Every trader dreams of catching a big win on a hot, new, high-flying stock.
There are several problems with that, of course.
One is finding a hot, new company. Although it’s not as hard as we might think.
Another is figuring out when to enter.
And a huge problem is when to get out.
Most monster wins are ruined by getting out too early or too late.
But a system solves all that.
And a long-term system solves it in a very non-frantic way.
An example of this is ROKU.
Back in 2020, everyone was staying home. Could we have possibly picked a stock that might benefit from that?
How about a company that helps us watch TV? That seems smart. And ROKU was a reasonable pick.
How do we get in?
In July 2020, ROKU closed above its 30-week simple moving average (SMA) five weeks in a row.
So, we could’ve entered there.
How do we get out?
n May 2021, ROKU closed below the SMA for the first time. We could have exited there.
If we did that, how would we have done?
We would’ve hypothetically had a big winner, entering at $148 and exiting at $309.
And as you can see, that big winner could have possibly been even bigger.
Using common sense and having a long-term system can lead to some great trades.
ROKU showed us that.
— Scott Welsh
P.S. As a reminder, these plays are based on my longer-term Weinstein Stage Analysis method. The chart above uses weekly candles and a 30 week simple moving average. For details on this method, see my explanation on this Ask The Pros episode starting at timestamp 20:45.
Additionally, the teal lines on the chart show the profitable runs.