Picking stocks is one thing. Exiting is another.

To find good setups, I have to know when to exit trades. Otherwise, I’m just a long-term investor.

Traders love to talk about being up in a stock…

And that comes down to price targets and exiting the trade.

It can be hard to do when a stock is moving in your favor. I get it…greed kicks in, and visions of sugarplums dance in your head.

Or maybe you just have trouble determining a price target in the first place?

This is how I used resistance levels to find my price target on MRIN…

Marin Software Inc. (MRIN) Trade Setup

Marin Software Inc. (MRIN) hit my scanners yesterday. It was the most actively traded stock under $10 and it had just made a big move up.

After which, MRIN consolidated above VWAP (pink line on chart). This had me eyeing it for a continued move up at the end of day…and when the stock made its move, I got in at $6.95 looking for a potential gap up the next morning.

But this isn’t about why I took the trade…

You’re here to see how I found my exit.

Picking my Target

I simply pulled up the daily chart to find levels of overhead resistance.

Resistance is an area where supply is higher than demand, therefore creating a ceiling for the stock price.

When you look at a chart, you will notice places where the price seems to get “stuck.” 

In other words, every time it gets there, it can’t quite make a move above that price level.

These are the areas of resistance. These can be a moving average, previous high/ lows, pivot points, fibonacci levels, or even a psychological level…to name a few.

Being that MRIN was above all of the major moving averages, I was able to look back at the next previous chart highs…

For instance, when I entered MRIN at $6.95, looking back on the chart, the next previous high was $12. I had to go back years to find a high the stock hadn’t already broken above.

And as I explained to my members in my daily video recap, looking for a move to $12 was expecting a lot. With a short time frame, I prefer to target a more conservative move.

Looking at the $12 candle, that whole move was a wick while the high of the candle body was just under $10 and the previous high before that move was in the mid $8s.

So for my short timeframe, I felt comfortable targeting this range (marked on the chart below).

Could it go to $12? Certainly…but that’s not my trade.

I’ve seen stocks reverse enough times to know the importance of getting out of trades while I can.

For this very reason, I am not going to get caught trying to squeeze every last penny out of the trade.

Exiting as Planned

In the end it didn’t take until the next day to reach my target…in fact it happened in the after hours where I was able to scale out at $8.20 and $10.30 for an average of about $9.

With such a fast move, should I have waited to see if I can get more by holding it overnight?

The answer to this one is straightforward.

I always try to exit as planned…even when that comes faster than expected.

Seems pretty lucky, right?

I’ll take luck any time I can get it, but as I say… luck favors the prepared.

I planned my trade, and I traded my plan.

Now just for fun, let’s see what happened with MRIN this morning:

Look at that, MRIN broke above $12. What a beast…

It’s being touted on Reddit, so it’s not unbelievable, yet I didn’t hold for more…Why?

“Holding for more” is a slippery slope to potentially big losses. The moment I quit trading my plan and fly by the seat of my pants is the moment that I lose the only thing I can control.