Great Advice on Taking Partial Exits

MSTR is a good example of the "Partial Profit" or "Let it Ride" exit strategy. I entered the breakout-pullback setup at $84, with a target under the old high a limit order set at $89.85 (I always set the target a little below the round number). From there I move my stop up to the $84 entry level to lock in the profit.

The stock continued higher today, and closed with a new breakout bar (though on relatively low volume). This provided me with an opportunity to move my stop up again and lock in more profit. I moved my new stop up to $87 to lock in a $3 gain on the remaining shares. $87 is a good level since a failure of the breakout bar would be a negative signal.

Remember not to randomly pick new stops when "stair-stepping" your stops. You don't want to be stopped out by a random movement/natural volatility. Always look for support/resistance areas when picking the new higher stops.

The partial profit exit strategy will sometimes decrease the potential gain when the second half of the trade gets stopped out. It's easy to think to yourself, "I could have made more by just taking the full profit at my original target". However, it keeps you in the huge moves. These huge moves are well worth the cost of not taking the full profit at the intital target.

STEC Short Entry: Time to Take Profits?

Is it time to take profits in the STEC short? Entry was made back on September 24th at $30.75., so we are looking at a 15-20 percent gain.

My general approach to exits is to set a target based on support/resistance levels and take a partial profit at that level. As you can see from the chart, a consolidation zone is in the $22-25 range. Thus, I took profits yesterday around $26.

After taking profits, I move my stop to entry to "lock in" the initial profit. This allows me to stick with the trade if it continues to drop, without worrying about giving back too much. If price reaches the 200 day moving average, I'll take full profits.

Trade: Partial Profits in MOS

I took partial profits in MOS today, selling half my shares at $43.10 (+10.2%). As noted in a Trade Alert sent to my subscribers, my entry was at $39.10. I have moved my stop up and will let the rest "ride". This is now a "free trade". I've locked in my profit with the possibility of more.

My reason for entry was quite simple. The market is oversold and the ag sector has shown strong relative strength in relation to the market.



I also took full profits in SIGM. I'll have more details on this trade later.

SFK Trade, Partial Exits and Poker

I received a number of similar questions about the SKF and Poker posts:

How did you determine your partial profit target for the SKF trade; and when do you decide to use a full exit versus partial exits?

I like to use partial exits when major resistance is more than 10 percent from my entry. This happens quite often with certain setups, like oversold bounce and breakouts-pullbacks.

For the SKF trade, major resistance is near the 50 day moving average at about $123. That's my target. However, that's about 20 percent away from my entry. If my targer never got hit, I would not want to give up a 10-15 percent gain. To remedy this problem I use a partial exit at around 10 percent, move up my stop to lock in that profit, and hold on until my next target is hit.

It seems that you were upset with yourself about the "big hand" in the poker post, but you said you had a 95 percent probability of winning. Why is this a bad move?

I confused some of you about what I was upset about with regards to my play that night. It wasn't the intitial $3600 bet I lost. I'll take a 95 percent probability every time. What I was upset with myself about was the $900 I lost after that hand. I made poor decisions because I was an emotional wreck, or on "tilt", because of losing based on a good decision ealier. So I wasn't criticizing my play on the big loss, it was the smaller losses after that hand that I need to work on.

Why I like to take partial profits

X is a good example of why I like taking partial profits. I would have been inclined to take full profits when I had a decent gain. Instead, I took partial profits, moved my stop up to break even, and now am reaping the benefits of today's huge breakout.



Note: I took small positions in a couple of airlines today and initiated a couple of commodity related shorts (not steel!). More details tonight.

Today's Trades: URRE, NCTY, FSLR

As I said I would in last night's trading video, I exited half my FSLR postion (125 shares) at $247.20 (entry at $223.30) for a $2987 gain (+10.7%). My current position is 125 shares and my stop is at the original entry price.

I bought 500 shares of URRE at $12.21. This stock made my watchlist via a long time reader's suggestion. We have been working on a trading setup over the past month, and this is my first attempt at trading it.

I went short 400 shares of NCTY at $25.78. This is a classic breakout-pullback setup from the short side.