Using Moving Averages as Resistance

When your position is below the 50-day and 200-day moving averages, these levels act as major resistance areas where the stock is likely to face selling pressure. This makes them ideal profit-taking zones.

Why this works: These moving averages represent areas where many traders and algorithms have positions, creating natural resistance levels.

1. Simple Moving Average Exit (Conservative)

If you're looking for quick profits with lower risk:

• Entry point: Golden retracement zone (around $275 in our example)
• Exit target: 50-day or 200-day moving average (around $290)
• Profit potential: 3-5% gain
• Strategy: Take profits when reaching these levels

Example trade:

• Enter at $275 (golden retracement)
• Stock rallies to $290 (moving average resistance)
• Exit for approximately 5.5% gain

2. Prior High Exit (Moderate Patience)

For traders with more patience and higher profit targets:

• Entry point: Golden retracement zone
• Exit target: Previous swing high (around $316 in our example)
• Profit potential: 10-15% gain
• Strategy: Hold through minor resistance for larger moves

Why prior highs matter: From a low to high, this represents the area where the stock previously faced rejection, making it a logical profit target.

3. Supply Zone Breakout (Advanced)

For maximum profit potential:

• Entry point: Golden retracement zone
• Exit target: Major supply zones above prior highs
• Profit potential: 15%+ gains
• Strategy: Hold for breakout moves with trailing stops

The 40-30-30 Entry Method

To optimize your entries and exits, consider scaling into positions:

1. Initial entry (40%): Buy at the first golden retracement touch
2. Second entry (30%): Add if the stock dips further into the demand zone
3. Final entry (30%): Complete position on any additional weakness

Benefits of scaling:

• Lowers your average entry price
• Reduces risk of timing the exact bottom
• Allows for better profit potential on rebounds

Example calculation:

• 40% at $275 = $110 average
• 30% at $270 = $81 average
• 30% at $265 = $79.50 average
• Total average: ~$271 (improved from initial $275)

Quick Profit Strategy

• Target: 3-5% gains
• Exit at: First moving average resistance
• Mindset: "There's an abundance of opportunities"
• Benefit: Consistent, repeatable profits

Swing Trade Strategy

• Target: 10-15% gains
• Exit at: Prior highs or major supply zones
• Mindset: "Let winners run with discipline"
• Benefit: Larger gains per trade

1. Moving averages are your friends: Use the 50-day and 200-day as reliable exit targets
2. Prior highs create resistance: These levels often cap rallies
3. Take profits systematically: Don't let greed turn winners into losers
4. Scale your exits: Just as you scale entries, consider taking partial profits at different levels
5. Rinse and repeat: With clear entry and exit rules, you can trade the same setups multiple times

Remember: The goal isn't to capture every penny of a move,it's to consistently bank profits and preserve capital for the next opportunity.

• Set alerts at your target levels to avoid emotional decisions
• Use the Auto-TA signals to confirm exit timing
• Consider market conditions when choosing between conservative and aggressive targets
• Always respect your original exit plan,don't move targets based on hope

The beauty of this system is its simplicity. By following these mechanical exit rules, you remove emotion from the equation and trade with confidence.