Translated Summary - Mark Minervini - Trade Like a Stock Market Wizard

My primary thought process starts with 'How much can I lose?' not just 'How much can I gain?'
To assess profits from investing in stocks, you need to make three correct decisions: what to buy, when to buy, and when to sell.
You need to understand that the biggest challenge is not the market. It is you.

Have confidence in your ability. Learn to do your own research and think for yourself.
I sell losing stocks quickly, which means accepting small losses but preserving most of my capital.
Trading is about making money. It is more important to make money than to be right.
A key factor for super performance: a relatively small number of shares in the float.
Individuals can react to surprises that create new price trends almost instantly.
Achieving super performance in actions comes from doing things that are different from what is obvious or popular. This is often misunderstood.
interpreted as risk. When observing and analyzing the market, keep an open mind and be willing to do things that most of
people will not. Growth comes at the cost of comfort. Learn to risk your comfort zone and always question wisdom
conventional.
You need to learn to accept less favorable periods for your style.
The only way to combat paralyzing emotions is to have a set of rules you operate with, with clearly defined goals.
defined. Are you a trader or a long-term investor?

If you are a short-term trader, recognize that selling a stock for quick profit and seeing it double in price doesn’t upset you.
However, if you are a long-term investor, there will be many times when you will achieve a decent gain in the short term and
it will return everything in the pursuit of a greater movement. The key is to focus on a particular style. After defining your style and
goals, it becomes much easier to stick to a plan and achieve success.

Many investors miss out on great companies during their phenomenal growth phases due to their relatively P/E ratio.
high.
Five Key Elements of Specific Entry Point Analysis:
1) Trend: to fit into the defined upward trend model. In almost all cases, the trend is identifiable in
beginning of the advance of super performance. Specific technical factors displayed by historical models of past super performances.
A) The current price of the stock is above the 150 and 200 day moving averages.

B) The 150-day moving average is above the 200-day moving average.

C) The 200-day moving average has been in an upward trend for at least one month.

D) The 50-day moving average is above the 150 and 200-day moving averages.
E) The current stock price is above the 50-day moving average.
F) The current stock price is at least 30% above the 52-week low.
G) The current price of the stock should be at least 25% of the 52-week high (the closer to a new high, the better)
better).
H) Relative strength no less than 70, and preferably above 80.
2) Fundamentals: most phases of super performance are driven by an enhancement of earnings, revenue and
margins. Filters based on profit growth, sales and margins, relative strength and volatility. Specific factors
fundamentalists exhibited by historical models of past super performances.
3) Catalyst: whatever the reason, behind every super performance there is always a catalyst that drives it.
institutional interest. Reported sales and profits, historical surprises in sales and profits, growth and acceleration of profit by
action, growth and acceleration of sales, guidance issued by the company, revision of estimates by analysts, profit margins,
industry and market position, potential catalysts, performance compared to other stocks in the same sector, price analysis
the traded volumes, liquidity risk. Identifying positive revisions in sales and profits, identifying institutional volume support
(significant purchase demand), quickly identify appreciation based on imbalance between supply and demand.
4) Entry Points: most super performance stocks provide multiple opportunities to capture an increase
meteoric at a low-risk entry point.
 5) Exit Points: not all actions that exhibit super performance characteristics will result in gains. You must
establish stop loss points to force you to exit losing positions to protect your capital. On the other hand, at some
At that moment, your actions should be sold to make a profit.

Execute the trade based on the convergence of 4 factors: company fundamentals, stock price (trend, entry points), volume
(trend, catalyst) and market conditions.
Super performance: the company makes money at a higher or accelerated rate by attracting purchases from institutional investors.

Usually, the super performance phase occurs when a stock is relatively young. Pay attention to companies that you
never heard of. Pay attention to small companies.
Historical analyses of super performance stocks suggest that the P/E ratio is one of the most useless metrics on Wall Street. The P/E ratio
does not take into account the most important element for valuing the stock price: the future.

