Want to make more money? Hold your trades longer. Here are some thoughts on Twitter (TWTR). (June 15, 2018)

by DAN TWTR 
Here is a Free Chart Video for you on Twitter ( NYSE: TWTR ). Here is why: I think it is time to be taking some profits. I put this stock on our Growth Stock List a while ago, you can see on the 11th here. All told, I was very late. This would have been the time to put it on, right at the bottom. But I decided to put it on here just because I could see what was happening with the chart. Then I am looking at the growth prospects for the company and this is a much different company than it was back here when this thing hit the “enthusiasm” high of over $70.00 right after the IPO. This to me looked like a “screaming” short for a lot of different reasons.

Well, all these months and years later we’ve got a 1, 2, 3 triple bottom at 15 and now the stock is on it’s way back up. So I am looking at this stock and I see $70.00, that is not a prediction but it absolutely is a price target. The reason is that if the stock got there before on enthusiasm that turned out to be unfounded it can get there again now that the fundamentals are starting to get better. The company is growing; they are actually making money, which is kind of rare these days it seems like. I think the stock has a lot of upside from here.

I am talking about, though, a combination of trading and investing or just holding. This is what I am talking about: We put the stock on the list; I forget, I think it was an upgrade or something here where the stock popped. Maybe it is my age, maybe it is just because I am always looking ahead as opposed to the rear view mirror but I forget exactly why this stock popped up. I am pretty sure it was an upgrade. Anyway, the stock pops up here and my suggestion was, you have got to take some profits.

But here is the thing, I have been pounding into people’s heads for a long time this idea that you don’t just want to be all in or all out; particularly all out. It is easier for people to kind of build positions. A lot of traders want to start small and then they will add a little bit more and then they add a little bit more. Maybe it works and maybe doesn’t. But people tend to be a little more cautious when they are buying and then they just gradually build a position. Hopefully, you are only buying when you are up as opposed to when you are down and you are averaging down.

It is different when you are selling. A lot of times traders make a mistake of looking at a stock and saying, “Okay, well now I have got to sell, I have got to take profits.” And Boom! They punch out of the whole thing. I have just found, in my individual trading, that that doesn’t work. If you get in a habit of tracking your trades and not just looking at when you bought, where you bought, how much you bought. When you sold, where you sold, how much you sold but also tracking the stock afterward. It is one thing to buying and selling a stock and then looking at it and saying, “Oh, okay I did this. I did that. Oh, I did this wrong, I did that right.” That’s fine.

But unless you go back after the fact and look and see what happened after you exited the trade you are really loosing out on a great lesson in your trading. And that is were you actually taking profits at the right time? I am not talking about top ticking the stock. I am talking about, was there an objective reason for you to be closing out your entire position? Or was it just kind of a mojo thing that you just decided, Okay, I think this was the top and so I will exit. And by the way, that’s okay if that is what you are doing. If you say, “Well, I am happy with the money that I am making so I exited the trade.” Hey, that is a good strategy. It’s fine it works.

But can you do better? Can you have a better strategy where you are actually able to hold on to a stock that is working for a longer period of time? Because I mean to tell you, it is easier to hang on to a stock that is working than it is to find another one, just generally speaking. If you have got a good idea you stick with it. You don’t want to get out too early. If you can go back and look at the trade, after the fact, you will see whether you actually sold at the right time.

What I do is, I just trade like a risk manager and I say, “I have got a decent profit here. The stock looks like it is stalling. I’m not real sure if it is done yet but I will book some profits.” Sometimes you are going to feel like an idiot when you are trading. You will, when you are trading. You are going to feel dumb, like, oh crap, I did the wrong thing. That is just part of the deal; if your ego is so fragile that you can’t handle that, then seriously, you must not trade, you have got to get out of here.

The idea is though is, you take some profits here. Maybe the stock is going to pullback, I’m not sure but I got a good profit. I buy here, I decide to take some profits here on this big move but I am going to leave some on the table. The reason is that as I look at this it just seems to me like this is just getting going; it is just getting going. But I don’t know, so I am going to take some risk off the table and I will leave some on. Now, the stock starts moving higher and you are feeling like a champ for keeping some on the books; for not just closing out everything.

Now, you are feeling like a chump if you did close everything out and you sold, basically on the first red day here. You got out of the whole position and what have you missed? You have missed another 15 percent. And so what I want you to do, I could talk about this for hours but I won’t. The next time that you want to close everything out, do yourself a favor, close out half and then put a stop on the remaining that is 2 percent lower than the exit that you just took. If you decided to sell half at 39.35 (I am just picking a number), then fine. Then sell half and then put a stop down at 38.25, whatever it is. Same thing here, you are going to sell this; sell your entire position at 45.80? No. Sell half and then extend this down 2 percent; 44.87 is where you want to put your stop; I would probably extend it a little bit lower and go 44.35.

Why am I doing this? I am doing this because I want to show you that over time staying in a trade for longer will give you more money to trade with. It is good to be taking profits on the way up but to close out your entire position, that is the final assessment that you make that the stock is done going up. That my friend is a harder thing to do than you might imagine.

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