We Stayed For The Rise And Left Before The Fall On Meta Stock
June 13, 2025
One of the key concepts of swing trading is not overstaying your welcome in a position. By piecing together multiple small moves and avoiding big drawdowns, you can get sizable outperformance over the general market indexes. Take Meta stock. Though it was held for just over a week, we got what we needed out of it as a short-term trade.
Stock Market Corrections Impact Bases
Meta PlatformsMETA took its hits along with most of the market. But it got back above its 50- and 200-day moving average lines, well ahead of the market indexes (1). That relative strength was a key component of many leading candidates after the April 22 follow-through day.
In just over a week, Meta jumped an additional 11%, making the total move from its lows a 38% rebound (2). Those gains certainly deserved some digestion, and Meta gave up just 6% as it carved out a handle over the next couple weeks.
When Meta stock broke out from its cup-with-handle pattern (3), we added it to SwingTrader as a full position.
Of course, sometimes the easiest part is buying a stock. The harder part is making the decision on when to sell it. That requires a recognition of trade-offs. If you want big gains, you’ll have to sit through some nasty pullbacks. If you want to reduce your drawdowns, selling into strength and cutting losses quickly is a proven strategy to achieve that. That was the approach we took with Meta as a swing trade.
Taking Profits Into Strength On Meta Stock
After a one-day pause (4), we saw Meta really start to move strongly. Our typical approach with our full positions is to start taking at least a quarter position profit once we get between a half and full ATR (average true range) above our entry. For Meta, a full ATR was around 682.50. In the case of Meta, we initially tried to stretch the gain closer to 700 but eventually did start booking some profit at 690.25 (5). That day just happened to be a big downside reversal for a lot of stocks. Taking some profits on the morning strength made it a little easier to handle our best positions with more patience. But we still ended up taking another quarter off at 686 to protect the profit we had.
How To Follow The Big Money For Finding Market Leaders
Downside reversals often come with the expectation of more weakness, at least on a short-term basis. But that didn’t really materialize with Meta. It kept inching up just past 700 but would then finish weak (6).
Making Our Exit
To be clear, Meta didn’t really do anything wrong when we exited the remaining position (7). But it was another day where a strong move above 700 started to fizzle. As Meta stock hit lows for the day, we exited our remaining position at around 700.
It wasn’t just the weakness that caused our exit. It was also that we had new positions to which we might want to add shares. Though Meta hasn’t fallen apart, we secured a strong 5% gain on the trade and have that money available for other positions.
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.
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