When you buy a stock just because it is cheap, it is hard to sell if it moves against you because it will be even cheaper.
cheap.
Fast-growing companies can trade at multiples of 3 or 4 times above the market (significant premium).
Many of the greatest winning stocks in history traded at 30 or 40 times earnings before experiencing their biggest surge.
Rapidly growing companies with great potential are not found in bargains.
Most of the time, money in stocks is lost not because the P/E ratio was high, but because profits did not grow at a rate.
sufficient to support the expectations.
Value does not move stock prices; people do. Stock market: everything is relative, subjective, and dynamic. Every action carries
premises that constantly change. These premises are constructed and based on personal opinions. The price of the shares
moves based on what people think. Only the perception of value can influence people to buy, not the mere
metric assessment reading.
Wrong conclusions: laggard stocks have value and market leaders are very expensive. Value investment does not protect you.
I am very reluctant to buy shares of companies trading at an excessively low P/E ratio, especially if the stock price
it is close to the 52-week low. Remember, the market is a discount mechanism that trades in the future, not in the past.
Trying to buy in a oversold condition and sell in an overbought condition is a risky business.
Supreme foundation: the judgment of the market.
I use the P/E ratio as a sentiment indicator that gives me a perspective on investor expectations. Companies that
growing revenue at an accelerated pace is your best choice. Look for emerging trends that may have adoption in
mass: scalable trends. Growth actions are driven by growth.
Evaluating/buying a company with intrinsic value is not trading stocks; it is buying assets.
I do not consider buying stocks in a long-term downtrend. I want to see interest in the stock, preferably from
big institutional investors. I am not interested in being the first to arrive at the party, but I want to make sure that there is a party.
in progress.
A strong trend remains strong until something occurs to change it.
Four Phases of Price Action:
1) Negligence Phase: few investors paying attention to the action. Sales, profits, and margins are lackluster or irregular.
Uncertainty about the company or sector. Bear market. Price moves sideways. Undefined trend. Frequently occurs.
after several months of decline. Relatively low volume.
2) Advance Phase: can start without warning or news. Significant volume on days (and weeks) of increase and low volume.
during pullbacks. Price is between 25 and 30% above the 52-week low. Series of higher highs and higher lows. New news,
a new CEO, a promising business, regulatory changes. Large institutional buyers.
3) Top Phase: larger volumes in pullbacks. Increasing volatility (irregular movements). Highly crowded long trade.
obviously. Largest decline on the weekly chart. 200-day average flattens and enters a downtrend.
4) Decline Phase: profits slow down. Negative surprise. Higher volumes on down days and lower volumes on up days.
high. Stock price near the 52-week low. Series of descending highs and lows. Short-term averages below the averages
in the long term.
After the rise, there is profit-taking, causing a temporary pullback, during which the stock builds a base. If the stock
If you are really in the middle of something significant, the long-term trend will resume. Short-term pauses allow for action.
to digest the previous high, so that they can rise even more when they emerge from a constructive consolidation period.
I never put much faith in my fundamentalist ideas about a particular company without market confirmation.
Even if you are correct in your fundamental analysis, it is the investors' perception that creates buy orders, and you will
needs large purchase orders for your stock to move significantly. Keep in mind that if the investor community
Institutional not seeing what you see, your action may remain dormant for an extended period.
The goal is not to buy at the lowest price, but to sell the stock for a price significantly higher than what you paid for it.
shortest period of time. This is how super performance is achieved.
It is important for you to learn to detect and respect a change in trend. There is a reason for the adverse movement, you
they just don't know yet. Stocks often reach their peak while profits still look good and the story still seems
untouched. When a stock shows signs of a peak, you should trust what you see, not what you hear. Do not listen to the company
or the media; listen to the action. You cannot wait for changes when the price action of a stock becomes volatile or hostile. For
To be successful, you need to respect the trends and the wisdom of the market.

Six Categories of Companies:

1) Market Leaders: the stock prices of market leaders rise sharply in the early stages of a market rally. These
companies have superior products and services. Market leaders in high growth stages often seem expensive. See
brand and market position, expansion into new markets, sales in the same stores (prices and volumes).
2) Strong Competitors: the company's products or stores may be less popular or inferior to those of the leader. Always
monitor two or three stocks of a group. Focus on profits, sales, margins, market share, and pricing power
relative.
3) Institutional favorites: quality companies. Mature companies. Good track record, consistent sales, and growth.
of the dividends.
4) Turnaround Situations: look for companies with strong results in the last two or three quarters, or for a
quarter capable of moving the annual earnings per share close to or above the previous peak.

