Taking Profits

His partner introduced him to AI in early 2022. He bought a small Nvidia position. ChatGPT launched two weeks later — he doubled. A Morgan Stanley call confirmed the thesis — he doubled again. He then publicly said he couldn't see selling for 2–3 years. Then the stock hit $800, up from $150, and he sold — couldn't stand the success. It went to $1,400 five weeks later. He describes this as one of his biggest regrets: he violated his own stated time horizon because of short-term P&L discomfort.

"I couldn't stand success. It had gone from 150 to 800. I was long-term in it. I couldn't deal with it and I sold it."

Mark's guiding principle: at all times, aim to improve your worst-case scenario. He calls this a multi-million-dollar sentence. Example: buy a stock, it moves up — move the stop to breakeven (worst case just went from -5% to 0%). Stock goes up 16% — sell half, let the rest ride with a stop at breakeven (worst case is now a guaranteed 8% profit on the total position). By focusing on minimizing the downside rather than maximizing the upside, the upside takes care of itself. This year with aggressive sizing, Mark sometimes uses microscopic stops and time stops — if the stock does not move on cue, he is out immediately.

Lance acknowledges he simplifies for training: the two-minute bar low is the trailing stop rule he teaches. But his actual trading has more nuance. The key exception: when a position capitulates in his favor — when it gets euphoric and pulls far away from the trend at an unsustainable angle — he takes some or all off early rather than waiting for the trailing stop to trigger. The trailing stop is the baseline system; recognizing euphoric capitulation is the art that improves the system's returns.

Ryan recalls being interviewed for Market Wizards by Jack Schwager in a shared cubicle at O'Neil's office, with quote terminals shared through holes cut in the divider wall. The context underscores that the edge was never about infrastructure. His core compounding lesson: the biggest gains come from stocks that break out, make a new base, and break out again — at each new breakout you can add to a position you're already profitable in. He only adds to winners, never to losers. The multi-year move, where you buy once and ride two or three distinct breakout stages, is where serious wealth is made. Adding into a loss destroys the compounding effect entirely.

As SNDK extended into a parabolic move, Ted's approach was to build a position cushion through partial sells at technical resistance and ATR extensions rather than holding everything for maximum gain. The mindset: 2.5% per month compounding equals roughly 35% per year, which is world-class portfolio management — the goal is to protect gains so the cushion allows more aggressive positioning later. A 10 ATR extension above the 50-day was his trim signal; a bearish engulfing candle on high volume warned of a potential reversal. His acknowledged lesson: he was undersized in this trade (one of the two best opportunities of early 2026), and a pyramid to 7.5% would have made the year in a single position.

When managing a late-stage parabolic position in SNDK, Ted switches to a 5-minute chart to time partial sells. The technique: watch for the stock to push into pre-market highs, reject them on a 5-minute candle, then use the 5-minute open range lows as the trim trigger. He sold 14% of the position at 647.81 when the stock broke the 5-minute open range low — a level that coincided with a half-Livermore level breaking at 650 and the intraday opening price. For managed accounts that can't short, he uses parabolic short entry criteria as his trim signal: if this were a short setup, that is where you'd sell a long.

Partial sells in GLD were triggered by ATR extension signals. The final exit came when gold closed below the 10 EMA — coinciding with futures closing below the same level and a macro shock (hawkish Fed chair nomination plus CME margin hike) that forced a liquidation cascade across precious metals. Ted emphasizes that commodity trade exits require cross-referencing the futures chart, not just the ETF — the futures close below 10 EMA is the definitive signal, and the ETF can lag by minutes or hours. The lesson: when a macro event hits a crowded trade, the exit must be immediate and mechanical — hesitation in a liquidation cascade is the most expensive mistake.

Gon shows his actual trade executions for the ICCT multi-day runner. He entered at $3.20 and peeled off a third as it pushed up — but admits he often cuts winners too early because he looks at his P&L and, especially when in drawdown, takes profits prematurely rather than letting the trade work. He uses no hard stop in the platform — only an emotional stop at his buy price. The moment the stock takes out his entry, he's out. He's OK with choking a trade by micromanaging it: 'I just want to have a good setup — as soon as I enter, it should go in my direction.' The stock never looked back, running exponentially — a signature of the small-cap squeeze world.

