Successful investing requires two main components – making big money when we get it right and limiting retracements when we get it wrong. Making big money inevitably involves investing during the most profitable bullish runs of top companies.

Our investment dollars should naturally flow to stocks that will perform best and away from stocks that show troubling signs. These may include deteriorating fundamentals, such as slowing earnings and revenue growth, or more technical-based signs, such as stocks falling below important support levels, a series of lower stock price lows, and increased volume on down days. These examples can serve as warning signs that institutions are selling stocks and it is better to sell rather than hold stocks that will continue to decline.

Today's example: Meta Platform (FB Quick Quote – ). For years, FB has been a growth stock. However, numerous warning signs over the past few weeks and months have provided an opportunity for long investors to start scaling back FB stock and potentially avoid this sell-off.

As shown by the red arrow at the bottom of the chart below, we can see that sales are higher on down days. Note also that FB stock has been making a series of lower lows and falling below the 50-day and 200-day moving averages. What once served as support has turned into resistance. In addition, shortly before FB reported earnings, the stock experienced the dreaded death cross (highlighted by a yellow circle) where the 50-day moving average fell below the 200-day moving average. This is another warning sign for investors.

Zacks Investment Research Image Source: TradingView, Zacks Investment Research

Of course, today's plunge in Meta Platforms is due to weaker than expected quarterly results, which is extremely difficult for the average investor to see. This is why technical analysis can really help guide investors and give them an idea of what institutions are doing with a given stock. It is clear that institutions started selling FB stock before the recent earnings report was released.

Our goal is not to continue to invest in stocks that are down, but to go with the flow. We want to take a long-term approach to stocks. This means letting our winners run their course over a multi-year period. For early FB investors whose shares have risen sharply, perhaps a good move would be to take some of the profits in the weeks and months before earnings are announced as the stock price falls. For more recent investors, the situation has changed.

When it comes to losses, we want to adopt more of a short-term mindset. The only way to avoid large pullbacks is to sell our losing positions before they develop into the type of losses that are detrimental to portfolio performance. For recent FB investors, selling at a loss before earnings are announced is the most prudent course of action. Let your winners run and cut your losers early.

Cutting losers goes against natural human emotions. Most retail investors don't have a proper plan and once the stock falls from their entry point, they will continue to hold it in hopes that they can regain equilibrium. If the stock continues to fall, they will consider it a bargain now to justify holding the stock. If you find yourself an investor who thinks along these lines, it's time to change that thought process. In the long run, this small adjustment in your approach will save you a lot of money.

Even the best investors experience retracements, but they are able to limit their losses. They don't mind taking small losses because they know it's part of the process. They realize that they can always get back into good stocks when the market is more favorable. Taking small losses allows them to retain their investment capital and wait for new and better opportunities to showcase themselves.

So where does FB go from here? Over time, revenue growth rates will naturally fall: the

Zacks Investment Research Image Credit: Zacks Investment Research

The Zacks Consensus Estimate for 2022 earnings per share is $14.00, up just 1.67% relative to 2021. FB reported 2.9 billion monthly active users last quarter, up just 4% from the same quarter in 2020. There may be some tough times ahead for FB in the near term.

However, most companies would be excited about the 20% year-over-year growth despite $33.7 billion in revenue in the fourth quarter. The stock is now trading at just 6x, matching the March 2020 P/S low and the lowest ratio in the company's history. This year, FB's earnings are up 36% in 2021. At the time of writing, FB was trading at 17x TTM P/E, down from 30x last year. It remains to be seen if the slower pricing growth will continue or if FB will be able to innovate and exceed expectations as it has in the past.

There has been a lot written and said about the FB growth slowdown in recent years – and it's really nothing new for investors who have been paying attention. But time and time again over the past decade, the naysayers have been proven wrong. Over the years, FB stock has made significant gains as the company continues to find new ways to innovate and modernize.

While the stock may be volatile in the short term, today's plunge could be a good entry opportunity if long-term investors believe the company will outpace the lower growth rates now priced in. I wouldn't count on FB just coming out.