5) Cyclical Stocks: sensitive to the economy or commodity prices. Reverse cycle. Stocks, supply, and demand are
important variables to analyze. The bottom of the cyclicals: profits are falling, dividends may be cut, the P/E ratio is
Hello, the news is bad. The peak of the cyclicals: profits are rising, dividends are being increased, the P/E ratio is low,
the news is generally good.
6) Past Leaders and Laggard Stocks: stay away. They may have periods of decent performance, usually brief.
They seem to be relatively cheaper than the market leaders.
Your portfolio should consist of the best companies from the four or five main sectors. Some groups may emerge late in
a bull cycle and lead the next cycle after a bear market. I tend to let individual stocks take me to a group
or sector of the industry, adopting a more bottom-up and not top-down approach.
New innovations create new opportunities: work better, live longer, enjoy life more, cut costs, improve
Productivity etc. Events in one industrial group can affect other industrial groups.
New technologies become old technologies: market penetration and eventual saturation. Progress in technologies and
manufacturing gradually reduces the relative price of a new product.
When a stock experiences a major price break, there is a reason, and it is usually the start of lower prices to come. In almost
In all cases, there is something fundamentally wrong with the company's business or the industry. It doesn't matter how large or prestigious
be a company, when the fundamentals deteriorate - read, profits - you never know how much the stock will drop.

Many winning stocks can be companies you have never heard of before.
Three basic questions about profits: How much money can a company make? For how long? How certain?
The most influential factors that drive stock prices: profitability, sustainability of profits, and visibility.
Actions are driven by two basic reasons: anticipation and surprise; whether positive or negative. The effects of a surprise can last.
months.
Profit Maturation Cycle:
Stage 1: Value stock.
Stage 2: Operate here. Positive surprise Models with a positive surprise Revised estimates upwards.
Stage 3: Top. Moment of profit per share Growth stock Loss of earnings per share moment.
Stage 4 Models with negative surprise Revised estimates downward.
Stage 1: Value stock.
Sometimes a company with its stock price high may not be making a lot of money, but the increase in price means that
Investors expect it to be profitable in the future.
- Institutional investors like to see the following: surprise in earnings, acceleration of earnings per share, acceleration of sales, expansion of margins.
strong change in annual earnings per share (recurring break), signs that acceleration will continue.
- Where did the profits come from? I prefer high-quality profits (core operations). Sustainable growth in profits requires
growth in sales. Check the story behind the growth in profits.
Winning combination: expansion of sales of current products in current markets, expansion of sales of current products
in new markets, expansion of margins of current products in current markets, expansion of margins of current products in
new markets, expansion of sales of new products in current markets, expansion of sales of new products in new
markets, expansion of margins of new products in current markets, expansion of margins of new products in new
markets, cost reduction (in COGS, in VGA, in financials), increases in productivity.
Ask yourself: Are there new products and services or positive changes in the industry? Is the company gaining market share?
market? Is the market dominated by only a few companies? What is the company doing to increase sales and expand?
What is the company doing to reduce costs and increase productivity?
Losing combination: limited pricing power, capital intensive, low margins under pressure, regulation
heavy, intense competition.
The best type of margin increase comes from the ability to price the strong demand for a company's products.
Study how the price responds. Pay close attention to the reaction price of the stock to determine how good the result was/seemed.
series. Initial response: rally or strong sale? Did it continue to fall or did it recover? Subsequent resistances: Held firm the gains and
Did it resist profit taking? Resilience: did it recover quickly and strongly? Did it fail the rally after a pullback, or worse, sell off?
Strong? For a true super performance, there definitely shouldn't be a strong sale that breaks the whole leg of
upward movement of a stock.
In some cases, the reaction to the announced guidance is stronger than the reaction to the earnings report.
