Recently I made a call on Zoetis, ZTS. A closer inspection of the 60 min chart tells us it is at a decision point. First lets look at the daily chart where we entered the stock around $45.50 with a stop loss at around $42.
The stock is in an uptrend, moving up 45 degrees upwards and in a stage 2. If you want to learn more about selecting good stocks. Check out this article 5 Stock Market Secrets That Will Make You Money.
Well we entered the stock and hope that it will go up.
As time goes by this stock just meanders and does not go up that fast. A closer look at the 60 min chart will show that this stock is at a decision point.
The chart shows Zoetis's 60 min chart. The stock is forming a triangle and this is continuation pattern (usually). However a drop to below $45 will ring some bells for the pro. So what some pros will do is to sell 1/3 to 1/2 at a small loss. If it goes up, well...the other half will make us money. If it goes down further it will save us quite a lot of money.
On the other hand, if the stock goes above $46, this is actually quite bullish. The stock has gone above the defensive line and some pros will add 1/3 to 1/5 of the original position with a tight stop loss at $45.
That's how the pros trade. If you are wrong you minimize your losses. If you are right you add a little more.