So in this video, we are going to be talking about how to let your winners run and why most people who follow this advice end up losing. But for a bit of context, let me just go ahead and say that letting your winners run is a piece of advice that has always worked me. It's one of those phrases like buy low and sell high that is true in theory, but it's not very helpful. Most people rationalize blindly holding positions by saying that they're just letting the winners run.

they're just letting their winners run. So it's fine to blindly hold the positions. but the root of it is good advice. You do not want to unjustly close your winning positions.

That is like shooting. The winning horse traders are already overwhelmingly more likely to hold a position if they've already won some profit in it. But the fact of the matter is that just because something is up doesn't mean that it's going to continue going up. In fact, if it's overextended, it's actually more likely that it's going to go down on average.

But sometimes it continues running and people are like hey, wait I didn't follow any of the trading rules and I still made extra money. They're like hahaha I beat the odds Charlie Well friend, I'm sorry to tell you that it does not matter how much you make on a single trade. If you use bad habits on that trade, it doesn't matter how much you made, you actually just lost money. But wait, how do you lose money if you made money? cuz long-term losses are often disguised as short-term profits, Your short-term profits are just hiding long-term losses because in the long run, practicing bad habits is going to hurt.

you. Need to understand that taking extra profits on one trade means that you're going to be losing out on future trades where you wouldn't have been so lucky. But in any case, folks, we're going to be going over how to let your winners properly run and how to not fall into this category where you're prioritizing short-term profits instead of long-term profits and all that it is that I ask in return is that you hit that ravishing like button? Make sure to let that ravishing miss run. And of course, do not forget to subscribe for more short, sweet and simplified videos on how to trade the stock market.

Okay, so we love to start with examples. Let's go ahead and start with OC GN Now at Zip Trader, we like to focus on having concrete entry points and concrete exit points. That means waiting for price action confirmation to enter and validation to exit. For example, this would mean taking a position at both price strength confirmation over our blue short term SMA line and directional strength over our red directional SMA line right here and then holding it until a conservative validation point upon the break of priced ranks here.

Now in this case, that would have meant a 25% increase in value, but many people would look at this and say but Charlie that's great that you're able to take most of the move, but there's still more move on the table. Are you stupid? We're traitors. We need to take all of the moves. Charlie It's a winner.

Why are you selling now? And this is exactly where we get into the concept of letting your winners run. The problem is that once you're validated out, the position is no longer a winner. That is because in the long run positions that lose dramatically, they're priced ranked in a short time period are going to be heading for a continued pullback. and if you trade like this on every trade, you're going to lose money.

If you make a habit to hold through validation in the long run, you're going to lose money. But then you might say, but Charlie that is just too conservative I Want to be a flaming Flamingo? Selling out at this later validation point would have met more profit. So Charlie why would you recommend selling out earlier? It's still a winner. And hey, it's easy to say that you could have just held past validation and fine sign, but when you are actually trading, this is a very dangerous maneuver.

Let me ask you this question: If you are unwilling to sell at validation here, why would you be more likely to sell at Validation here? What makes you think that all of a sudden you'd have this revelation to sell here? You wouldn't have that revelation If you aren't following rules for concrete exit points that is screaming sell here. Why would you all of a sudden decide to sell out here? The answer is, you wouldn't because you continue telling yourself that you need to let your winners run. And this folks is the slippery slope of ignoring concrete exit points and as they result, if you did that, you'd end up losing the extra upslide. Anyways, the point is, unless you have a magical crystal ball that tells you exactly when the stock is going to reverse, my suggestion is to sell out at a concrete exit point.

So with all that being said, what is the correct way to let your winners run? In this case, well, the correct way is to let it prove to you that it is indeed a winner. I'd like to say proof not promises. Let the price action prove it to you, not just promise you great things. For example, we get confirmed here and we have a confirmation of price strength.

Thus, we can take an entry and let it run all the way up to validation. Then it's at this point where the price action is debating whether or not it is indeed a winner. So we close our position because at validation when it makes sense, we close our position when all of a sudden we have unsure price strength or we have a deprecating price break. That's a huge factor pushing the odds against us.

So we closed our position because it can't figure out what direction it's going. There is no reason to hold a position that has uncertain price strength that is like taking your girlfriend with amnesia to a singles bar. It just doesn't make sense. But then right here it proves to you again that it has Prai strength and it gives us a confirmation with that first green candlestick opening above the SMA line.

Then we can buy any confirmation and again sell out at validation. So what just happened in effect? Well, we did let our winner run. We took profits from both parts of the move and we executed out at prescribed validation exit points. If we had just simply held through this period of validation, we would have likely ended up selling out at a random point down here.

Because again, if you aren't selling out at concrete exit points, you're going to end up selling out whenever it feels like it's the right time and the stock market doesn't care about your feelings. So have a concrete exit point folks. So selling out add validation actually allowed you to take most of both parts of the move while only losing a bit of upside around this area. And that's the price that you pay for having a concrete exit point where the probabilities are more in your favor.