When dealing with future profits, it is important not to look too far ahead. Growth stock investors need to have the mindset of 'what
What have you done for me lately?”. So, focus on what the company is saying about the next quarter and the current fiscal year.
- Compare the inventories with sales (inventory trend vs. sales trend). Analyze the receivables. Analyze the taxes.
payments.
- Profit margins should increase when the company increases productivity. Sales should increase when the company
expand to new markets.
High-performing stocks will lead the market averages at turning points. The top stocks will appear first and
they will rise before the others. At this moment, the general market conditions still seem bleak for most investors
and the news is still, most of the time, negative and preventive.
When you see the rotation happening (money leaving true leaders and entering other groups), it is a warning that
the market rally may be entering its final stage.
More than 90% of super performance stocks emerge from bear markets and general market corrections. Look for stocks that
materialize during the initial leg of a new and powerful bull market.
When the rise is so strong that the market moves higher and higher, ignoring overbought readings, increase your
exposure according to your negotiation criteria, action by action.
To make a lot of money in the stock market, you need to have the main trend of the stock market on your side.
Many of the best leading stocks tend to stay ahead of their respective sectors. Look for resilient stocks that maintain
the best, recover as quickly as possible and gain the largest market share in general.
It is important to study carefully the price action of individual companies with positive developments and strong profits.
action during market downturns. Many stocks with strong recovery and those that remain strong are likely to be
as super performances of the next cycle.
What to look for in a market with signs of a bottom: 1) A first wave of market leaders emerges and builds bases in
steps. 2) Action setups proliferate while the original leaders give up relatively little ground and recover.
quickly with any sale. 3) Most leaders must maintain their position. 4) Volume on major averages must be
observed the search for signs of distribution (volume on up days x volume on down days).
A stock that is in its own down cycle can withstand a strong market and go nowhere. Often this is
indication of unfavorable perspective and these actions should be avoided.
Each market cycle has a unique signature. Focus on the facts: prices, volumes, profits, sales, margins, new products,
positive changes in sectors. Look for evidence action by action and employ the best criterion. Look for types of patterns and
price actions that are proliferating in the market. This can help you understand which type of tactic will work best in the current cycle;
- Which stocks should I buy first? Buy the strongest ones first. Coming from a bear market, I like to buy in order of
breakout. Let the strength of the market tell you where to put your money, not your personal opinion, which is rarely a good
substitute for market wisdom. Opinions mean nothing compared to the market's verdict.
When the market is at its lowest, the best stocks make their lows ahead of the absolute lows of the market averages.
As the market averages make lower lows in the final stage of decline, the leaders diverge and make lows.
ascendants.
Most stocks experience a relatively strong price drop after the end of a super performance phase. This
it is due to the realization of profits and the anticipation of slower growth ahead.
Leaders tend to peak at the same time the overall market starts showing signs of distribution.
Pay attention when money stays in the market and rotates into lagging stocks.
Frequently, the leaders of the next bull market will emerge from unlikely areas. Expect to see unknown names. Update
frequently your watchlist. Focus on the list of 52-week highs. Remember to listen to what the
Action is telling you, not the experts. This is your best early warning system. Turn off the media.
They are emotional, imperfect, illogical people who make buying and selling decisions. Ego, fear, greed, hope,
ignorance, incompetence, exaggerated reaction, and many other human errors in reasoning and judgment create all kinds of
discrepancies and, in turn, opportunities.
The charts allow us to see what is happening with a specific stock as buyers and sellers come together.
in an auction market. They refine emotional, logical, and even manipulative decisions into a clear visual display; the verdict of
Supply and demand. I owe much of my success to the accuracy of my timing, which would be virtually impossible without the use of charts.