A question from host Ashley: what is Gon's process for selling? He always sells into strength — never waits for a fixed price target. His method: peel off 1/3 of the position as it pushes up, then if it confirms and continues, he may add back before peeling again. He never uses static targets in small-cap high-volatility names because the range of outcomes is too wide. His approach is reactive rather than predictive: collect the data the market is giving, and when momentum visibly slows, reduce — don't wait. Strength in price action is the signal.

Host asks what price and volume clues signal that an intraday run is getting exhausted. Gon's answer: when the magnitude of the intraday move is already extremely large (e.g. 250%+), the post-market continuation will typically be muted — the stock has spent its energy for the day. He also watches subsequent attempts to break higher: if volume is drying up on those attempts, buyers are spent. Toward end-of-day, these exhaustion signals together are his cue to exit rather than hold overnight into a much smaller move.

Schwager’s second key trait — one he considers underappreciated — is patience, which operates in two distinct modes. The first is the patience to wait for the right trade: resisting the urge to always be in the market and sitting out when conditions don’t meet your criteria. The second is staying with a position long enough to realize its full potential — many traders cut winners too early, locking in small gains while their best trades are still running. Schwager notes that holding through noise and drawdowns in a profitable position is psychologically harder than it sounds, and that traders who master this skill generate returns far above those who exit at the first sign of strength.

Once in a position, Kristjan trails his stop to the 10-day or 20-day moving average depending on how fast the stock is trending. He takes partial profits on the way up to reduce risk and lock in gains while keeping a core position running. When a stock he already owns forms a new consolidation and breaks out again, he treats that as a completely fresh trade with its own rules — the original position is managed separately. This framework keeps him from cutting winners too early or violating his risk rules when adding to a hot name. Using a trailing stop on each tranche means the worst outcome on any add is losing a defined amount, never letting a winner fully reverse.

Weinstein continues the gap analysis, showing how the same gap pattern that signals a strong stage 2 entry becomes a warning when it appears in an extended stock. Using the Nvidia chart, he identifies how a third or fourth gap — appearing late in a significant move, far above the moving averages — shifts the probability from continuation to exhaustion. When that late gap is followed by a terrible close on heavy volume, the warning is clear. He explains that he trimmed Nvidia positions for clients on exactly this analysis, separating the short-term tactical view from the long-term thesis: Nvidia remains a strong company, but the technical evidence argued for reducing exposure after the exhaustion pattern appeared.

"That to me is an exhaustion gap. It's late in the move."

Ted's exit framework operates in two modes. Selling into strength: trim when price reaches 3-4 ATRs above the 21 EMA, or 8-10 ATRs above the 50-day moving average. Climax top signals that accelerate trimming include the stock heading toward 12 o'clock trajectory, multiple gap-ups in a row, 7-8 green days out of 10, and the largest daily volume ever after an extended move — institutional capitulation to the upside, not accumulation. Trailing rule: exit most of the position on a close below the 21 EMA; trail a smaller remaining piece on the 50-day or 10-week for the highest-conviction fundamental names. The combination captures both the bulk of the move and the occasional multi-month runner.

"Always trail a piece and sell into weakness because you never know how high a stock's going to go."

Ted explains how he sets price expectations using the concept of market symmetry: the first leg of a move and the second leg are often similar in magnitude, separated by a base. You can use that to set reasonable targets for taking partial profits into strength — not because the target must hit, but because the probabilities favor a pullback at that measured-move zone, and trimming smoothes the equity curve. He contrasts this with crypto traders who set price targets and sell completely, then watch the asset go another 10x. River always trails a piece because you never know how far a stock will run. The move in symmetry is a guide, not a hard exit — use it to manage risk, not to cap returns.

"Markets like to move in symmetry. The second leg is often quite identical to the first leg."

A host question about switching between positions prompts Chuck's views on selling. Selling a great compounder is one of the hardest things to do — it is difficult to identify something better and even harder to time the switch correctly. For most investors, owning fewer things and holding them is the better decision. But valuation extremes do matter. He uses Markel as an example: bought at 3x book while the company was compounding book at 20% annually. Over time, the valuation expanded to roughly 10x book — well beyond what the underlying compounding could justify. He lightened up. In hindsight, it was the right call: at 10x book, the math of future returns had shifted decisively against him, even though the business itself remained excellent. Sometimes selling is correct with imperfect foresight.

"If you've got 10 positions that have all got high rates of compounding and you say, well I'm going to just lighten up a little bit here and buy some more there, that's probably a bad decision."