Why I Exited Nvidia and Microsoft: A Lesson in Probabilities, Charts, and Risk Management

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Investing is not about being right all the time. It is about managing probabilities, protecting capital, and staying emotionally disciplined when markets refuse to cooperate.

A few weeks ago, I shared my outlook on two stocks I believed had strong potential this year—Nvidia (NVDA) and Microsoft (MSFT). Both are exceptional companies. Both are leaders in innovation. And yet, I have exited both positions.

This decision was not emotional. It was not based on headlines or opinions. It was based on price behavior, technical structure, and risk management.

Let’s break down what the charts are telling us—and more importantly, what investors can learn from this experience.

Nvidia: A Great Company Doesn’t Always Mean a Great Trade

There is no debate about Nvidia’s quality. Over the last 25–30 years, it has been one of the most extraordinary stocks in the market, and the rise of artificial intelligence has given it renewed momentum.

However, stock prices often move ahead of fundamentals. Nvidia has already experienced a massive run-up, and much of the optimism surrounding AI may already be priced in.

What the Chart Reveals

Nvidia is currently consolidating near all-time highs
The stock is forming a descending triangle
Price action is choppy, trading near the 50-day moving average
Buyers and sellers are locked in a battle between roughly $165 and $200

Importantly, about 40% of breakouts fail, and Nvidia has not shown the strength required for a decisive upside breakout. When momentum stalls at elevated levels, profit-taking often follows.

This does not mean Nvidia is “bad.” It simply means the risk-reward no longer favors staying in the trade.

Microsoft: When Technical Damage Becomes a Warning Sign

Microsoft’s situation is more concerning from a technical perspective.

The company is deeply embedded in the future of AI through Azure and enterprise infrastructure. However, stocks move on market behavior, not narratives.

Key Technical Red Flags

Microsoft has fallen below both the 50-day and 200-day moving averages
A death cross is forming (50-day crossing below the 200-day)
Heavy selling volume on down days
A visible gap on the chart near the $400 level, which historically tends to get filled

There is a long-standing rule in technical trading:

Not many good things happen when a stock trades below its 50-day moving average.

Microsoft is no longer consolidating—it is rolling over. Remaining in the trade would mean hoping rather than managing risk.

Market Context: The Bigger Picture Matters

These stock-specific signals are occurring within a broader market environment:

The NASDAQ (QQQ) is not making new highs
A prolonged “green market” period has exceeded historical averages
Sellers appear to be taking control as profits are locked in

Buying stocks that are breaking down while the broader market weakens increases downside risk significantly.

The Most Important Lesson: Risk Management Over Ego

Every trader is wrong—often.

What separates successful investors from struggling ones is how small their losses are when they’re wrong.

Getting out of a stock at $490 is far better than exiting at $440. You may not know how far a stock will fall, but charts often reveal when momentum has shifted.

This is why:

Stops matter
Circuit breakers matter
Emotionless decision-making matters

You can always buy back in. Capital lost unnecessarily is much harder to recover.

Life-Improving Investing Tips

Detach Emotion from Decision-Making
Loving a company can cloud judgment. Respect the chart more than the story.
Play Probabilities, Not Predictions
Markets are probabilistic systems. Even strong setups fail—manage them accordingly.
Exit Early, Not Perfectly
You don’t need the top. You need capital preservation.
Use Mechanical Rules
Predefined exits (like moving averages) prevent emotional paralysis.
Protect Mental Capital
Large losses damage confidence and discipline. Small losses build resilience.

Frequently Asked Questions (FAQs)

Does selling Nvidia and Microsoft mean they are bad investments?

No. Both are excellent companies. This decision is purely based on timing and technical structure, not long-term business quality.

Why rely so much on moving averages?

Moving averages reflect market psychology. When institutions sell, price often breaks below these levels.

Isn’t it risky to exit and miss a rebound?

Missing upside is less dangerous than riding a prolonged decline. You can always re-enter when conditions improve.

How does this apply to covered call strategies?

Covered calls help, but they do not protect against large drawdowns. Risk management still comes first.

What is a “death cross”?

It occurs when the 50-day moving average crosses below the 200-day, often signaling longer-term weakness.

Call to Action: Trade Like a Professional, Not a Hopeful Investor

If you want to improve your investing results:

Stop trying to be right
Start trying to be disciplined
Respect charts, risk, and probabilities

Markets reward those who manage downside first.

If you want to learn how professionals structure trades, manage exits, and generate income while controlling risk, continue building your education and refining your system.

Cashflow Machine

Conclusion

Not every trade works—and that’s okay.

What matters is how you respond when the market disagrees with you. Nvidia is consolidating. Microsoft is breaking down. The broader market is losing momentum.

Exiting is not failure.
Holding and hoping is.

Successful investing is not about predictions—it is about protection, probabilities, and process.

Kill losses while they’re small. Stay robotic. Preserve capital.

You can always come back stronger.

Why I Exited Nvidia and Microsoft: A Lesson in Probabilities, Charts, and Risk Management

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