I never bet on my fundamentalist ideas without the confirmation of the current price action of a certain stock. Traders
experts use price and volume analysis as a mechanism to control their trades, manage risk, and increase
profitability probabilities. Price and volume analysis can help you determine if the stock is in accumulation or distribution.
(being bought or sold in size).
Graphic patterns are not the cause; they are the effect. Supply and demand do not dictate the market; human behavior does.
The first piece of information that the graph shows us is the predominant trend of a stock. To define my entry, I look for
for a price consolidation, which is a momentary pause in the context of a previous upward trend.
The first part of the process is to qualify the current graphic standards by filtering actions based on the prevailing trend and then
buy when they emerge from consolidation periods before they become widely followed and obvious.
Volatility contraction pattern: I want to see the stocks move from higher volatility on the left side of the price base.
for lower volatility on the right side. Note the contraction of volume during the tightest part of the setup, on the right side.
from base. The progressive reduction in price volatility, which will be accompanied by a reduction in volume at specific points,
eventually means that the base has been completed. Normally, most contraction setups in volatility are formed by
two to four contractions, although sometimes there are five or six.

- A quick way to capture the visual of an action: 1) Time: how many days or weeks have passed since the baseline started?
2) Price: how deep was the largest correction, how narrow was the smallest retracement to the right of the price base? 3) Symmetry: by how many
contractions the action went through the base process?
If a stock is under accumulation, a price consolidation represents the period in which strong investors absorb hands.
fracas.
A stock that is under accumulation will almost always show this characteristic: price narrowing with volume contraction.
This is what you want to see before starting your purchase on the right side of the base. If the action is indeed being accumulated by
Institutional, the contractions will be smaller from left to right when the supply is absorbed by large buyers.
You will be more successful by focusing on actions that correct less rather than those that correct more. In most conditions,
Stocks that correct more than two or three times the market decline should be avoided.
If an action advances very quickly on the right side, it creates a dangerous time compression and, in most cases, the
Action should be avoided, at least temporarily. Constructive price consolidation tends to have a certain degree of symmetry.
Always keep in mind that everything you see in the market is also visible to all other participants.
- A stop loss regime is essential. Inevitably, a good stop loss practice will keep you away from some winning stocks.
Looking for evidence of demand: the combination of high demand days, low volume pullbacks, various shakeouts
Prices at the base and contraction in price provide sufficient evidence that the stocks are being accumulated.
When a stock crosses the line of least resistance, the chances are higher that it will move up in a short period.
of time. This point represents an area where the sale/supply is low; therefore, even a small amount of
buy/sell can move the stock up.
When the price surpasses the pivot point with increasing volume, you can place your buy order.
Sometimes a stock moves away from a pivot point only to return to its range and negate the day's gains. When this happens, I don't always
I leave immediately. I try to wait to see if the action can recover from the reversal. Of course, if the reversal is big enough to trigger
my stop, I sell and reassess. If the reversal causes the price to close below the 20-day moving average, it decreases the probability
of success and becomes a judgment decision; sometimes I sell if that happens. However, as long as the price remains
Above my stop loss, I try to give the stocks some room.

Frequently, a stock will emerge through a pivot point and then pull back to or slightly below that breakout point.
initial. This is normal, as long as the actions recover quickly in a few days or perhaps within two weeks.
After buying a stock emerging from a volatility contraction pattern, look for the following signals:
At the beginning of the movement, the volume should expand over several days.
Prices generally rise for a few days with little resistance.
A normal reaction will occur: the volume should decrease compared to the volumes observed during the trend.
initial and the price may move in some way against the trend.
In a few days or perhaps a week or two after the normal reaction, the volume should increase again and the trend
the prices should be resumed.
The cup-with-handle pattern is undoubtedly the most repeatable and reliable price structure among all the variations that stocks have.
super performances outline before they advance dramatically in price.
- Cup completion cheat, or 3C, is the first point where you should try to buy a stock. When a handle forms,
It usually occurs in the upper third of the cup. The cheat area is the first point where I try to operate a cup pattern (you do not
want to get involved before this point). This pause presents an opportunity to enter the trade as early as possible, perhaps not even
always with all your position.
The Turn:
1) Downtrend: this leg can occur over several weeks or months, and it is normal to experience large spikes.
of prices along the downtrend with the increase in volume.
2) Uptrend: the price will try to recover and stop its downtrend. You don't want to buy yet; it is
too early. At this point, the price action and volume lack the necessary confirmation that the action has hit rock bottom and
entered a new uptrend. The price will start to rise on the right side, usually recovering about one third to
half of the previous decline; however, the supply/sell pressure created during the downtrend will typically be strong
sufficient to prevent the rise of prices and create a pause or retreat.
3) Pause: the action will be paused for several days or weeks and will form a plateau area (the cheat), which must be within
5% to 10%, from the high point to the low point. A typical signal that indicates that the stock is ready to break is when the volume dries up.
drastically, accompanied by a narrowing in price.
4) Breakout: the stocks rise above the plateau area, and you place your buy order.
When a stock moves in one direction, a trend line can be drawn connecting highs and lows. However,
Counter-trend volatility is common.
Livermore hoped that the trend would be interrupted and two reactionary pullbacks would occur; then, with the stocks trading
above the second high reaction, he would enter a trade.
Failure Reset, which comes in two forms: a failure in the base, which requires the construction of a completely new base before it can be
bought again and a failure in the pivot, which can reset and recover in a few days. Do not dismiss an action
just because you were stopped; if the fundamentals remain intact, be on the lookout for a failure reset.
The key to making a lot of money in stocks is to align fundamentals with constructive price action during a general environment.
of a healthy market. You want all the forces behind you: fundamentalists, technicals, and market tone.
It really doesn't matter what you think about an action. What matters is what large institutions think, because it is they...
that can dramatically move the price of a stock. Therefore, it is your job to find the companies that the institutions
they are considered valuable.

