moving average (currently just below $95).<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Top_3_Takeaways\"><\/span><strong>Top 3 Takeaways<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>There are a few great tips (mini lessons)\u00a0to be learned\u00a0from this trade review, which will surely help to increase your profits in\u00a0<em>any<\/em> stock trades you make in the future:<\/p>\n<ol>\n<li>On high-momentum stocks that have broken out and then enter into a <a title=\"How consolidation patterns help you find the best stocks to buy\" href=\"https:\/\/www.morpheustrading.com\/blog\/best-stock-breakouts\/\" target=\"_blank\" rel=\"noopener\">sideways consolidation pattern<\/a>, the <em>10-day moving average is a simple, yet highly reliable indicator<\/em> to help determine when the stock may be ready to resume its ascent.<\/li>\n<li>When sitting on a winning stock,<em> patient and disciplined traders are rewarded. <\/em>Although we bagged a 27% gain on the initial exit of one-third of the position, realize that its required the patience to hold the trade for six weeks.<\/li>\n<li>Proper trade management is nearly as important as picking the right stocks. $NXPI is just one of many stocks that have zoomed sharply higher in recent months, but even traders who picked one of the right stocks could still have easily realized a much smaller gain (or possibly even loss if the timing is wrong). That&#8217;s why we always\u00a0provide exact and updated\u00a0entry, stop, and target prices for each trade setup in our <strong><a title=\"Subscribe now\" href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"nofollow noopener\">swing trading newsletter<\/a><\/strong>; picking a winning stock is one thing, but <em>knowing the right time\u00a0to buy and sell is a whole different ballgame.<\/em><\/li>\n<\/ol>\n<p>Overall, perhaps the biggest tip\u00a0for newer traders (and a reminder for experienced traders) is that <strong>losing trades should always be dumped quickly and without hesitation,<\/strong> but\u00a0winning trades should always\u00a0be held until price action gives a valid reason to sell.<\/p>\n<p>As long as the price action of $NXPI remains bullish, we will continue to hold (and possibly add to) the remaining third of our position that is currently showing a 20% unrealized share price gain.<\/p>\n<p><em>In which stocks has patience and proper trade management paid off for you? We&#8217;d love to hear about it, so drop us a comment below.<\/em><\/p>\n<div class=\"cfmonitor\" style=\"padding-top: 30px;\"><center><script src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\" async=\"\"><\/script><!-- Footer of content - Large --> <ins class=\"adsbygoogle\" style=\"display: inline-block; width: 336px; height: 280px;\" data-ad-client=\"ca-pub-7565144363001883\" data-ad-slot=\"6017996961\"><\/ins><script>\/\/ <![CDATA[\n(adsbygoogle = window.adsbygoogle || []).push({});\n\/\/ ]]><\/script><\/center><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Recently, we scored more than a 20% gain from trading a high-momentum semiconductor stock. Here are three excellent takeaways from that trade setup, which will increase your chances of profitable stock trades in the future.<\/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-4338","post","type-post","status-publish","format-standard","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4338","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=4338"}],"version-history":[{"count":1,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4338\/revisions"}],"predecessor-version":[{"id":11292,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4338\/revisions\/11292"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=4338"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=4338"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=4338"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}