Mark Minervini: Keys to winning in the Stock Market

Until the right opportunity emerges, I pay special attention to preservation of capitalabove
capital appreciation. When a promising opportunity eventually presents itself, Imready to act
swiftly and aggressively with the bulk of my capital intact.Remember, the top three priorities in
trading:
First, is preservation of capital. Next isconsistency in executing your plan. When you
have these two things mastered, youcan then pursue the third, which is superior
performance.
In stock trading, waiting is the hard part.
While you are sidelined, reading latest newsor watching the Dow move up may pressure
you to make trades that you wouldnormally not take. Patience is the key. Daily
surveillance is necessary, whilesuppressing the temptation for action, meaning the
desire to initiate a trade, untilthe right opportunities present themselves.
I conduct intensive research to identify trading ideas and follow those ideas like a hawk.When
the time comes to put money to work, the decision is be automatic and obvious. Totrade like
this, in almost a Zen like manner, you must trade when the conditions arefavorable. Trading
should be effortless. If your trading is causing you difficulty or stress,then something is wrong
with your criteria or timing, or else youre trading too large.When the market is not acting great
and theres no clear market leadership, play it smallwith pilot positions. This accomplishes two
things:First, you will test the market and keep its pulse. Once you get a strong heartbeat, you
canstep it up.Second, you stay in trading shape. Trading is just like working a muscle; if you
dontwork it, it loses strength.Stay in trading shape by using pilot positions as sparring
partners. However, dont slugit out and get hurt with your sparring partner. Instead, wait for
the main event and thengive it your all to capture the championship belt.
Sacrifice
: Must know who you are and what you will be doing- A successful Trader willneed to establish
their edgeStatus: Do you want to be a Hyundai or a Mercedes?The average trader spends the
majority of his/her time in between
Indecisiveness
<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>
Regret
S h o u l d I
b u y I s h o
u l d h a v e
b o u g h t S
h o u l d I
s e l l I s h
o u l d h a v
e s o l d S
h o u l d I
h o l d I s h
o u l d h a v
e h e l d
50% win rate is enough
KEY Point: Perfectly executing your plan is the key, not perfectly trading the stock
It is a business of being wrong- How you manage this determines your success.

Discipline

Process

following game planEGO: do you want to make money or be right? A destructive Force inside
all of us.

Dont focus on $... Focus on Process

Money is the Scoreboard

Scoring is a by-product of successful speculation.

Focus on being the best you can be

Focus on implementing sound principles

Focus on implementing your plan consistently

Master one Style
Multi-tasking hurts development and confidence

Master one style

Master one strategy w/in that style

Master one tactic w/ in that strategy within that style

Develop a consistent routine (like the military. SOP standard operatingProcedure

Become profitable first (most traders set unrealistic goals)Trading Priorities:Preservation of

CapitalHow much can I lose (consistent application of discipline)Consistent ReturnsSuperior
ResultsHave a contingency Plan for every situation before it happens

Initial stop loss must be determined beforehand- It should always be a functionof expected
gain R

When to take profits A) Into Strength B) into weakness

Re-Entry Plan- some of his best trades have been from previous failures

Disaster PlanReasons many fail to achieve superior Results

Poor selection Criteria

Style Drift

Failure to cut losses

Averaging Down

Let good gains slip or even worse turn into a loss

Seeking Action- trading is supposed to be boring(Missed 7-10- I sent him a message to get the
bullets but have yet to hear back)SACRIFICEPractice does not make perfectConventional
wisdom guarantees mediocrityYou will have rotten days
Position Sizing:

He has and will put up to 25% in one position

His goal is to put as much capital as he can in his best ideas

He will risk 1-2% of equity per trade

Avg Stop/loss 4-5%

Max Stop would be 10% (only breached on nasty gap down)

Smaller positions if stock is thin

All you have is your entry- Your stop is only as good as you are at setting it.

Max Positions 12 (unless they r small caps and he has smaller positions)

In ideal situation he can have 8 positions- fully margined.Must do best to take emotion out of
playHave a plan and contingency planHe would rather lose following his plan than win outside
his competencyHe uses no indicators: Focus only on Price, Volume and a few MAs just
for reference