And sure, in some situations you're going to pay more in terms of upside loss for doing that. but it's worth it every single time so that you can come out on top in the long run. Okay, here's another example: Roku Now Roku was a huge winner this morning, but then it hit validation and sure it ran up slightly more, but it was unsure of its strengths. Why would you waste your time in a position that can't make up its mind as to whether or not it's in an uptrend? The best way to play this is to buy in at confirmation, sell out at validation, and you would have taken most of the move.

and then if you had some sort of magical ball, you could have made some profit on this trade or you just got lucky. you could have made some profit on this trade. People message me all the time with pictures where a validation would have taken them out earlier than they should have been taken out and this upsets them because people don't like leaving any money on the table. but every time I see someone post a profit picture or a successful trading picture where they practice they bad habit I Think to myself while I feel really bad because they just lost a lot of money in the long run, but they think they made a ton of money because they had a good short-term trade.

You have to understand that executing out at specific points where the odds are against you. that's going to cost you in the long run. you need to have a concrete point. So if you have a slew of wins and aren't executing out a concrete point where it makes sense, you need to understand that it does not matter how much money you make in the short run.

The only time when how much money make on a single trade matters is when that's your last trade. If you just go to the market and you make one trade, then you never trade again. Yes, it matters that that short-term trade worked, but again because trading is a probability game that would just be gambling. In fact, even in this particular trade on this one setup, the market would have taken you for a ride if you didn't magically execute out at this point.

And that is why we always sell out a validation folks. Okay, next example AM RN Now AM RN Ran up this morning and provided an entry point confirmation and the ability to consistently ride to run up. And by the way, my policy on choosing time charts and aggregation periods as we choose the time chart that matches and both contains the duration of your position and the pattern of which you were trading. So for example, if you see Am RN is known to provide priced rates, confirmation, and running up on that 15-minute aggregation period like we have open, then it makes sense to focus on the 15-minute chart because that's where the aggregation period is where we have that pattern.

And if you're taking a day position like we're attempting to do here, you just need to choose a time chart that holds the duration of that position. So one day or five day or 10 day works fine. And if your swing trading for a couple weeks, maybe you choose a twenty day time chart or something of that nature, something that holds the duration of your position and holds the patterns at what you're trying to create. This is just a general rule of thumb with time charts, but we always get those questions.

But anyways, AM RN ran up and that's great. Remember we use the blue SMA line to measure that she price trends. the farther away it is the stronger and vice versa. So once we've gone to this point where we've broken below the SMA line, we have reached validation and it's time to sell out and you could say hey, let's let this winner run and again.

same thing. This was the point where you should sell out so that you can be profitable in the long run and let the price action prove to yourself that it has potential to continue running. Proof not promises. now that validation is just a good practice and then rebind at confirmation and writing the rest of the move if you still want to play the winner.

Another example is Apple Buying a confirmation sell out at validation. Cookie cutter trade and again, a lot of people would say hey, but wait Later in the day it came past, it ran past this point and I do not want to sound like I'm beating a dead horse, but let me just go ahead and beat that horse. We aren't aiming to grab all of the move on a single trade. That's just not how trading works.

We are aiming to take a consistent amount of money or of profit potential on many trades over the long run. We prioritize the long term over the short term and selling out ad validation means that we are able to execute this position in a short timeframe and sell out here instead of holding the position for hours afterwards, locking up our shares and a random attempt to make a profit. Okay, let's go ahead and look at Netflix We had a confirmation of both directional strikes and price strength right here. We could have simply road over the SMA line and sold out at validation.

This is another example of where you're giving up shorter term profits in order to garner longer term profits. Overall, because you want the probabilities to be in your favor over the long run and you could have taken the second part of the move by again playing at confirmation. Okay folks, well I do hope that this video is helpful. The point of the entire video is pretty much to say that if you were letting a stock run past the points of overextension or run past points where the probabilities are against, you may feel like you just won.

But if you can't replicate that on a hundred trades or a thousand trades, then you actually just lost in the long run because doing that overall is going to cost you money. Thus, it is very important to always have a trading plan and always execute on that trading plan regardless of what your emotions are telling you and regardless of what the market is telling you because at the end of the day you need consistency. You don't just care about that one short-term trade. Okay folks, well if you have any questions, feel free to reach out to us below or join our free zip trader circle Facebook Group I Post nightly watch lists and there's a ton of great people in the community, so make sure to check them out if you haven't already.

We also have a discord chat and they trade in tutorials playlist links below if you'd like to check those out. Of course, always make sure to hit that ravishing like button and also subscribe for more short, sweet and simplified videos on how to trade the stock market. I Appreciate you taking time to watch this video and I appreciate you and I'll see you in the next video.