After taking profits in a winning trade, there's no reason it can't be tried again later. That was the case with KKR. But you also need to treat the trades separately. Just because you made a stock work before doesn't mean you'll get the same results on the next trade.
A Solid Entry With A Shakeout
As KKR stock skated across its 21-day line in January, it culminated in a powerful move out of a tight area (1). That earned it a spot on SwingTrader and Leaderboard that day.
Leaderboard is still holding a reduced position. But for SwingTrader, we ended up exiting a couple of weeks later (2). We got shaken out on a day that saw KKR stock get support at its 10-day line and then reverse and close positive. One of the deciding factors in our exit was that we only had a few days before earnings were due, so we took the profits while we had them.
After earnings, the stock gapped up over 5% and kept going without us through early February (3). That's happened a lot this earnings season. We've exited ahead of earnings only to see huge gap-ups afterward. But we've missed some huge gap-downs as well.
KKR Stock Stayed On The Radar
Though we missed out on a 10%-plus move, we kept an eye on KKR stock for another potential setup. A 6.5% pullback to the 21-day moving average line caught our attention (4). Especially since the stock saw an upside reversal on the day.
Even better, KKR stock gapped up the next day (5) and then closed tightly for the next four days. When it popped out of that tight area, we had another chance to add it to SwingTrader (6).
Sure, it was at a much higher price than our exit. But we often have multiple trades in a single stock. Sometimes a losing trade is followed by a winning one. Consider those a case of right stock, wrong time. Other times it can work the other way.
At the end of the day, you need to treat each buy opportunity and setup on their own merits. Just because you had a previous winner doesn't mean you can throw out risk management the next time.
A Different Trade, A Different Outcome
While we got an immediate lift in our KKR stock position the next day (7), the gains didn't last. It's not that the downside reversal was an immediate deal-breaker. Our earlier buy was also followed by a reversal. But the stock did start acting differently and with more volatility.
We were still able to take a third of the position off with a 2.5% profit (8), but the wide swings made it a harder hold, especially as the market in general got extended. Ultimately we exited to keep a small gain for the trade (9).
So one trade worked and one didn't. We can either wait for another opportunity if KKR stock tightens up again, or we can move on to a different stock. Remaining flexible keeps your options open.
More details on past trades are accessible to subscribers and trialists to SwingTrader. Free trials are available. Follow Nielsen on X, formerly known as Twitter, at @IBD_JNielsen.
