One of the biggest risks in trading is holding on to a winner until it turns into a loser. Not long ago we spotted a great set up in Dexcom. (check it out here) It did exactly what we expected and popped up nicely. If you grabbed it when we wrote about it you saw a nice gain. But if you held it too long, you gave some or all of that right back.

Holding on is very defendable. Sometimes you see people who have been holding that stock a while sell to grab gains and the stock dips before it continues its rise. So what is DXCM doing? Let’s look at the chart:

You can see the bounce upward recently followed by the drop. What is really important is the longer down trend here. At this point DXCM is good for short term trades. If the drop extends, consider a put option to leverage the short term move. But to get into any kind of long position we are going to want to see it turn back up and ideally move toward the 50 day moving average.

At the end of the day, when you have a winning position, decide which would be worse. Missing out on more wins or eating a loss. It is a lot easier to lock in the win and put the money in the bank.

Keep learning and trade wisely,

John Boyer


Market Wealth Daily