Mastering the Art of Holding: A Case Study with Nvidia from Morpheus Trading Group

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Morpheus Trading Group
Rick Pedicelli
Swing trading
Wagner Daily
Trade management
Price action
Volume analysis
8-day EMA
Explosive stocks
Stock watch list
Breakout strategy
Holding onto winning trades
Earnings season
Risk management
Trading discipline

Unlock the secrets of mastering the art of holding onto winning trades with Morpheus Trading Group’s latest blog. Join seasoned trader Rick Pedicelli as he takes you through an in-depth analysis of a recent trade in Nvidia, revealing strategies that led to an impressive 40% gain. Learn the intricacies of trade management, the significance of explosive price action, and the power of doing nothing. Whether you’re a short-term swing trader or a longer-term position trader, this blog provides valuable insights to elevate your trading game. Don’t miss out on the potential for big wins—subscribe, hit the like button, and trade what you see, not what you think.

Are you tired of selling your winning trades too soon? If you’ve ever wondered how to maximize gains and avoid missed opportunities, you’re in for a treat. In this comprehensive blog, we’re delving into the recent Nvidia trade from the renowned swing trading letter, The Wagner Daily, by Rick Pedicelli of Morpheus Trading Group. This trade is still open, boasting an impressive 40% gain. Join us as we break down the strategies and tactics employed to ensure you never miss out on those significant gains again.

Unveiling the Nvidia Trade
I’m Rick Pedicelli, and with over two decades of trading experience, I’m here to guide you through the intricacies of holding on to winning trades for substantial gains. If you’re eager to enhance your trading skills and make informed decisions, hit that like button, subscribe to our channel, and let’s dive into the Nvidia trade.

Why Nvidia?
With thousands of stocks to choose from, why did Nvidia make it to Morpheus Trading Group’s watch list? The answer lies in the quest for explosiveness. Morpheus looks for stocks with the potential to surge 30%, 40%, or even 50% higher over a few weeks. How is this potential identified? By examining the stock’s historical performance. In the case of Nvidia, a remarkable 160% move in late 2022 to early 2023 caught Morpheus’s attention.

What’s even more impressive is that following this explosive rally, Nvidia only retraced 22% of the advance. A tight consolidation phase ensued, indicating strength and resilience, key attributes of a quality leader in the midst of a robust run.

Nvidia’s Journey to the Watch List
Nvidia’s journey to Morpheus’s watch list involved careful observation of its price action. A failed breakout attempt in late November, marked by a 22% pullback and oscillation around the 10-week moving average, became a positive sign. This pullback, unlike previous instances, showcased a change in character, holding above the moving average.

The subsequent price action revealed a tightening pattern, with pullbacks reducing from 22% to 11% and then 6%. Simultaneously, the 10-week moving average transitioned from a sideways trend to an upward trajectory. The breakout eventually occurred, leading to Nvidia making it to the daily watch list.

Decoding the Breakout
Analyzing the daily chart, the breakout on January 8th became a pivotal moment. The decision to buy Nvidia was not based on a perfect setup but on the explosiveness of the price and volume action. The breakout was supported by strong volume, well above average, signaling a green light for Morpheus to enter the trade.

While the entry point at around 510 wasn’t perfect, the explosive nature of the price action superseded the need for perfection. In a bull market, Morpheus typically aims for at least a 20% return with stops ranging from 4% to 8%. The objective is to catch a 20% winner, with the potential for gains exceeding 40% considered highly lucrative.

The Importance of Doing Nothing
Once in the trade, the number one rule for holding on for a bigger gain is surprisingly simple—do nothing. When a stock is cooperating in a strong market, there’s often no need for constant intervention. The best trades are often the easiest ones to sit in, requiring minimal management.

During the Nvidia trade, holding above the 8-day Exponential Moving Average (EMA) became the guiding principle. As the price action remained above this critical level, there was no reason to panic or sell. The strategy involved selling partial size at a 20% gain and letting the 8-day EMA guide further exits.

Trade Management: A Fine Balance
Trade management involves striking a balance between maximizing profits and minimizing risk. Depending on your trading style—short-term swing trader, intermediate-term trader, or longer-term position trader—decisions on when and how much to sell vary.

For short-term swing traders, selling a partial size at a 20% gain is advisable, with the 8-day EMA serving as a guide for the remaining position. Intermediate-term traders might opt to sell half the position and hold on to the rest, while longer-term position traders could hedge risk with options or sell a third of the position, holding through the earnings report.

Navigating Earnings Season
As Nvidia prepares to report earnings, the cautious approach is to lock in gains, especially if holding a substantial position. The risk of a gap down after earnings could result in a significant loss. Traders can choose to sell into strength, giving them control and peace of mind.

For those with a more extended trading horizon, holding a smaller portion through earnings might be an option. However, this decision is subjective and should align with individual risk tolerance and trading plans.

The Power of Simple Techniques
The success of holding onto Nvidia with an unrealized gain of approximately 42% boils down to the application of simple techniques. The rule of doing nothing until there’s a close below the 8-day EMA eliminated unnecessary emotional interference. Following a plan, sitting on your hands, and letting the trade play out were the keys to success.

Trade What You See, Not What You Think
In wrapping up this in-depth analysis of the Nvidia trade, the Morpheus Trading Group emphasizes the importance of staying disciplined, following proven strategies, and letting the market guide your actions. The journey from identifying explosive stocks to executing trades and managing them requires patience, but the potential for substantial gains makes it worthwhile.

The following video is a MUST WATCH!

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Elevate your trading journey with Morpheus Trading and Rick Pedicelli’s wealth of experience.

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