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With 35 years of experience, David Ryan has earned acclaim as a 3-time US Investing Champion, breakout swing trading expert, and accomplished trader. Specializing in longer basing patterns and stocks breaking into new highs, Ryan's career highlights include:

• 3-time US Investing Champion (1985, 1986, 1987)
• 17-year tenure at William O'Neill & Co (1982-1998)
• Founder and Hedge Fund Manager, Ryan Capital (1998-2014)

Ryan's journey reflects his commitment to mastering investment strategies and sharing his knowledge with others through portfolio management and advisory services. His success serves as an inspiration for aspiring traders seeking to make their mark in the world of finance.

David Ryan Tells in an interview with Investor’s Business Daily says he looks for two things:

“Well, the sell rules on big positions are no different than for smaller positions. It's always the same. I look for two things. First, if the stock went through a climactic run or even just an accelerated move, you're always looking for change. If a stock has been going up at a steady rate and then all of a sudden accelerates that rate, to me, that tells me that the stock is probably getting ahead of itself.

I mean, I guess Digital Turbine is an example. It almost looks like it went through one climactic move. Well, that was only one week, from mid-40s to 60. Things like that are very handy to do—draw a trend line, draw the channel line that the stock is moving along. When it gets ahead of that, then I start selling or cutting down the position.

I also look for some of the other things that I mentioned earlier: volatility. If the stock has had a nice tight range as it's moving higher and then it starts having much wilder days—bigger days up, bigger days down—and just starts chopping back and forth, then that tells me something. I'm always looking for a change in character. It's like studying an animal; certain stocks have certain characteristics, and you've got to learn what those are, especially when you have big positions in them. When those characteristics are changing, price and volume are where I get 90% of my technical input—just supply and demand.”

Buying Right, Solves Selling

"Buying correctly solves a lot of your problems because if you buy the stock coming out of a really nice base and you buy it exactly right, then you know where your stop point is. You can look at the stock technically, and if it breaks down below that really tight action, then you know where to sell. And you can sell before it gets to eight percent; you can keep your losses even smaller than that well." [ 1 ]

David explains the importance of buying stocks correctly and setting proper stop-loss points to manage risk effectively in trading or investing. When you buy a stock, you should determine a stop-loss point. This is the price level at which you will sell the stock if it moves against you to limit potential losses—emphasizing selling a stock before it declines significantly (specifically before it drops 8% or more).

Smaller Bases Mean Exit For Quick Profit

"Just keep in mind where the stock has been. If the stock has had a big move over the last year and is forming smaller bases, then the move might be near the end, and you want to take a quick profit." [ 1 ]

After a substantial upward trend, smaller consolidation periods often signal a slowdown or potential reversal, making it wise to secure profits. A "big move" refers to a significant increase in a stock's price over the past year, indicating a strong rally. When such a stock starts forming smaller bases—periods of sideways or minimal movement—it suggests the momentum might be waning. These smaller bases often reflect indecision or a pause in the trend. To capitalize on gains, watch for stocks that had a big move followed by smaller bases, and consider taking profits during this phase.

Monitoring Stock Movements Relative to the 50-Day Moving Average

"I like to see how far is that stock away from its 50-day moving average." [ Watch Video ]

Tracking a stock's distance from its 50-day moving average helps identify potential stall or reversal points. Determine the percentage where the stock usually stalls. For example, if it stalls at 25%, consider locking in profits at that level next time.

Examine if this percentage changes with each move. A decreasing percentage shows weakening momentum, while an increasing one indicates strength. Use multiple indicators, like the Stochastic, alongside this percentage for a fuller view.

Screen for stocks frequently deviating from the 50-day moving average. Use technical indicators to confirm these patterns and lock in profits at typical stall percentages.