Pay close attention to the price action of the market itself. Markets are never wrong - opinions often are.
Stay mentally flexible.
I focus on my trading plan and the two elements that are absolutely critical for long-term success: consistency.
risk management. To achieve consistent profitability, you must protect your profits and capital.
When a stock rises a decent amount in relation to my purchase price, I usually give less room on the downside.
I enter profit protection mode. At least I protect my breakeven point.
You should give space for the stocks to fluctuate, but this margin has little to do with your past gains. Evaluate your stocks with
based on the return you expect from them in the future versus what you are risking. Each day, an action must justify your trust.
to hold it to achieve a greater profit.
Losses work against you geometrically. Keep your losses small.
How do I know when I am wrong? My answer: the action falls. The fact that an action is below its purchase price means
that you made a mistake in the timing.

Every great correction starts as a smaller reaction. The best way to stay out of the market's wrath is to accept its judgment.
Good companies can be terrible investments if bought at the wrong time. Companies will face new challenges,
deterioration in business conditions, regulatory changes, etc. Often, before the problems become apparent,
the price of a stock plummets sharply, anticipating such developments. When problems arise in a public company,
management is probably the worst source of information.
Consistent winners increase their bets as their position strengthens, and they exit the game when the odds are
against them.
The best traders are those who recognize mistakes, cut their losses with detachment, and move on, preserving capital for
the next opportunity.
If you consider each trade as just one out of a million over time, it becomes much easier to endure a small
lose and move on to the next trade. If you remain disciplined, apply common sense, and trade in high probability situations,
The probabilities will be distributed over time and you will be profitable.
In the stock market, you are operating with probabilities, not certainties; this means that you will not be correct all the time.
Be a demanding opportunist. Be selective and choose your entry points very carefully. Wait until the odds
be stacked in your favor before taking action.
Being wrong is not the problem. Making a mistake is not the problem. The problem is not being willing to accept the mistake. The problem is
continue wrong.
Many of your failed trades may not even be errors on your part, just changes in circumstances that are impossible to predict.
a true mistake occurs when you refuse to make an adjustment after things change. Being wrong is inevitable, but
staying wrong is a choice.
Stay disciplined and cut your losses. The success of cutting losses depends on your ability to remove emotions.
hope, fear, pride, enthusiasm, greed - from your investment decisions. How you deal with loss is the difference between
mediocrity and greatness. For a speculator, small losses are simply the cost of doing business.
Do not ignore the only opinion that matters: the verdict of the market.

The objective of stock trading is to make money consistently by executing trades with greater potential.
reward of what risk.
Over time, I learned that investors do not lose money or fail to achieve superior performance due to bear
markets or economic risks, but due to mental risks.
Risk management requires discipline. Its goal is not to avoid risks, but to manage risks: to mitigate risks and have a degree
significant control over the possibility and amount of losses.
The best way to ensure success in the stock market is to have contingency plans and update them continuously as needed.
what you learn and find new scenarios. A professional's mark is the proper preparation. To execute, you must be
prepared.
Before the start of each trading day, mentally review how you will handle each position based on what you can.
happen during this day.
Four Basic Contingency Plans:
1) The initial stop loss: the price at which I will exit the position if it moves against me. At the moment the price reaches
To stop loss, I sell the position without hesitation. Once the stock advances, the sell point should be increased to protect your profit.
2) The re-entry: a correction or a pullback that hits the stop. This tends to happen when the market is facing weakness.
general or high volatility. However, a stock with solid fundamentals can be reset, forming a new base or a setup
suitable. Often, the second setup is stronger than the first. It may take two or three attempts for a big
winner advance.
3) Selling for profit: selling in a strong market is a practice of professional traders. It is important to recognize
when a stock is rising rapidly and may be running out. You can easily unload your position when the
buyers are abundant. Or you can sell at the first signs of weakness immediately after a price drop. You
you need to have a plan to sell in a strong market and sell in a weak market.
4) The disaster plan: I am always prepared for the worst-case scenario (black swans, internet failures, CVM,
complaints). Contingency planning is an ongoing process.
Always keep the risk at a level lower than the average gain. Your maximum stop loss depends on your percentage of trades.
Profitable how much of your profit per trade. A rule of thumb would be to cut your losses at a level of half of your average gain.
The problem of relying on a high percentage of profitable trades is that no adjustments can be made; you cannot control.
the number of gains and losses. What you can control is your stop loss; you can tighten it as your gains decrease
during difficult times.
The time to think more clearly about where you will exit a position is before you enter. When a stock falls into your line
in defensive selling, there is no time to hesitate or rethink. There is no decision to be made; it was decided beforehand. You just execute the
your plan; you must write down your selling price before buying each stock.
Your predetermined stop loss should be used as an absolute maximum. Once the stock has fallen to your stop loss, sell it.
immediately, without exception or hesitation. The market does not care about what you expect to happen.
If you are repeatedly stopped out of your positions, there may only be two things wrong: 1) Your stock selection criteria
are flawed. 2) The general market environment is hostile.

