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Mastering Tricky Winners Is Necessary In Investing

Everybody would like to find the stock that makes big gains and is easy to hold.

Investing, though, doesn't always work out that way. Sometimes, a winning stock is hard to play.

If you're going to have consistent success in the stock market, you're going to have to learn how to play the hard cases.

Stratasys (SSYS), a maker of 3D printers, was such a stock in 2012.

On paper, the small cap was a big gainer this year. It ended 2011 at 30.41 and rose 160% to a peak of 79.25 by late November.

How much of that gain could an IBD investor have snagged

The buy-and-hold camp could interrupt here to argue that all of the gain was available, except for the modest pull off the high.

The flaw is that buy-and-hold investors can just as easily latch onto a flat or losing issue. And if the market turns south, they have no protection.

Also, such investors tend to be in the diversification camp, which means a big stock gain isn't a big gain for the portfolio.

IBD's approach is based on timing buys and sales and concentrating a portfolio on a handful of stocks at most.

So back to our question: What did Stratasys offer the IBD-style investor

Stratasys began the year by rising without offering a valid entry. That happens sometimes.

The first came April 16 when the stock broke past a 41.85 in strong . (1) Yet, the IBD investor wouldn't have bought the stock. The market was in a correction.

Stratasys rose 28% past the buy point intraday April 20, but staged an ugly reversal to finish 5% down (visible only on the daily chart). The action would've chased out many investors.

The stock then consolidated, offering an entry July 18. (2) The uptrend was under pressure, but buys are allowed in such markets. After clearing a 54.47 , Stratasys rose 28% in about four weeks. A new consolidation would've forced investors to take profits before losing most of the 35% gain. (3) The stock next shaped its most recent pattern — a third-stage base, which is more prone to fail. But so far, Stratasys is moving in a healthy direction.

Stratasys' over-arching lesson: Sometimes an investor must take the good that is offered and forget about the perfect.