If the market is entering a correction or a bear market, even good selection criteria can show results.
ruins. Stay in tune with your portfolio and, when you start to experience abnormal behavior, pay attention.
If you have a series of abnormal losses, first reduce your exposure. Do not try to trade larger to quickly recover.
your losses. When your trading plan is working well, do the opposite.
Growth stocks that fall after the purchase (at the right entry point) do not become more attractive; they become less so.
attractive. The more they fall, the less attractive they are. The fact that a stock is not responding positively is a red flag.
red that the market is ignoring the action; the perception is not going in your direction.
When I exit a position of 100% cash, I rarely jump in with both feet. I enter slowly, with the main focus on avoiding big
errors and understand the market moment. The moment can come in the form of how prices are behaving in general, industry leaders,
general market overview and economic and political influences. After noticing the moment and establishing my trading pace,
Only then do I significantly increase my exposure.
Patience is key. My goal is to operate effortlessly. If your operation is causing difficulties or stress, something is wrong.
with your criteria or timing, or you are too exposed.
Three-tier hierarchy: 1) Capital preservation. 2) Consistent profitability. 3) Superior returns. The key to creating
Wealth is preserving capital and patiently waiting for the right opportunity to achieve extraordinary gains.
- To make a lot of money in the stock market, you don't need to make all-or-nothing decisions. Trading stocks doesn't
it's an on-off business; the shift from cash to stocks should be incremental.
Caution is the order of the day here. You should start with 'pilot purchases', initiating smaller positions than normal; if they work out...
Sure, larger positions should be added to the portfolio right away. This 'water finger' approach helps keep you away.
of problems and to build your success.
Before aggressively increasing my exposure, I look at my portfolio for confirmation. If the market is really healthy, I
I should be succeeding with my trades. Be incremental in your decision-making process. Build on success. Subtract.
in setbacks. Let your portfolio guide you.
In my trades, I try to buy or increase a position in the direction of the trade only after it shows me a profit;
Even if I am buying a pullback, I usually wait for the stock to rise before going long. The lesson: never trust the first one.
price, unless the position shows profit.
I have some general guidelines: any action that hits a multiple (above) of my stop loss should never be allowed.
entry in the losses column. Move your stop up when your stocks increase two or three times your risk, especially
if this number is above your historical average gain. This will help protect you against losses and safeguard your profits and your
trust.
During difficult periods, your earnings will be lower than normal and your percentage of profitable trades will definitely be
smaller than usual, and therefore, your losses should be reduced to compensate (shorter stops).
If you are trading poorly and your percentage of profitable trades is falling below 50%, the last thing you
What you want to do is increase the space you give to your actions on the negative side. This is not an opinion; it is a mathematical fact.

In a difficult market environment, profits will be lower than normal and losses will be greater; downside gaps will be more
common and you will likely experience greater skidding. The smart way to deal with it is to do the following:
Tighten the stops.
Be content with smaller profits.
3) If you are trading with leverage, exit the margin immediately.
4) Reduce your exposure in relation to the size of your position, as well as to your overall capital commitment.
Once you see your percentage of profitable trades and the risk/return profile improve, you can start
to gradually extend your parameters back to normal levels.
You will never achieve super performance if you diversify too much and rely on diversification for protection. During a bear market,
almost all stocks are falling.

Concentrate your capital on the best stocks - a relatively small group - with interesting things happening.